Why most marketing budgets are wrong — and why it matters more than ever

“How much should we be spending on marketing?”

It is one of the most common questions raised in leadership discussions. It is also one of the least helpful.

Not because the question is unimportant, but because it assumes that marketing is a cost to be managed, rather than an investment to be understood.

In many organisations, marketing budgets are still set in familiar ways. A percentage of turnover. A modest increase on last year. Occasionally, a glance at what competitors might be doing.

These approaches are not unusual. They are, in many cases, entirely rational.

They are also where the problem begins.

Because they are based on history, assumption or comparison — not on how the business actually generates growth.

The consequence is rarely immediate. Marketing activity continues. Campaigns run. Leads are generated. But over time, a pattern emerges. Results are inconsistent. Return on investment is difficult to demonstrate. And marketing becomes something that is periodically questioned, rather than clearly understood.

This is not a reflection of capability. It is a reflection of how decisions are being made.

The reality is that most organisations do not have a marketing budget problem. They have a clarity problem.

They are unclear on where growth will come from, which markets or clients matter most, and how marketing supports the generation and conversion of opportunity. Without that clarity, any number attached to marketing spend is, at best, an approximation.

This becomes more significant in the current environment.

Expectations of accountability have increased. Boards and leadership teams want to understand what they are getting in return for their investment. At the same time, the number of channels, tools and options available has expanded. It is now entirely possible to spend more on marketing while achieving less.

In this context, the question of “how much” becomes less relevant than “why” and “where”.

The organisations that approach this effectively tend to start in a different place. Not with a budget, but with a commercial objective. They are clear on what they are trying to achieve, where growth is expected to come from, and what activity is required to support that.

Only then does the level of investment begin to make sense.

Even then, effectiveness is not guaranteed.

One of the most common points of failure is not the budget itself, but the lack of alignment around it. Marketing operates in one direction, business development in another. Activity is measured, but not always connected to outcomes. Leads are generated, but not always progressed. The investment exists, but the system around it does not fully support it.

This is where value is lost.

It is also where marketing is often judged unfairly — expected to deliver results in isolation, rather than as part of a wider commercial structure.

A more effective approach is not necessarily more complex. It is simply more deliberate.

It requires clarity of intent, alignment between functions, and ownership at a leadership level. It requires an understanding that marketing is not a standalone activity, but part of how the organisation creates and converts opportunity.

When those conditions are in place, marketing becomes easier to justify — and more effective.

Without them, even well-funded activity will struggle to deliver consistent results.

Which is why the question is not how much you should be spending.

It is whether what you are spending is aligned with how your business actually grows.

If your marketing budget is under scrutiny — or not delivering the return you expect — it may be time for a more structured, commercially focused approach.

If you’d value an external perspective on where your marketing investment is working — and where it isn’t — get in touch for an initial conversation.

Frequently Asked Questions

What is the best way to set a marketing budget?

The most effective approach is to start with clear commercial objectives rather than a fixed percentage or historical spend. A marketing budget should be based on what is required to achieve growth — not simply what has been spent before.

Why do marketing budgets often fail to deliver results?

Marketing budgets often fail because they are not aligned with how the business generates revenue. Common issues include unclear priorities, disconnected sales and marketing activity, and a focus on channels rather than outcomes.

Should marketing budgets be a percentage of turnover?

While this is a common approach, it is not always effective. It assumes that past performance and market position remain unchanged, and does not account for growth ambitions, competitive shifts or new opportunities.

How can I improve the return on my marketing spend?

Improving return typically comes from greater clarity and focus. This includes aligning marketing with business development, prioritising high-impact activity, and ensuring decisions are based on commercial outcomes rather than assumptions.