I‘ve been through enough annual planning cycles to know how marketing budgets often get set. There is usually a number from last year. Finance has a view on what the business can afford this year. Revenue might be expected to grow, so the marketing budget gets a small increase. Margins might be under pressure, so every function is asked to find savings. Some years the instruction is simply to hold the budget flat and find a way to deliver more. By the time the marketing team starts planning, one of the biggest strategic decisions has effectively already been made.
Think about the sequence. The amount available to marketing has been determined before the business has properly worked through what it needs marketing to achieve. The company might be entering a new market, launching a product, facing a much more aggressive competitor, trying to establish a new category, increasing penetration or reversing declining consideration. The growth ambition might be materially higher than the previous year. Yet whatever has changed in the market, the starting point is often remarkably similar: here is the number, now build a plan that fits inside it.
This is so normal inside large organisations that we rarely stop to question the logic. When marketing does push back, another familiar question tends to appear: “Well, what should we be spending?” That is usually when the industry benchmarks come out. Gartner says marketing budgets averaged 7.8% of company revenue in 2026. The latest CMO Survey puts the figure at 9.0%. Both are credible and useful pieces of research. Neither can tell you what your marketing budget should be. Neither can last year’s spreadsheet.
We have become very comfortable starting with the number
Marketing budget conversations tend to have an anchor. Sometimes it is last year’s spend, sometimes it is a percentage of revenue, and sometimes it is an industry benchmark. In other cases finance has already determined the size of the available pool and the marketing team is asked to work within it. The logic is understandable. Companies have finite resources, and marketing competes with product, sales, operations, technology and every other function for investment. A CMO cannot arrive at the CFO’s office with a wish list and expect it to be funded. Financial discipline matters, and marketers should be held accountable for how they invest the company’s money.
The problem comes when the financial constraint begins to substitute for the strategy. Last year’s budget tells you what the business spent last year. A benchmark tells you what other companies spend. Neither tells you what needs to happen in your market this year. Yet both carry enormous influence because they feel objective. A budget set at 8% of revenue has a reassuring logic to it. It can be compared with an external study, placed on a board slide and defended as being broadly in line with the market.
The average, however, has no idea what you are trying to achieve. A category leader defending its position does not face the same marketing challenge as a challenger trying to double its share. A business entering Japan for the first time does not have the same task as one that has been operating there for 30 years. A company with high awareness and weak conversion faces a different problem from a company nobody has heard of. Even two B2B software companies of similar size can have completely different levels of brand strength, market maturity, sales coverage, pricing power, existing demand and competitive intensity. Put all of them into a benchmark and much of that context disappears. What remains is a precise-looking average that may have very little to do with the decision in front of you.
There is another reason to be careful with the number itself. Gartner’s CMO Spend Survey represents a particular cohort of companies and marketing leaders. The CMO Survey represents another. Their methodologies, company mixes and definitions are not identical, which is one reason their headline figures differ. That does not make either benchmark wrong. It is a reminder that a benchmark describes the organisations in the study. It does not prescribe what every company should spend.
Last year’s budget is a benchmark too
External benchmarks get a lot of attention, but in my experience the more powerful anchor is often internal. We spent $20 million last year. Revenue is forecast to grow by 5%, so perhaps marketing gets another 5%. The company needs to protect margins, so the budget stays flat. Everyone has been given an efficiency target, so marketing needs to take out 10%. Once that number has been established, it quickly becomes the frame for the entire planning conversation.
There is good reason to use history. It tells us what things cost, gives us a view of existing commitments and provides evidence about what worked, what did not and where money may have been wasted. The danger comes when historical spend hardens into an assumption about future need. Last year may have included a major product launch, or perhaps it did not include one when it should have. The company may have been overinvesting, or it may have been chronically underinvesting and has now embedded that underinvestment into its planning process. Competitors may have increased their activity, customer behaviour may have changed, media costs may have shifted, or the business may have set a growth target that bears little relationship to the resources it is prepared to put behind it.
Once the previous number becomes the anchor, enormous amounts of organisational energy can go into debating relatively small movements around it. Marketing argues for another few per cent. Finance asks where savings can be found. Teams start cutting activities to fit the envelope. All of that can happen without anyone properly revisiting the more important question of what the business actually needs marketing to accomplish.
The current data suggests this tension is becoming more acute. Gartner reports that marketing budgets have been on a plateau since 2022, with the 2026 average sitting at 7.8% of company revenue, 18% below the mean allocation four years earlier. At the same time, 73% of CMOs describe the growth expectations placed on them as high, very high or overly ambitious. In the same 2026 research, 56% said their marketing organisation lacked the budget required to deliver its strategy. There may be perfectly good reasons for constraining investment, but there is an obvious tension when growth expectations rise without a corresponding discussion about what level of investment that growth requires.
Starting from zero
There is a well-established idea in budgeting that challenges the habit of starting with last year’s number: zero-based budgeting. Mark Ritson has written about the approach for years. In a 2016 Marketing Week column on Unilever’s adoption of zero-based budgeting, he challenged the assumption that it was simply a cost-cutting exercise. His argument was that a proper zero-based approach starts with the research and marketing plan, determines what the plan requires and then builds the budget from there, rather than accepting an arbitrary percentage of forecast sales and working backwards from it.
I like the principle more than the terminology. No sensible marketing leader should walk into planning pretending the previous year never happened. Historical performance matters. Existing commitments matter. What the business can afford obviously matters. We should know whether activity delivered a return and whether money was wasted. The useful part of zero-based thinking is removing the assumption that the previous allocation automatically deserves to become the next allocation.
The sequence changes when you approach the budget this way. You begin with the business problem and the growth ambition, understand what is happening in the market, decide where marketing can make a difference, build the strategy and then determine what that strategy requires. The eventual budget still has to survive commercial scrutiny. Senior leadership may decide the company cannot afford the plan. Marketing may need to make trade-offs. The growth ambition itself may need to change. At least those trade-offs are being made consciously instead of being hidden inside an inherited number.
Ritson revisited marketing budgeting in 2022 with his “Triple-Cooked Marketing Budgets” approach. Importantly, he did not claim there was a perfect calculation for every brand. Drawing on work by econometrician Grace Kite and other effectiveness evidence, he proposed using broad rules of thumb as a practical starting point and then adjusting for the context of the business. The answer is not to replace last year’s arbitrary number with a different arbitrary number. The value comes from understanding what the evidence can tell you, and where judgement still has to take over.
The budgeting problem is also a marketing problem
There is a deeper reason marketing budgets so often begin with cost. Marketing itself has spent years becoming increasingly defined by efficiency. Digital marketing gave us unprecedented visibility into activity and performance. We could see clicks, leads, conversions, acquisition costs, return on ad spend and pipeline. This was genuine progress, but it also changed the way marketing talked about its value and, eventually, the way organisations thought about the function.
The things we could attribute became easier to defend, while activity with an immediate and measurable return became easier to fund. Marketing became very good at answering questions about how much a lead cost, whether acquisition costs were rising, what the return on media spend was, whether conversion could be improved, or whether a process could be automated. Agencies were pushed to deliver more efficiently, technology promised greater productivity, and the expanding availability of performance data made short-term results easier to scrutinise than long-term market effects.
These are useful disciplines. The problem is the imbalance that develops when they dominate the conversation. The 2026 CMO Survey found that marketing leaders spend 68% of their time managing the present and only 32% preparing for the future, a pattern the survey says has remained remarkably consistent since 2019. Under increased pressure from CEOs, boards and CFOs, 70.6% of respondents said they were focusing more on short-term impact over long-run gains. The same research found that marketing spending decisions remain more reactive than strategic, shaped heavily by financial pressure and executive response.
This changes what marketing becomes inside an organisation. If most conversations with the C-suite concern cost, productivity, attribution and near-term return, then marketing gradually becomes understood through those lenses. A function that is predominantly asked to demonstrate efficiency will eventually be managed as an efficiency function. That is when the annual planning conversation naturally becomes one about delivering the same outcome with a little less money.
When marketing looks like an expensive department
If marketing is understood primarily as the department that produces campaigns, buys media, generates leads, creates content and manages channels, it can look very expensive. Salaries, agencies, technology, production, events, media and research all appear as visible costs in the P&L, making it relatively easy for someone to look at the total and ask what could be removed.
Gartner research from 2024 gives some sense of how widespread this perception is. In a survey of 395 CMOs, 47% said marketing was viewed inside their organisation as an expense rather than a strategic investment. Another Gartner study found that only 52% of senior marketing leaders believed they were successfully proving marketing’s value and receiving credit for their contribution to business outcomes. That is not simply a communications problem for CMOs. It tells us something about how the role of marketing is understood inside many organisations.
That role has become too narrow. Marketing should help the business understand markets and customers, find opportunities for growth, shape propositions, create and capture demand, build brands, support pricing power, increase penetration and make the company easier to choose. Sometimes it creates demand that sales can convert today. At other times it builds the conditions that make growth easier next year. There are also situations where the most valuable contribution a marketing team can make is recognising that communications are not the problem at all. The constraint may be the product, pricing, distribution, proposition or customer experience.
This broader commercial orientation is one of the things that distinguishes the strongest marketing functions I have worked with and observed. They know where the company expects growth to come from and understand the market well enough to have a view on whether that ambition is realistic. They are close enough to customers to identify emerging opportunities and confident enough commercially to challenge assumptions. They can make a case for investment without reducing every decision to a short-term ROI calculation because the organisation understands that marketing is one of the ways the company creates growth.
There is research supporting this broader view of the function. Gartner describes a group it calls “market-shaper CMOs”, leaders who use deep customer and market insight to identify unmet needs and influence business direction. In Gartner research with CEOs and CFOs, companies where CMOs were effective at market shaping were 2.6 times more likely to exceed revenue and profit goals. A later Gartner study found that market-shaping CMOs were eight times more likely to succeed in their role. The distinction Gartner draws is useful. These leaders do more than translate an existing enterprise strategy into marketing activity. They help shape where the business goes next.
AI is making the choice more urgent
For all the discussion about AI transforming marketing, much of the conversation still begins with efficiency. How much time can we save, how much content can we automate, can we reduce production costs, can a smaller team do more, and can we reduce our dependence on agencies? These are legitimate questions. Marketing should eliminate unnecessary work and use technology to improve its operations. Nobody benefits from protecting inefficient processes.
The risk is that efficiency becomes the limit of our ambition for AI. Gartner’s 2026 research found that marketing leaders were allocating an average of 15.3% of their budgets to AI initiatives, while 70% of CMOs considered becoming an AI leader a critical goal. Yet only 30% reported mature AI readiness capabilities. Gartner’s advice to marketing leaders is telling: reposition AI as a growth engine and move beyond viewing it only as an efficiency tool.
The productivity gains will be real, but the more interesting opportunity sits beyond producing the same marketing for less money. AI can improve how marketers understand customers, interrogate data, identify changes in demand, explore segments, test propositions and learn from experimentation. It can make research and insight more accessible, improve coordination between sales and marketing, and give marketers more capacity to work on problems where judgement and commercial understanding matter.
There will certainly be situations where the efficiency dividend should be taken out of the cost base. Businesses have to remain competitive and marketing has no special right to preserve waste. But there is no rule that every dollar or hour saved by AI must disappear from marketing. Capacity can be reinvested into customer research, creative quality, brand building, experimentation, capability development, market expansion or other opportunities that might create greater commercial value.
If our biggest ambition for AI is making marketing cheaper, we should not be surprised if organisations eventually conclude that they need less marketing. The bigger opportunity is to use AI to make marketing more capable of finding and creating growth.
Efficiency matters, but it is not the strategy
Good marketing leaders should care deeply about efficiency. Money spent on ineffective activity should be redirected, processes that consume time without improving outcomes should disappear, technology that nobody uses should go, and agencies should be accountable for the value they create. Every dollar has an opportunity cost, and treating marketing as a growth investment makes financial discipline more important rather than less important.
The danger comes when efficiency becomes the organising idea. A business can become extremely efficient at activities that contribute very little to growth. If AI or process improvements release 10% of a marketing budget, there is a strategic decision to make about where that capital can create the most value. The company may urgently need the margin improvement, or marketing may have a higher-return opportunity that has been underfunded. Money might move from production into media, from an oversaturated acquisition channel into retention, or towards longer-term demand creation that has been continually sacrificed because every investment has been judged against an immediate pipeline target.
This is also where the long-running evidence on advertising investment becomes useful. Nielsen’s review of share of voice research summarises the established relationship between share of voice and market share. Binet and Field studied 171 campaigns and found that market share typically increased by around 0.5 percentage points for every 10 percentage points of excess share of voice. Nielsen is careful to emphasise the nuances. The relationship varies by category, brand size, channel and competitive circumstances. That makes share of voice useful evidence for budget planning, but not another universal formula to apply without context.
The point is not that marketing should always spend more. Sometimes the right answer will be to spend less. Sometimes there are better uses for the capital elsewhere in the organisation. A growth-oriented view of marketing does not mean protecting every budget line or assuming that more investment automatically produces more growth. It means making those decisions in the context of the commercial opportunity rather than treating cost reduction itself as evidence of a better marketing strategy.
So how much should you spend?
This is the point in most articles about marketing budgets where a number appears. There are certainly useful reference points. Gartner reports an average marketing budget of 7.8% of revenue in its 2026 survey, while the CMO Survey reports 9.0%. Ritson’s 2022 budgeting work, drawing on Grace Kite’s analysis of multiple effectiveness datasets, suggested that spending somewhere between 5% and 10% of turnover on advertising can provide a useful rule of thumb, with Ritson proposing 10% as a practical starting point. These are all valuable pieces of evidence, provided we remember what they are.
I would want to know those numbers. I would want my team to know them too. I would use benchmarks, share of voice, previous expenditure, unit economics, margins, market data and effectiveness research to challenge the plan. What I would not do is outsource the budget decision to any one of them.
The starting point should be the growth ambition and the market situation. Where is growth expected to come from? What is happening in the category? What needs to change among customers for the growth ambition to be realised? What is the company’s current market position? How strong is the brand? What are competitors doing? Where can marketing genuinely influence the outcome, and what would need to be done well enough and for long enough to give the strategy a credible chance of success?
Only then can we sensibly ask what that strategy costs. At that point, last year’s spend becomes useful evidence rather than destiny. Industry benchmarks help us determine whether our number is unusual. Share of voice tells us something about competitive investment. Unit economics and margins tell us what the business can sustain, while finance imposes the very real constraints within which every strategy has to operate.
If the plan suggests that marketing needs 15% of revenue while comparable companies spend 7%, the difference deserves scrutiny. The proposal may be extravagant. The benchmark may be inappropriate. The company may have set a growth ambition it cannot afford, or the business may be dealing with years of accumulated underinvestment. The purpose of the benchmark is to expose the question, not answer it.
What the budget says about marketing
There is a reason I care about this beyond the annual irritation of budget season. How a company sets its marketing budget tells you something about how it sees marketing. When the conversation begins with last year’s cost base, it naturally moves towards increases, reductions and efficiencies. When it begins with the growth ambition, the questions become broader and more commercially useful. Where does the company want to win? What would need to change for that to happen? What is stopping it now? Where can marketing make a meaningful difference? What level of investment is the business prepared to make, and what should it reasonably expect in return?
High-performing marketing functions should be comfortable with that level of scrutiny. Marketing does not deserve investment simply because it is marketing, and a growth engine still needs to produce growth. But the scrutiny has to work both ways. If a business wants aggressive growth while holding marketing investment flat, that assumption deserves to be examined. If it expects marketing to build future demand while measuring the function entirely on the current quarter, the consequences of that choice should be visible. If the organisation wants AI transformation but frames the opportunity almost entirely around reducing headcount and production costs, it should be clear about what kind of marketing function it is creating.
Most importantly, if the budget has already been decided before anyone has agreed on the marketing strategy, we should be honest about what has happened. The investment envelope has already constrained the strategy before the strategic choices were made. That is the marketing budget trap.
A better planning process starts by understanding where the business wants to grow, what needs to change in the market and what role marketing can realistically play in making that happen. The numbers still matter, perhaps more than ever, but they belong in the conversation as evidence, constraints and pressure tests, not substitutes for strategic thinking.
Evidence informs. Judgement decides.
And if you want to build the judgement to make calls like this one, the FP Collectiv courses go deeper.
References and further reading
Gartner, “CMO Spend in 2026: Redefining Marketing Investment Under Constraint”, June 2026. Marketing budgets averaged 7.8% of company revenue, 18% below the mean budget allocation four years earlier. Gartner also reports that 73% of CMOs describe enterprise growth expectations as high, very high or overly ambitious. Read the Gartner research
Gartner, “2026 CMO Spend Survey”, May 2026. Reports that 56% of CMOs say their marketing organisation lacks the budget required to deliver its 2026 strategy. It also covers AI investment, including the average 15.3% of marketing budgets allocated to AI and the finding that only 30% report mature AI readiness. Read the Gartner 2026 CMO Spend Survey
The CMO Survey, 35th edition, fielded January 2026 among 308 marketing leaders at US for-profit companies. Marketing budgets fell to 9.0% of company revenue. Marketing leaders report spending 68% of their time managing the present and 32% preparing for the future, while 70.6% say executive pressure is shifting their focus towards short-term impact over long-run gains. Read The CMO Survey findings
Gartner, “Only 52% of Senior Marketing Leaders Can Prove Marketing’s Value”, September 2024. Gartner reports that 47% of CMOs said marketing was viewed as an expense rather than a strategic investment, while only 52% of senior marketing leaders said they were successfully proving marketing’s value and receiving credit for its contribution to enterprise objectives. Read the Gartner marketing value research
Mark Ritson, Marketing Week, “Why Unilever is right to adopt zero-based budgeting”, 2016. Ritson explains the strategic logic of building the marketing plan and determining the investment required rather than simply accepting a budget based on an arbitrary percentage of projected sales. Read Mark Ritson on zero-based budgeting
Mark Ritson, Marketing Week, “Triple-Cooked Marketing Budgets: The full recipe”, October 2022. Ritson proposes a pragmatic approach to marketing budget setting informed by effectiveness evidence and the specific circumstances of the brand. Read Triple-Cooked Marketing Budgets
Marketing Week, “Ritson’s ‘foolproof’ system for marketing budgets”, October 2022. Summarises Ritson’s budgeting approach, including Grace Kite’s analysis of effectiveness datasets and the proposed 10% of turnover starting point. Read the Marketing Week summary
Nielsen, “Need to know: What is share of voice?”, 2025. Reviews the relationship between share of voice and market share, including Binet and Field’s analysis of 171 campaigns and the finding that market share typically increased by around 0.5 percentage points for every 10 percentage points of excess share of voice. Read Nielsen on share of voice
Gartner, “Top Three Priorities for CMOs to Deliver Marketing Excellence in 2025”, December 2024. Gartner found that companies where CMOs are effective at market shaping are 2.6 times more likely to exceed revenue and profit goals. Read the Gartner market-shaping research
Gartner, “Market Shaping CMOs Are Eight Times More Likely to Succeed in Their Role”, May 2025. Gartner’s survey of CEOs and CFOs found that CMOs combining strong market-shaping capabilities with enterprise execution were substantially more likely to exceed performance expectations. Read the Gartner market-shaping CMO study