Is There an Ideal Marketing Budget Ratio?

From Procter & Gamble’s consistency to Amazon’s flexibility – what the world’s biggest brands actually do

Marketing has a habit of making simple questions feel unnecessarily complicated. This is one of them.

On the surface, it sounds like something that should be neatly resolved with a number:

  • Spend 10% of revenue.
  • Allocate 5% of profit.
  • Match your competitors.

Unfortunately, marketing doesn’t work like a fixed mortgage repayment. It’s closer to managing a portfolio – dynamic, contextual, and occasionally uncomfortable.

So let’s unpack the reality.

Note:

This article features content from the Marketing Made Clear podcast. You can listen along to this episode on Spotify:

The Classic Benchmark: Marketing as a % of Revenue

If you’ve ever Googled this question (and let’s be honest, most of us have), you’ll have seen a familiar range:

  • B2C companies: 5% – 15% of revenue
  • B2B companies: 2% – 10% of revenue
  • Start-ups / high-growth: 15% – 30%+

These figures are widely cited, including in work influenced by Philip Kotler, and they provide a useful starting point.

But they’re not a rule. They’re a reflection of context.

Why revenue-based ratios exist

Revenue is:

  • Easy to measure
  • Consistent across businesses
  • Available in real-time

It gives finance teams comfort. And if there’s one thing finance teams love, it’s a clean percentage.

But here’s the issue…

The Problem with Revenue-Based Ratios

A fixed % of revenue assumes something that is rarely true:

That marketing is a cost to be controlled, not an investment to be optimised.

Two businesses with identical revenue can have completely different needs:

  • One may rely heavily on brand awareness to grow
  • Another may be running on repeat customers and word-of-mouth

Treating them the same is like prescribing the same diet to a marathon runner and a shot-putter.

Both are active – just in very different ways.

A Better Question: Marketing Spend vs Profit

This is where things get more interesting.

Instead of asking:

“What % of revenue should we spend?”

We might ask:

“What level of marketing spend maximises profit?”

Because ultimately, marketing isn’t there to look busy; it’s there to drive profitable growth.

The Economic Lens

A more useful framework is:

  • Marginal return on marketing spend (ROMI)
  • Customer acquisition cost (CAC) vs lifetime value (LTV)

If your marketing generates more value than it costs, increasing spend makes sense.

If it doesn’t, scaling it simply accelerates the problem.

This is where many businesses get caught out – especially in growth phases.

Have Companies Used Fixed Ratios Successfully?

Some have tried. Few have succeeded long-term.

Procter & Gamble

Procter & Gamble historically spent ~10-12% of revenue on marketing

  • Outcome: Built some of the strongest global brands
  • Reality: Constant optimisation behind the scenes – not blindly fixed

Unilever

Unilever often sits around 12-15% of revenue

  • Outcome: Sustained brand dominance
  • Caveat: Heavy reliance on scale and portfolio diversification

Amazon

Marketing spend varies widely depending on growth phase at Amazon

  • Outcome: Prioritised growth over profitability in early years
  • Lesson: Ratios followed strategy – not the other way around

The pattern is clear:

The most successful companies don’t follow ratios.
They create them based on strategy.

The Danger of Underspending

Cutting marketing is often the quickest way to improve short-term profit.

It’s also one of the fastest ways to quietly erode long-term growth.

What happens when you underspend?

  • Reduced brand awareness
  • Declining customer acquisition
  • Increased reliance on price promotions
  • Competitors take share (often unnoticed at first)

It’s a bit like turning off the heating in winter to save money.

Technically correct. Strategically questionable.

The Danger of Overspending

On the flip side, more budget doesn’t automatically mean more growth.

What happens when you overspend?

  • Diminishing returns on channels
  • Poor-quality customer acquisition
  • Inflated CAC
  • Internal complacency (“just spend more”)

This is particularly common in:

  • Venture-backed start-ups
  • Businesses chasing vanity metrics
  • Organisations without clear attribution models

Overspending often feels like progress.

Until finance asks awkward questions.

Industry Differences: Why Some Spend More Than Others

Not all industries are created equal when it comes to marketing intensity.

High Marketing Spend Industries

  • FMCG (e.g. Coca-Cola)
    • Heavy reliance on brand and emotional connection
    • High competition, low switching cost
  • Retail / eCommerce
    • Constant need for traffic and conversion
    • Paid media dependency
  • Technology / SaaS
    • High CAC but also high LTV
    • Aggressive growth targets

Lower Marketing Spend Industries

  • Utilities
    • Low differentiation
    • Price-driven decision making
  • Industrial / manufacturing
    • Relationship-led sales
    • Long sales cycles
  • Public sector / non-profit
    • Budget constraints
    • Different success metrics

The key variable is this:

The easier it is for a customer to switch, the more you typically need to spend.

So… How Do You Actually Get It Right?

This is where theory meets reality.

There isn’t a perfect ratio. But there is a better approach.

1. Start with your growth objective

  • Are you defending market share?
  • Scaling aggressively?
  • Improving profitability?

Your answer should dictate your budget – not the other way around.

2. Work backwards from unit economics

Focus on:

  • CAC
  • LTV
  • Payback period

If your numbers are strong, you can justify higher spend. Check out our free marketing tools to help make the calculations.

If they’re weak, increasing budget will only amplify inefficiency.

3. Balance short-term and long-term marketing

Performance marketing delivers immediate results.
Brand marketing builds future demand.

Neglect either, and you create instability.

This aligns with broader thinking from Philip Kotler and others who emphasise sustainable brand building over purely transactional marketing.

4. Continuously optimise (not annually, but constantly)

The biggest mistake is treating marketing budgets as static.

Markets change. Competitors move. Channels evolve.

Your budget should move with them.

A Final Thought (and a Slight Reality Check)

If you’re looking for a definitive number – something you can present in a board meeting and say “this is the right answer” – I’m afraid marketing won’t give you that satisfaction.

But it will give you something better:

A framework for making smarter decisions.

And perhaps that’s the point.

Marketing isn’t about hitting a ratio.
It’s about understanding when the ratio should change.

TL;DR

  • There is no universal “ideal” marketing-to-revenue ratio
  • Benchmarks (5–15%) are useful, but highly context-dependent
  • A profit-based view (ROMI, CAC vs LTV) is more meaningful
  • Successful companies adapt ratios to strategy, not vice versa
  • Underspending risks stagnation; overspending leads to inefficiency
  • Industry dynamics heavily influence marketing intensity
  • The best approach is flexible, data-driven, and aligned to growth goals