2% of revenue? 5%? 10%?
When people ask ‘How large should a company’s marketing budget be?’ they often want one exact percentage. It would be convenient: take revenue, multiply it by a suitable market average, and the budget is done.
Unfortunately, that is rather like asking what percentage of income someone should spend on a car without knowing where they live, what they need it for or how much they drive.
A sound marketing budget is not a fixed share of revenue. It is the amount the business can invest while still reaching its growth target profitably.
According to Emor’s 2025 marketing practices survey, the participating Estonian companies spent an average of 3.2% of sales revenue. [1]
In Gartner’s international 2025 CMO Spend Survey, the comparable figure was 7.7% of company revenue. [2]
Does that mean an Estonian company should spend 3.2%? No.
Gartner surveyed 402 marketing leaders, most of whom worked for companies with annual revenue above one billion US dollars. Emor’s Estonian panel included 60 marketing experts. [1][2] These figures describe different companies, markets and situations.
A benchmark tells you what others do. It does not tell you what your business needs.
Earlier Estonian data shows how strongly a percentage can depend on the definition.
In Kantar Emor’s 2021 survey, spending on agencies, partners and paid media averaged 2.1% of company sales revenue. When estimated marketing payroll was included, the share rose to about 3.3%. [3]
One definition gives 2.1%; another, 3.3%. The company is the same. There is little point comparing two marketing budgets before knowing what each contains. Advertising only? Or also people, agencies, website, CRM, analytics, content and brand development? This is not merely an accounting detail. It determines whether the numbers are comparable at all.
Suppose two companies each generate one million euros in annual revenue. The first wants to grow by 5% next year. The second wants 30% growth, entry into a new market and a new service launch. Should their marketing budgets be the same percentage of revenue? Hardly.
A sensible marketing budget depends on factors including:
- the desired growth rate;
- the business model;
- margin;
- average deal value;
- customer lifetime;
- customer acquisition cost;
- sales-cycle length;
- existing brand awareness;
- competition;
- sales and delivery capacity.
Instead of asking ‘What percentage of revenue?’, ask:
How many new customers do we need to reach the target, and how much can we afford to spend to win one?
This is where CAC, or customer acquisition cost — the cost of acquiring one new customer — comes in.
In simple terms:
CAC = sales and marketing costs related to acquisition ÷ number of new customers.
If a company spends €30,000 on acquisition and wins 20 new customers, average CAC is €1,500. Is that high? It depends. If a customer produces only €1,000 of low-margin revenue, it is a problem. If the same customer generates tens of thousands of euros in profitable revenue over several years, €1,500 may be an excellent investment. Revenue alone is not enough.
Revenue does not pay the marketing bills. Margin does.
When planning the budget, a company should know roughly how much economic value one customer creates and how much of that value it can spend to win them.
A budget that is too small can waste money
A smaller marketing budget feels safer. It is not always so.
Suppose a company has €1,000 a month for marketing. It spends a little on Google Ads, Meta, LinkedIn, SEO and perhaps video. The money is spread across five channels, but nowhere is there enough to produce a reliable result — or even learn what works.
The smaller the budget, the sharper the focus must be.A small budget should not mean ‘a little of everything’. It should mean one clear audience, a specific objective, few channels and a test period long enough to learn.
In Emor’s 2024 survey, Estonian companies allocated an average of 46% of marketing spend to media advertising, while marketing technology received only 7%. [4] This raises an important question. What use is a larger media budget if the website does not convert, the sales process leaks, or the company does not know which channels actually bring customers?
Sometimes advertising is not the best use of the next euro. Better analytics, CRM, automation, website experience or sales process may matter more. The size of the budget and the quality of how it is used are separate questions.
According to Emor’s 2025 survey, Estonian companies most often build their marketing budget from the previous year’s budget. Starting from zero, objectives and actual needs is far less common. [1]
It is convenient, but it carries a risk: yesterday’s budget begins to dictate tomorrow’s strategy. When growth ambitions, market conditions, prices or acquisition cost change, there is no reason to assume that last year’s budget plus a small adjustment will be optimal next year.
A sound marketing budget should reconcile two views:
How much can we invest? and How much must we invest to achieve the objective realistically?
So how much should a business spend on marketing?
3.2% may be exactly right. So may 7.7%. For one company, the answer may be 2%; for another, 12%.
The questions matter more than the percentage:
- How much do we want to grow?
- How many new customers will that require?
- How much value does one customer create?
- How much can we spend to win them?
- Which channels can produce that result?
- Can sales and the wider business handle the demand created?
Only then is it useful to calculate what share of revenue the resulting budget represents.
A percentage does not know your strategy.
A good marketing budget is not simply an expense line. It is a reasoned investment decision: what we want to achieve, what must be done, what it will cost and what return we expect.
That is where marketing and finance finally meet at the same table.
[1] Emor (2025). A recent trend survey examines key marketing indicators in Estonia. Point 2025 marketing practices survey; panel of 60 marketing experts.
[2] Gartner (2025). Gartner 2025 CMO Spend Survey Reveals Marketing Budgets Have Flatlined at 7.7% of Overall Company Revenue. Survey of 402 marketing leaders in North America, the United Kingdom and Europe.
[3] Kantar Emor (2021). Estonian marketers plan a 6% increase in marketing budgets. Estonian marketing practices survey; panel of 63 respondents.
[4] Emor (2024). Media advertising accounts for almost half of Estonian companies’ marketing budgets. Estonian marketing practices survey; panel of 61 marketing experts.