Key Insights
Essential data points from our research
The U.S. Small Business Administration recommends spending 7 to 8 percent of gross revenue for marketing and advertising if you are doing less than $5 million a year in sales
The average small business (1-99 employees) spends approximately $8301 per month on marketing
B2C companies generally dedicate a higher percentage of revenue to marketing (around 13.7 percent) compared to B2B companies
Digital marketing commands approximately 57.1 percent of the total marketing budget for the average business
Small businesses allocate an average of $30000 to $40000 annually specifically for PPC advertising
63 percent of businesses have increased their digital marketing budgets just this past year
Print advertising still accounts for about 8 percent of small business marketing budgets despite the digital shift
Direct mail marketing costs range from $0.30 to $10.00 per piece depending on complexity
36 percent of small businesses engage in some form of event marketing or trade shows
61 percent of small businesses report that their biggest marketing challenge is lack of funding or budget
44 percent of small business owners don’t know how to measure their marketing ROI
The top reason for exceeding marketing budget is unexpected media cost inflation cited by 35 percent of marketers
91 percent of small businesses plan to increase or maintain their marketing spend in the coming year
AI-powered marketing tools are expected to capture 10 percent of the small business software budget by 2025
Short-form video investment is the top trend with 30 percent of marketers planning to invest more heavily next year
Digital Marketing Spend
- 1Digital marketing commands approximately 57.1 percent of the total marketing budget for the average business
- 2Small businesses allocate an average of $30000 to $40000 annually specifically for PPC advertising
- 363 percent of businesses have increased their digital marketing budgets just this past year
- 4Social media advertising usually accounts for 25 percent of the total digital marketing spend for small retailers
- 540 percent of small business owners say social media ads are their most expensive digital marketing line item
- 6The average Cost Per Click (CPC) in Google Ads across all industries is $2.69 impacting search budgets
- 7Small businesses spend between $2000 and $10000 on average to build a professional website
- 8Email marketing claims about 10 percent of the typical small business digital budget
- 9SEO services typically cost small businesses between $500 and $2000 per month
- 10Content marketing gets about 20 percent of the digital budget for B2B firms
- 1172 percent of total marketing budgets are expected to move to digital channels within five years
- 12Investment in mobile marketing analytics is expected to grow by 70 percent in budget allocation over three years
- 13Small businesses spend an average of $200 to $350 per day on Instagram ads if utilizing that channel actively
- 14Local SEO budgeting is a priority for 64 percent of small businesses with a physical location
- 15Businesses spending on marketing automation tools allocate around $2500 per month on average for software
- 16Video marketing budgets have increased by 25 percent year-over-year for small businesses
- 1731 percent of small business marketing money goes toward driving traffic to the website via paid channels
- 18Small businesses see an average return of $2 for every $1 spent on Google Ads
- 19Approximately 15 percent of digital budgets are wasted on poor targeting or bounce traffic
- 20Influencer marketing budgets have grown to approximately 7.5 percent of digital spend for e-commerce brands
Interpretation
Small businesses are treating digital like prime real estate, pouring more than half their marketing budgets into PPC, social, websites, SEO, content and analytics and getting roughly two dollars back for every dollar on Google Ads, yet with rising ad costs, hefty Instagram spends and about 15 percent of budgets leaking to poor targeting, the smartest play is to invest in sharper targeting and measurement to turn growth-oriented spending into reliable returns.
Future Trends & Growth
- 191 percent of small businesses plan to increase or maintain their marketing spend in the coming year
- 2AI-powered marketing tools are expected to capture 10 percent of the small business software budget by 2025
- 3Short-form video investment is the top trend with 30 percent of marketers planning to invest more heavily next year
- 4Programmatic advertising spend is projected to reach 82 percent of total digital display spend
- 556 percent of marketers plan to increase their budget for TikTok specifically
- 6Voice search optimization is entering the budget planning for 22 percent of small businesses
- 7Over 70 percent of small businesses are increasing investment in first-party data collection due to privacy changes
- 8Social commerce sales are expected to grow forcing 25 percent more budget allocation to shoppable posts
- 942 percent of businesses are planning to increase spending on virtual and augmented reality marketing
- 10Spending on sustainability-focused marketing messages is rising by 6 percent annually
- 11Podcast advertising spending is projected to exceed $2 billion requiring small business adoption
- 1260 percent of B2B marketers expect their influencer marketing budget to increase
- 1345 percent of small businesses plan to use chatbots and intend to budget for setup and maintenance
- 14Native advertising spend is projected to increase by 372 percent from 2020 to 2025
- 1566 percent of marketers expect their Google Ads budget to increase despite rising costs
- 16User-Generated Content (UGC) campaigns are being budgeted for by 40 percent more brands than last year
- 1753 percent of businesses plan to adopt more automation in their email marketing strategy
- 18LinkedIn advertising budget is expected to increase for 42 percent of B2B marketers
- 1933 percent of marketers plan to invest in metaverse-related marketing activities
- 20Conversion Rate Optimization (CRO) software spend is growing by 10 percent annually among SMBs
Interpretation
Small businesses are treating their marketing budgets like diversified survival kits, pouring money into AI-powered tools, short-form video, programmatic and Google ads, platform bets on TikTok and LinkedIn, first-party data and social commerce, AR/VR and metaverse experiments, podcasts, influencer and native ad programs, chatbots, voice search optimization, UGC, email automation and CRO, while nudging sustainability messaging, because with privacy tightening and costs rising, survival means turning attention into measurable conversions.
General Budget Allocation
- 1The U.S. Small Business Administration recommends spending 7 to 8 percent of gross revenue for marketing and advertising if you are doing less than $5 million a year in sales
- 2The average small business (1-99 employees) spends approximately $8301 per month on marketing
- 3B2C companies generally dedicate a higher percentage of revenue to marketing (around 13.7 percent) compared to B2B companies
- 4Total marketing budgets as a percentage of company revenue fell from 11 percent in 2020 to 6.4 percent in 2021 before stabilizing
- 5New companies (1 to 5 years old) should allocate 12 to 20 percent of their gross revenue to marketing to establish a customer base
- 647 percent of small business owners handle marketing efforts on their own rather than hiring staff or agencies
- 7On average B2B product companies allocate roughly 9.4 percent of their total revenue toward marketing expenses
- 8B2B service companies tend to allocate slightly more at 10 percent of revenue compared to product companies
- 9Roughly 50 percent of small businesses spend less than $10000 annually on marketing
- 10Companies with revenues over $500M allocate a lower percentage (around 9 percent) to marketing due to brand recognition compared to smaller entities
- 11Marketing budgets often comprise about 11.2 percent of the total company budget across all industries
- 12Approximately 20 percent of small businesses do not plan to use any digital marketing tools due to budget constraints
- 13Startups frequently spend between 20 and 30 percent of their budget on marketing in the first year
- 14One in five small businesses does not utilize any specific marketing budget and spends ad-hoc
- 15Marketing employee expenses typically account for 15 to 20 percent of the total marketing budget
- 16Only 22 percent of businesses feel their marketing budget is adequate for their goals
- 17Retaining an existing customer is 6 to 7 times cheaper than acquiring a new one influencing budget retention allocation
- 18Healthcare companies spend approximately 8 percent of their total budget on marketing
- 19Retail businesses often have one of the highest marketing spends at nearly 20 percent of revenue during peak seasons
- 20SaaS businesses often aim for a Customer Acquisition Cost (CAC) payback period of 12 months in their budgeting models
Interpretation
Think of small business marketing budgets as a high-stakes balancing act: the SBA recommends 7 to 8 percent for firms under $5 million, startups often burn 20 to 30 percent in year one while half of small businesses spend under $10,000 a year, B2C and retail typically demand a bigger slice than B2B, large companies spend a smaller percentage thanks to brand recognition, nearly half of owners DIY their marketing and one in five have no formal budget at all, only 22 percent feel adequately funded, and given that retaining a customer is six to seven times cheaper than acquiring one, cutting spend without a retention plan is penny-wise and pound-foolish.
ROI & Challenges
- 161 percent of small businesses report that their biggest marketing challenge is lack of funding or budget
- 244 percent of small business owners don’t know how to measure their marketing ROI
- 3The top reason for exceeding marketing budget is unexpected media cost inflation cited by 35 percent of marketers
- 4Customer Acquisition Cost (CAC) has increased by 60 percent for B2B and B2C brands over the last five years straining budgets
- 5Only 35 percent of marketers report that their budgets are rigorously allocated based on ROI performance
- 626 percent of small businesses claim they are unsure of which marketing channels drive the most revenue
- 7Waste in digital ad spend due to bot fraud is estimated to cost small businesses $12000 annually on average
- 847 percent of small business owners handle marketing alone leading to time-cost inefficiency
- 950 percent of small businesses admit to having no primary fallback plan if their budget is cut
- 1014 percent of businesses fail due to poor marketing execution and budget mismanagement
- 11A lack of clear strategy is the reason 18 percent of businesses cite for wasted marketing budget
- 12Tracking marketing performance is a challenge for 49 percent of small businesses impacting budget justification
- 13Rising labor costs have forced 30 percent of agencies to increase their fees hitting small business budgets
- 1429 percent of small businesses feel their biggest challenge is retaining customers with their current budget
- 1510 percent of marketing budgets are often lost to inefficiencies in content production workflows
- 16Inconsistent branding across channels costs businesses an estimated 20 percent in potential revenue
- 1742 percent of mobile ads are accidental clicks which distorts budget effectiveness data
- 18Businesses that document their strategy are 313 percent more likely to report success than those who dont
- 1920 percent of small businesses say they cannot afford a comprehensive CRM to manage marketing data
- 20Only 48 percent of digital marketing is viewed by actual humans affecting ROI calculations
Interpretation
Imagine your marketing budget as a leaky rowboat: 61 percent of small businesses are short on funds, 44 percent cannot measure ROI, CAC has surged 60 percent while unexpected media inflation (35 percent) and higher agency fees (30 percent) bite into spend, an average of $12,000 is siphoned off by bot fraud and 42 percent of mobile ads are accidental clicks with nearly half of digital impressions unseen by humans, only 35 percent rigorously allocate by ROI and just 20 percent can even afford a CRM, 47 percent of owners shoulder marketing alone with 50 percent lacking a fallback, inefficiencies and inconsistent branding quietly eat into revenue and 14 percent of businesses fail because of it, which is exactly why the firms that document strategy are 313 percent more likely to succeed.
Traditional & Channel Mix
- 1Print advertising still accounts for about 8 percent of small business marketing budgets despite the digital shift
- 2Direct mail marketing costs range from $0.30 to $10.00 per piece depending on complexity
- 336 percent of small businesses engage in some form of event marketing or trade shows
- 4Trade show displays can consume up to 20 percent of a B2B small business's total annual marketing budget
- 5Approximately 30 percent of small businesses rely on outsourcing content creation to freelancers
- 654 percent of small businesses use email marketing making it the most popular owned channel
- 7Facebook remains the primary social media channel for traffic with 86 percent of marketers using it
- 8Promotional products receive about 6 percent of the marketing budget for local service businesses
- 9LinkedIn is the paid channel of choice for 80 percent of B2B small businesses
- 10Radio advertising costs small businesses anywhere from $200 to $5000 per week depending on market size
- 1132 percent of small businesses invest in referral marketing programs or software
- 1240 percent of local businesses still invest in local newspaper or community bulletin advertising
- 13Telemarketing consumes roughly 5 percent of the budget for high-ticket service sales businesses
- 1470 percent of small businesses invest in some form of content marketing whether internal or external
- 15SMS marketing adoption has reached 39 percent among small businesses for customer retention
- 16Outdoor advertising (billboards) costs small businesses an average of $750 to $1500 per month in rural areas
- 17Podcast sponsorship is a new channel for 10 percent of small businesses costing $18 to $50 CPM
- 18Affiliate marketing eats up about 5-10 percent of the marketing budget for e-commerce SMBs
- 19Hybrid events have led to a 10 percent increase in event technology spending for small businesses
- 20Agency fees typically take up 15-25 percent of the total marketing spend if functions are outsourced
Interpretation
Small businesses are juggling inboxes, social feeds and freelancers while still slipping envelopes, radio spots and trade show booths into the mix, proving that smart marketers must balance low-cost digital hits with legacy channels and outsourced fees that stubbornly eat sizeable chunks of the budget.
