how much should a small business spend on marketing?

Every business owner asks this question once. The answer they get back is usually wrong.

The standard advice is 5 to 10 percent of revenue. For a business doing $500K a year, that's $25K to $50K on marketing. For a business doing $2M, that's $100K to $200K.

But "how much" is the wrong question.

the standard answer

The 5-to-10-percent rule isn't made up. It's an average, pulled from decades of marketing budgets across mid-sized businesses.

For most owners running an established operation, it's a reasonable target. Newer businesses spend more — sometimes 15-25% — because they're trying to get on the map. Mature businesses spend less because their reputation does some of the work.

If someone asks for a number, that's the number you give them.

where most of it actually goes

Here's where the rule breaks down: most of the budget isn't going to advertising.

It's going to:

• The agency or freelancer ($800–3,000 a month)
• The marketing software stack ($200–600 a month)
• The "content" — photos, copy, video — that someone else makes for you
• The boosted Instagram posts that perform inconsistently
• The email tool subscription you keep meaning to use

Actual paid distribution — Google Ads, Meta Ads, anything where money buys attention — is often less than half the budget. The other half is the cost of making the marketing. Not the cost of running it.

what changed in the last two years

AI made the "making" part nearly free.

The copy used to require a copywriter. Now it doesn't. The campaign strategy used to require a marketer. Now it doesn't. The analytics dashboard used to require its own subscription. Now it's part of the platform that runs the marketing.

For most businesses, the cost of producing marketing has dropped 70 to 90 percent in the last 24 months. The cost of distributing it (the actual ad spend) has stayed about the same.

The old budget was 70% making, 30% running.

The new budget is 10% making, 90% running.

Same percentage of revenue. Different shape.

the new questions

"How much should I spend on marketing?" is yesterday's question.

The new questions are:

• How much am I spending on actual paid distribution?
• What's the AI doing for me, and what am I still paying humans for?
• Of what's working, am I doing more of it?

If half your marketing budget still goes to the people making the marketing, you're spending it like it's 2022.

the closer

Spend the same percentage.

Spend it on different things.

Less on people making the asset. More on the attention.