Marketing Budget Allocation Guide: How Much to Spend on Each Channel
October 15, 2026 - 10 minutes read
Budget season is here, and it’s time to take a good, hard look at your plan for deciding how to split your budget across your marketing channels.
If you’re not sure where to start, the current benchmark sits at 7.8% of revenue, according to Gartner’s 2026 CMO Spend Survey. Digital marketing now accounts for more than two-thirds of that total spend.
How Much Of My Revenue Should Go To Marketing?
Knowing marketing matters is one thing. But knowing how much you should be spending on it is another.
I find it helpful to think about your marketing budget as a slice of your revenue instead of an arbitrary fixed number. Let’s look at an example. If your company makes $1 million in revenue in a year, and you follow the 7.8% benchmark, that means your marketing budget should sit around $78,000.
If your business is trying to maintain rather than grow, you may decide to do what many CMOs do: run at 6% of revenue (or less).
Three things that can move your business away from that average:
- You’re new or scaling: Your brand recognition isn’t doing the heavy lifting for you yet. You need to put the dollars behind getting noticed.
- You’re in a competitive market: If you’re one of ten similar businesses in the same zip code, everyone has to spend more just to be seen.
- Thin margins: You have less room to overspend.
Remember, your marketing budget is an investment that’s tied to a tangible outcome. It shouldn’t be the first place you look to make cuts.
Where Is My Marketing Budget Going?
When I review a client’s budget and see them putting only a small fraction into digital marketing, I know they’re not keeping up with where their customers are spending their time.
Paid media alone (search, social media, and display ads combined) makes up 31.4% of total marketing budgets, making it the largest category.
How Should I Split My Budget Across Channels?
We often think of a budget like a pie. Everyone’s working with the same basic ingredients, but no two slices are cut the same way. The channels below are your ingredients. How much goes into each depends entirely on your business.
Search
Search is when your ad shows up after someone specifically searches for you. For example, “piano lessons near me.” In 2025, search pulled in $114.2 billion, 38.8% of total digital ad revenue.
What I’ll always love about search is that it reaches people at the exact moment they’re ready to buy. It’s especially helpful for businesses with an “urgent need” search pattern, like home repair businesses or legal services.
Social
I can’t overstate the value of social media. It recently beat out search as the biggest growth category, with $117.7 billion and a 40% share of digital ad revenue. It increased 32.6% year over year, the biggest leap any major format has seen.
Creator content is the major driver of this growth. More social platforms are adding shopping features directly in their feeds, too. That means people no longer click off the app or website to make a purchase. They can stay right on the platform, which makes a huge difference.
Social is the best place to reach people who have never heard of you before. Rather than catching someone in the middle of their search, social builds recognition in a familiar, conversation-based environment.
Display
While display is the slowest-growing channel, up 9.8% year over year, it still sits at $81.6 billion with a 27.7% share of digital ad revenue.
Display has a very straightforward job. If someone visited your site, checked out what you have to offer, but didn’t convert, a display ad’s job is to retarget them. Display helps you stay visible during the consideration phase of the consumer journey, keeping you top of mind for when the customer is ready to buy.
Digital Video (Including CTV/Streaming)
Digital video includes CTV, social video, and short-form, and it hit $78 billion and sits at 25.4% of digital ad revenue. After social, it’s the fastest-growing format, and it’s a channel worth taking seriously.
Viewership is the strongest story to tell when it comes to digital video. In July 2026, streaming captured 49% of all TV viewing, which is the largest share it has ever recorded. Cable sat at just 18.7% and broadcast at 19.5%, according to Nielsen.
Streaming is where people watch their favorite shows. It’s where everyone has migrated to — and age isn’t a factor. My mother is in her 70s and is an avid viewer of YouTube TV. The people you used to reach on cable are now watching Hulu, Prime Video, Peacock, or their other favorite streaming service. They’re watching the same content, but on a different platform.
While email is typically the smallest item in most companies’ budgets, its return is anything but small.
Businesses generate $36-$42 for every dollar spent on email — the highest return of any channel on this list — according to Axis Intelligence.
Email campaigns are an often neglected channel. I challenge you not to cut email first when your budget gets tight, because it’s one of the highest-returning strategies in your budget. It’s about keeping your existing customers loyal, communicating, and staying in front of them with content, offers, and updates that keep them coming back.
How Should This Change As My Business Grows?
As your business grows, your budget should grow with it. More importantly, it should shift to match your business goals:
- If your goal is helping new people learn that your business exists, direct more of your budget into CTV and streaming, social, and display.
- If your goal is to turn interest into active leads or sales immediately, direct more of your budget toward search and retargeting.
- If your goal is to keep your current customers, don’t take money away from email just because it’s the smallest line item in your budget.
The most valuable piece of advice I can give is to revisit your numbers quarterly, not annually. If a channel stops working for you in March, there’s no reason to keep putting the same amount of money into it through December.
What Mistakes Upend A Marketing Budget?
- Chasing new trends instead of matching your spend to your business’s needs and goals.
- To avoid this, tie every channel to a specific goal before you put money into it.
- Cutting your marketing budget the second sales dip a little. Pulling back on marketing when sales dip only makes things worse.
- Instead, use it as a signal to review which channel is underperforming. Don’t overreact and pull back everywhere.
- Set it and forget it.
- A quarterly check-in catches this before it costs you.
- Writing off search and content because of AI.
- Yes, AI is reshaping how people find businesses, but you can use this to reframe your spend. Think of it as investing in AI visibility instead of worrying about where you rank in traditional search results.
Every business will have a different percentage of marketing budget relative to their revenue. The quickest way to get this number wrong is to guess at it instead of looking at your revenue, your type of business, and your goals.
This is the conversation I have with every new client before we ever talk about a product or service. Reach out today so we can talk about your revenue, your goals, and how to build a budget that works for your business.