As a Small Business, How Much Should I be Spending on Marketing in 2017?

What is your marketing spend doing to your pie?

We have all heard the statement “You have to spend money to make money”. This is particularly true when it comes to marketing and small businesses. It might hurt a little up front, but well-spent marketing dollars will generate business that pays for the initial expense. But how do you know what “well-spent” marketing dollars means? Where should you invest your marketing dollars so that they bring an adequate return on investment (ROI). Let’s check out what other small businesses are doing, and hear what works for them.


Most businesses are steadily decreasing the amount they spend on traditional advertising (billboards, tv ads, pamphlets, etc…) and increasing the amount they spend on digital marketing (social media, search engine, mobile, and email). The reason simply being that they can get more business while spending less money.

• Based on CMO statistics by Gartner Media, businesses spend up to 12% of company revenue on Marketing.
• Most (62%) of small businesses surveyed spend at least 4% of revenue on marketing.
• Of that total marketing budget, anywhere from 35% to 100% is spent on digital marketing, depending on your business industry and model.

Digital budget breakdown for small businesses.

So lets take these numbers and plug them into an imaginary business and see what kind of budget we come up with.

Let’s say the business generates $1 million in sales per year. We will allocate 4% of company revenue to the marketing budget, and over half (65%) of that budget will be digital. Our sample budget will be as follows.

Company Revenue: $1,000,000

Total Marketing Budget (4%): $40,000

Digital Marketing Budget (65%): $26,000

                              Display Ads (41%): $10,660

                              Social Media (10%): $2,600

                              Video (14%): $3640

                              Programmatic buys (3%): $780

                              Search (19%): $4,940

                              Other (5%): $1,300

                              Mobile (8%): $2,080

While this is just an example and actual budgets will vary depending on specific needs, it can be a helpful tool in knowing where to invest marketing dollars.

In recent years digital marketing has been trending heavily towards video. With videos being utilized in most categories of digital marketing. For example, Social Media ads are much more effective when in video format rather then a text/image. And SEO is weighted heavily towards video content on your website. Also Email campaigns have been proven to have higher click-thru rates when video is included. All told, video is the most effective format for marketing a message through digital sources. So if you are looking for maximum results with the lowest cost, include videos for an effective Digital Marketing strategy.

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