Skip to content
English
Contact us
  • There are no suggestions because the search field is empty.

How much should a small business spend on digital marketing?

How to set a budget from your cost per lead and close rate rather than a percentage rule.

Build the budget from the bottom up, starting with how many customers you need, not from a percentage of revenue. The percentage rule is a sanity check at the end, not a starting point.

The benchmark, for context only

Gartner's 2026 CMO Spend Survey, based on 401 respondents, found that marketing budgets sit at 7.8% of company revenue in 2026, up slightly from 7.7% in 2025. That is an average across large enterprises, so treat it as a ceiling check rather than a target. A $3M business is not going to behave like the median Gartner respondent.

The math that actually works

  • Start with customers. How many new customers do you need this year to hit the number?
  • Divide by close rate. If you close 20% of qualified leads and need 50 customers, you need 250 qualified leads.
  • Divide by lead quality rate. If 60% of raw leads qualify, that is about 417 raw leads.
  • Multiply by your cost per lead. Use your own historical number. If you do not have one, this is the real problem and paid media will tell you within 60 days.
  • Add the management fee. At LevelUp, ad management is 10% of spend with a $1,500 per month minimum, so anything under $15,000 a month in spend carries a flat $1,500.

Now compare the total to your revenue. If the answer is a wildly larger percentage than the benchmark, either your close rate or your average customer value needs work before more spend will help.

Practical floors by channel

Below a certain spend a channel cannot gather enough data to optimize. We recommend roughly $3,000 a month on Google, $1,500 a month can work on Meta, $5,000 a month for geofencing, and $10,000 a month for connected TV in a single tight market, more for a full metro. Those are ad spend and exclude the fee. Details are in the minimum ad spend we recommend.

When the answer is not yet

If you do not know what a customer is worth, or nobody follows up on leads within an hour, spending more on ads makes the leak bigger. Fix the follow up first. See when start ups should start spending on ads.

Related: Paid advertising for small businesses, How do you approach paid media strategy?, Published retainer rates