How Much Should You Spend on Marketing? Three Methods Compared

Most marketing budgets get set in one of three ways. Someone quotes a percentage of revenue. Someone notices a competitor everywhere and says “we need to match them”. Or the marketing team lists everything it wants to do and adds it up. Each method answers a different question. Each one breaks in predictable ways when it is used alone.

This guide covers how much to spend in total, not how to split the money between brand and sales activation. For the split, see our guide to setting your own brand-versus-performance split. Below we look at what each method assumes and where it misleads. Then we show how to combine all three into one annual figure that a CEO or board can challenge and still accept.

Method 1: Percentage of revenue, and what the benchmarks really measure

A percentage of revenue is the number finance teams like best. It scales with the business and it is easy to compare. The trouble starts when the benchmark comes from companies that look nothing like yours.

Two widely cited current sources:

Even these two disagree, and the gap tells you something. They survey different companies, and both are mostly American or European. Neither report spells out what its “marketing budget” includes, for example whether marketing salaries count, and The CMO Survey also gives a second ratio (9.6% of total company budget) that is easy to confuse with the revenue figure. Neither describes a mid-sized distributor in Riyadh, a contractor in Dubai or a manufacturer in Cairo. We found no comparable current survey that publishes this ratio for GCC or Egyptian companies, so treat any “Gulf average” you hear with caution unless it names its source and sample.

What the method assumes: that last year’s revenue is a good guide to how much market support you need next year, and that your situation is roughly typical.

Where it misleads:

• It runs backwards. Revenue drops, so the budget drops, so revenue drops again. That cycle is the opposite of what you need in a downturn or a market entry; the evidence is in our article on cutting marketing in a downturn.
• It ignores ambition. A company planning to double in a new country and one planning to hold steady get the same number.
• It hides what is inside. One company’s “7%” includes salaries, the website and exhibitions. Another’s covers paid media only. Before you compare, check what the benchmark counts.

Use the percentage as a sanity check at the end, not as the starting point.

Method 2: Share of voice, and the growth rule behind it

Share-of-voice budgeting starts from your competitors. Share of voice (SOV) is your share of all the advertising in your category. Share of market (SOM) is your share of category sales. The gap between them is called excess share of voice (ESOV).

The working rule comes from large studies of brands over time. A 2009 Nielsen analysis of 123 brands in 30 categories found that “a 10 point difference between SOV and SOM leads to 0.5% of extra market share growth”. Category leaders got more growth per point than challengers: 1.4% of share growth per 10 points of ESOV, against 0.4%. For B2B, LinkedIn’s B2B Institute reported in January 2020 on work by Les Binet and Peter Field. In their analysis of the IPA Databank, an ESOV of 10% led to market share growth of about 0.7% a year in B2B, against about 0.6% in B2C. The figures differ between datasets, and both sources qualify the rule: Nielsen with “all things being equal”, the B2B Institute with “all other factors being equal”. Use them as direction, not as a forecast.

What the method assumes: that you can measure what competitors spend and what share of the market you hold, and that your creative is about as effective as theirs.

Where it misleads:

• Measurement is hard, especially in B2B. In our experience, reliable spend tracking is hard to find for many Gulf categories. Much B2B activity happens through exhibitions, distributor promotions and sales teams, and no media monitor sees any of it.
• It can turn into an arms race. Copying the loudest competitor’s budget ignores whether that competitor is profitable.
• Quality matters. Nielsen’s own paper warns of “large variances across particular categories and brands” and says “SOV alone is not enough”. Weak creative at high volume buys little.

Method 3: Objective and task, and why it is the backbone

Objective-and-task budgeting starts from what the business needs. You set the commercial objective, work out which activities will achieve it, and cost each one. Neil Krikul of the Ehrenberg-Bass Institute, writing in B&T in August 2026, says it “remains common today among large and advanced advertisers” and recommends combining it with other approaches, including checking “the maximum cost per acquisition/conversion they can afford to break even”.

What the method assumes: that you know your conversion rates, deal sizes and margins well enough to work backwards from a revenue target.

Where it misleads:

• Wish lists. Without a cap, it turns into every idea the team has had, all costed at full price.
• Bad funnel data. If lead-to-sale rates are guesses, the budget is a guess with a spreadsheet around it.
• Short-term bias. Tasks tied to this year’s leads are easy to justify. Brand work that pays off over several years gets cut first, even though it is what keeps acquisition costs down later.

Putting the three together: a hypothetical worked example

The method we recommend uses objective and task to build the number. Then it checks that number against two guardrails: maximum affordable acquisition cost, and share of voice. Percentage of revenue comes last, as a comparison. Here is how it works for a hypothetical company. The company and all its figures are invented for illustration; they are not client data or benchmarks.

Take an imaginary building-materials distributor with SAR 40 million in revenue and a 30% gross margin. It wants SAR 8 million of new-customer revenue next year, and its average first-year order is SAR 200,000.

1. Translate the target into volumes. SAR 8 million ÷ SAR 200,000 = 40 new customers. If 25% of qualified opportunities close, it needs 160 opportunities. If 30% of qualified leads become opportunities, it needs about 535 qualified leads.
2. Set the ceiling on acquisition cost. Each new customer brings SAR 60,000 of first-year gross profit (200,000 × 30%). That is the most it can spend to win one customer and still break even in year one. Across the funnel, that equals about SAR 4,500 per qualified lead (60,000 × 25% × 30%). If customers usually reorder, the ceiling based on lifetime value is higher, but the board will usually want the year-one figure too.
3. Cost the tasks. List what produces those leads and what supports the brand. That might be search and LinkedIn campaigns, one major exhibition, a product catalogue, a website rebuild, monthly content, and sales tools for the team. Price each line from real quotes, and keep one-off items such as the website apart from recurring ones.
4. Check the lead-generation lines against the ceiling. Suppose the plan needs SAR 1.2 million of lead-generation spend for 535 leads. That is about SAR 2,250 per lead, half the break-even ceiling, which leaves room for estimates that turn out to be wrong. If the cost per lead comes out above the ceiling, the plan is unprofitable as written. Change the tasks, the targets or the conversion assumptions. Do not just trim the total.
5. Check share of voice. Suppose the company believes it holds about 10% of its category, but the proxies above suggest it makes perhaps 5% of the visible noise. In that case the brand lines are probably too thin to support growth. Shift money towards reach, or lower the growth target.
6. Compare with the percentage. Suppose the full plan comes to SAR 2.4 million. That is 6% of revenue. It sits below the US B2B services average in The CMO Survey and close to its B2B product figure. If yours sits far outside the range, you need to be able to explain why. It is not, by itself, a reason to change the plan.

The board now sees one total backed by three separate tests. That conversation goes very differently from defending a percentage borrowed from someone else.

Gulf and Egypt adjustments to make before you finalise

These points are our working judgement from planning in these markets, not findings from the surveys above. Test each one against your own figures.

• Budget by market, not by group. A company selling in Saudi Arabia, the UAE and Egypt holds a different market share and faces different competitors in each one. Run the share-of-voice check country by country. A group-level figure hides the country where you are losing ground.
• Cost bilingual work properly. Arabic and English versions of campaigns, catalogues and landing pages are separate pieces of work, not translations added at the end. In our experience, under-costing them is a frequent reason task budgets run short mid-year.
• Plan around the seasons. Ramadan, the summer slowdown and the main trade-show season can change both how buyers behave and when campaigns run. Phase the budget by quarter instead of dividing it into twelve equal months, as in our annual marketing plan for B2B companies in the GCC.
• Separate entry costs from running costs. A market entry or an exclusive-agency launch needs a one-off push: identity work, launch content, an exhibition presence. Present it as an investment with its own objective, so next year’s budget is not judged against it.
• Keep platform costs visible. Ad platforms may invoice in different currencies and with different tax treatment, depending on the country and how the account is set up. Ask your finance team how each one is billed before you fix the media lines. In Egypt, where prices keep moving, see our guide to setting a budget under inflation.

Presenting the figure so it is accepted

The hardest board question is rarely “why so much?”. It is “what happens if we cut it by 20%?”, and most budgets have no answer. Put these on one page:

• The commercial objective, with the funnel maths that turns it into leads and customers.
• The break-even acquisition cost, and the planned cost per lead against it.
• The share-of-voice reading per market and what it implies.
• The total as a percentage of revenue, with the benchmark source named and its limits stated.
• A cut scenario: which tasks go first, and what that does to the lead target.
• Three or four measures you will report quarterly, and the point at which you will ask to re-forecast.

If the funnel numbers are weak, fix that first. A budget built on guessed conversion rates will not survive the first quarter. Start from the market, the competitors and the real conversion path, as any marketing strategy should, and only then put a cost on the plan.

Before the board meeting, run the cut scenario yourself: take 20% out of the plan, decide which tasks go, and recalculate the lead target. If you cannot say what the cut costs in customers, the budget is not ready to present.