Most small business marketing budgets are the sum of what got approved rather than a decision. Then the money goes to whatever is easiest to buy, which is usually ads, and the parts that need money but not invoices, creative production and follow-up capacity, get nothing.
Here is how I set a budget and split it, with the numbers I actually use.
Quick Info
Established business
5% to 10% of revenue
Buying growth
10% to 20% of revenue
Acquisition share
50% to 60%
Retention share
20% to 25%, and usually underfunded
Production share
15% to 20%, almost always forgotten
Fund before anything else
Follow-up capacity
How much in total
As a share of revenue, adjusted by what you are trying to do.
—Established business defending its position: 5% to 8% of revenue.
—Established business growing steadily: 8% to 12%.
—Deliberately buying growth: 12% to 20%, funded by a plan rather than by optimism.
—New business with no revenue to base it on: a fixed monthly figure you can sustain for twelve months. Sustainability matters more than the amount.
—Professional services with high margins can spend more; low-margin resale businesses much less.
Check it against unit economics as well as against revenue. If a customer is worth £1,200 and you can spend 20% acquiring them, your acquisition budget is a function of how many customers you want, which is a more useful calculation than a percentage.
The split I use
Three buckets, and the third is the one nobody funds.
01Acquisition, 50% to 60%. Paid media, content production for acquisition, local search, outreach.
02Retention and existing customers, 20% to 25%. Email, repeat purchase campaigns, referral and review programmes.
03Production and infrastructure, 15% to 20%. Creative, photography, tools, website work, measurement.
Most budgets I audit are 90% acquisition, 5% tools and nothing else. That produces rising acquisition costs and a business that spends everything finding new customers because it has no mechanism for keeping the ones it has.
A budget that is entirely acquisition is a budget that will keep needing to be bigger.
Inside acquisition
Roughly, for a small business with one primary channel and email alongside.
—Primary channel: 60% to 70% of the acquisition budget. One channel, funded enough to work.
—Testing a second channel: 15% to 20%, only once the first is producing reliably.
—Content or creative for acquisition: 15% to 20%, and this must be a line item rather than an afterthought.
—Not: five channels at 20% each, which is the most common and least effective allocation.
The minimum viable spend per channel matters. £20 a day across three platforms is three campaigns that cannot learn; £60 a day on one is a campaign that can.
Inside retention
The cheapest return in almost every business, and the least resourced.
—Email platform and the time to write. Small money, large return.
—Automated workflows: welcome, follow-up, post-purchase, review requests. Setup time rather than spend.
—Referral incentives, if they fit your market.
—Customer research: talking to your existing customers is the cheapest marketing research available and it costs almost nothing.
—A modest budget for existing-customer advertising, which is usually the highest-return campaign in an ad account.
Inside production
This is the bucket that gets raided first and that quietly determines whether the acquisition spend works.
—Creative production: three to five new concepts a month if you run paid. Without it, performance plateaus within a quarter.
—Photography: one session a year, £400 to £1,500, and it removes stock imagery from your marketing for three years.
—Website work: conversion improvements, speed, page structure.
—Tools and measurement.
—Copywriting, if you are not writing it yourself. This is the line that most improves everything downstream.
When a paid account is declining and nothing has changed, the cause is almost always that nobody funded new creative. It is a production problem being diagnosed as a media problem.
What to fund before any of it
Two things, and neither looks like marketing spend.
01Follow-up capacity. Somebody available to respond to enquiries within minutes rather than days. Leads contacted within five minutes convert several times better, so every hour of delay is money spent and wasted.
02Conversion basics on your site: clarity, speed, a short form, a visible price. Traffic sent to a page that loses people is the most expensive line item in any budget.
I would divert budget from advertising to either of these without hesitation. They multiply everything else.
How to phase it over a year
01Quarter one: conversion fixes, measurement setup, and one channel funded properly. Deliberately narrow.
02Quarter two: creative production established as a rhythm; retention automations built.
03Quarter three: test a second channel with 15% to 20% of the acquisition budget.
04Quarter four: rebalance based on blended cost per acquisition, and decide next year's total from what you learned rather than from last year's number.
The strategy piece covers the decisions this budget serves.
When to change the allocation
—Blended cost per acquisition rising: shift towards retention and conversion rather than adding acquisition budget.
—One channel clearly working: increase it in 20% to 30% steps rather than doubling it.
—Creative fatigue showing as rising costs: move money from media to production.
—Enquiries not being followed up: stop increasing spend entirely until that is fixed.
—Seasonality: budget for the higher auction costs in your peak rather than being surprised by them.
The number that governs it all
Blended cost per acquisition: total marketing spend divided by total new customers, monthly, across all channels. It ignores attribution arguments and it is the number the business actually runs on.
Watch it alongside total new customers. Both rising with blended cost stable means you are scaling well. Blended cost rising means you have reached the edge of efficient demand, and more budget will buy worse customers.
Frequently Asked Questions
What percentage of revenue should go to marketing?
5% to 8% to defend a position, 8% to 12% to grow steadily, 12% to 20% if you are deliberately buying growth.
How should I split my marketing budget?
Roughly 50% to 60% acquisition, 20% to 25% retention and existing customers, 15% to 20% production and infrastructure.
What is the most commonly underfunded area?
Creative production, followed by existing-customer marketing. Both are why acquisition costs keep rising in otherwise well-run accounts.
Should I split budget across several channels?
No. One channel funded above the level where it can work beats three funded below it. Add a second only once the first is reliable.
What should I fund before advertising?
Follow-up capacity and basic conversion fixes on your site. Both multiply the return on everything else you spend.
How do I know if my budget is working?
Blended cost per acquisition and total new customers, monthly. Stable blended cost with rising customers means the budget is scaling properly.
Before You Go
Set the total from revenue and unit economics, split it three ways rather than putting it all into acquisition, and fund creative production and follow-up before you increase media spend.
Then judge the whole thing on blended cost per acquisition. Measuring it without an analytics team is the next piece.
Three buckets. Fund production and follow-up first.
WRITTEN BY TARIQ SALLAM
Marketing Consultant. Entrepreneur. Content Creator.
I'm a marketing consultant, entrepreneur and content creator. I help businesses grow through practical marketing, websites, SEO, content and AI.
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