How much should a business spend on marketing in 2027?
The most current large sample is Gartner's 2026 CMO Spend Survey. It puts the average marketing budget at 7.8% of company revenue, up from 7.7% in 2025. Gartner surveyed 401 marketing leaders in North America, the UK and Europe between January and March 2026.
Before you copy that number, check who it describes. Most of Gartner's respondents run companies with more than $1 billion in revenue. A $2 million practice or firm buys customers differently than a national brand. Use 7.8% to see whether your number is in a normal range. Then set the real number from the math below: what a customer is worth to you, and how many customers the budget has to produce.
How to split the budget: 70-20-10
The 70-20-10 model comes from Coca-Cola's content planning.
"Coca-Cola uses a 70-20-10 marketing model, where 70 per cent of media budget is devoted to its 'bread and butter channels', 20 per cent is spent on augmenting those channels with new innovations and 10 per cent is on the high risk content."Marketing Week, November 2013
For a small or mid-sized business, the translation is simple. Seventy percent goes to channels that already produce customers at a cost you can see. Twenty percent grows the channel that is showing the most promise. Ten percent funds tests you would be comfortable losing.
One rule makes the model work: a channel only earns a place in the 70 when you can name its cost per customer. If you can't name it yet, it belongs in the 20 or the 10.
Set your cost-per-customer ceiling first
Start with how much you can afford to pay for one new customer, then size the budget around it. The common guardrail is the ratio of customer lifetime value to customer acquisition cost. David Skok, who popularized the metric for subscription software, writes that "the best SaaS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8." He also recommends recovering acquisition cost within 5 to 7 months, and warns that going past 12 months leaves profitability "anemic."
The planner calculates lifetime value from gross profit, not revenue, which is how Skok calculates it. Divide that by three and you have the most you can spend to win a customer. Divide your budget by that ceiling and you have the minimum number of customers the budget must produce.
The 3:1 ratio started in software. For a service business, treat it as a starting guardrail and adjust it once you have a year of your own cost-per-customer data.
What the benchmarks leave out
Budget benchmarks measure what companies spend. They say nothing about what that spend returned. Two gaps show up again and again when we review small-business budgets.
No cost per customer by channel. Knowing what you spent on ads is different from knowing how many customers each channel produced. Without the second number, the 70-20-10 split is a guess.
Leads that were paid for and never answered. Marketing spend creates calls. A call that goes to voicemail after hours is a lead you already paid for. It never shows up as a budget line. The Missed Call Calculator puts a number on it, and our missed-call research report covers the problem in depth.
Your 2027 budget checklist
- 1Pull 2026 marketing spend by channel, month by month.
- 2Count 2026 new customers by the channel that produced them.
- 3Divide spend by customers to get cost per customer for each channel.
- 4Set your ceiling: lifetime gross profit divided by three.
- 5Move channels that beat the ceiling into the 70. Put everything else in the 20 or the 10.
- 6Put a quarterly review date on the calendar and move money based on cost per customer.
Questions owners ask
What percentage of revenue should a small business spend on marketing?
There is no single right percentage. Gartner's 2026 average is 7.8% of revenue, drawn mostly from very large companies. A better way to set a small-business budget is to work backward from what a customer is worth: set a maximum cost per customer, then fund enough spend to hit your new-customer goal at or below that cost.
Is 7.8% of revenue right for my business?
Use it as a reference point. If your budget is far above or below it, check your cost per customer before you change anything. A business that wins customers cheaply can grow on less. A business entering a new market may need more.
What is the 70-20-10 rule in marketing?
It is a budget split popularized by Coca-Cola: 70% to proven channels, 20% to growing promising ones, and 10% to higher-risk tests.
What is a good LTV to CAC ratio?
The common benchmark is 3:1, meaning a customer's lifetime gross profit is at least three times what it cost to acquire them. It comes from subscription software, where David Skok notes the best companies exceed 3 and sometimes reach 7 or 8.
Sources
- Gartner, "Gartner 2026 CMO Spend Survey Finds CMOs Allocate 15.3% of Marketing Budgets to AI," press release, May 11, 2026. https://www.gartner.com/en/newsroom/press-releases/2026-05-11-gartner-2026-cmo-spend-survey-finds-cmos-allocate-15-point-3-percent-of-marketing-budgets-to-ai-but-only-30-percent-are-ready-to-scale-ai-capabilities
- Gartner, "CMO Spend in 2026: Redefining Marketing Investment Under Constraint." https://www.gartner.com/en/articles/cmo-spend
- Marketing Week, "Coke to increase investment in production," November 28, 2013. https://www.marketingweek.com/coke-to-increase-investment-in-production/
- David Skok, "SaaS Metrics 2.0: A Guide to Measuring and Improving What Matters," For Entrepreneurs. https://www.forentrepreneurs.com/saas-metrics-2/
Planner outputs are calculated from the figures you enter. They are estimates for planning, not guarantees of results.