Tips For Planning Your Marketing Budget For 2026

A business’s marketing budget is the engine that drives growth. As marketing platforms continue to evolve, knowing where and how to spend has never been more critical.

72% of media budgets are now allocated to digital channels, because we live in a digital world. The question of “should I invest in digital?” is no longer on the table. Businesses know that digital is where they should invest, but they need to know how to invest there.

“The last thing you should do is chase tactics,” says Shannon Allen, Chief Revenue Officer of Federated Digital Solutions. “What you want to do instead is build a cohesive strategy.”

Thriving businesses take a balanced approach to their marketing budget, combining brand awareness with display ads, video/OTT, Facebook, and YouTube advertising with lead generation through paid search (SEM), and layering in social engagement with social media management and content creation.

The latest CMO Survey by the Fuqua School of Business states that marketing budgets now account for about 9.4% of a company’s revenue — that number is up from 7.7% in previous years. 

But creating your budget isn’t just about shelling out more money. It’s about knowing where to put that money and spending it smartly, and in 2026, that means understanding how AI is changing pretty much every aspect of digital marketing, from how ads are created to how search behavior is shifting in a major way. 

The Dominance of Digital Marketing – Understanding the Shift

The word digital is a wide umbrella that houses many different strategies under it. 

“You can’t just throw money at Facebook or Google ads and wait for the magic to happen,” Allen says. “Digital is so much more than just one channel. It’s an ecosystem that requires a cross-channel strategy.”

The most significant channel in most marketing budgets is paid search, commanding approximately 39% of digital spending. That makes a lot of sense, given that people search for things like “24-hour emergency HVAC services near me” with intent. But even though paid search is the beginning of the process, it’s far from the end of it. 

The onset of Google’s AI Overviews is changing how search results appear, too. In many cases, Overviews answers a user’s question right at the top of the page — without them ever having to click on anything and before traditional ads even show up. This means that businesses must consider their paid search strategy as well as how to alter their content so it appears in the responses of AI Overviews. 

Streaming services are quickly over-taking traditional TV viewership, meaning change is coming for video and OTT, too. By 2026, digital video ad spending will reach $351 billion in the United States, with platforms like Hulu and Peacock leading the way.

The shift goes beyond transforming strategies. Consumer behavior has fundamentally changed. People are no longer seeing a product on a shelf and snatching it up. Instead, they’re researching a product across multiple channels, reading reviews, watching videos, and taking days or even weeks to make a purchase decision. They’re also increasing their use of AI tools like ChatGPT, Claude, and Google’s AI search feature to get recommendations and compare options. 

Your marketing budget should meet customers at every one of these moments in their journey.

Investing Your Marketing Budget Wisely

A marketing budget is a living, breathing plan. It requires careful planning, for sure, but it also requires you to check in on its progress and leave room to be flexible.

Prioritizing Your Brand

Over and over again, companies will pour the majority of their budget into paid search and conversion-focused advertising. Why? Because the ROI is measurable right away.

Someone searches, they click, they convert, and you can track that revenue. Satisfying, right? Sure, but there’s not much brand-building to be done there. 

Fortunately, you don’t have to choose between brand and performance. There are plenty of ways that the two can work together to create the most strategic marketing budget possible.

Display ads and video/OTT/CTV foster brand recognition through visibility, strengthening your paid search, and making your ads more efficient in the long run. When someone searches for a solution and comes across your brand during their research, they’re more likely to recognize it from an ad (whether it be OTT or display) that they’ve already seen from your business. That recognition fosters trust and familiarity, which impacts your performance metrics in the form of improved click-through rates, decreased cost-per-click, and higher conversion rates. 

We’ve officially reached the tipping point of people watching more streaming TV than they are traditional cable. This shift presents an opportunity to deliver highly personalized ads through OTT/CTV for companies looking to reach segmented audiences.

Through these ads, companies can tell their stories in immersive, emotional ways that connect with customers on a deeper level, since these ads are unskippable and streaming audiences are typically more engaged than traditional TV audiences are. 

“If companies want to be successful, they need to build campaigns that meet people where they are and follows them along the consumer journey,” Allen says. “Whether it’s a display ad that someone sees while browsing the web or a video ad that catches their attention while they’re scrolling social media, that’s the difference between a marketing budget that gets you by and one that brings in real ROI.”

AI is helping to make personalization even more relevant and powerful. With their complex algorithms, machines can analyze consumer behavior and automatically adjust how the ads they’re receiving are targeted so the performance is maximized. That’s to say that your marketing dollars can work harder without as much manual work from your team. 

Consistency is Key

Consistency is what separates a forgettable brand from a recognizable one. It’s not posting and publishing every day for the sake of doing it; it’s about showing up for your customers with content that solves their problems.

The goal of publishing and creating content for your consumers is to establish your business’s online presence and authority. To solve the problems they’re facing, you need to show up when they’re looking for you and ensure that your messaging is consistent across all platforms. 

Consistency matters for AI, too. When people search for solutions using AI chatbots, these tools pull from authoritative content from around the internet. Importantly, consistency is a major factor in how AI tools judge your credibility. You’re more likely to be recommended by AI when your business has an online presence with consistent, high-quality content that’s optimized for SEO and AI search.

However, consistency doesn’t mean the same message on every platform. It means that your messaging should be recognizable as your brand across every platform, with all platforms working together to convey unified information. Pinpoint your message, adapt it to the appropriate channel, and keep your language consistent (with the same tone, phrasing, and taglines across the board).

Being consistent is a matter of adopting a balanced way of thinking. Invest across the entire customer journey, from awareness to re-purchase, because each stage feeds into the next and creates a compound effect that performance marketing can’t accomplish on its own. 

The FDS Budget Planning Framework for 2026

We’ve come up with a three-layer framework that will help to balance your brand, generate leads, and provide consistent engagement for your business. Keep in mind that this is a flexible template and it can be adapted to your business’s specific needs; no two companies’ frameworks are going to be exactly alike. 

We recommend focusing on fundamentals over the newest and flashiest trends flying around in the marketing sphere, along with setting your sights on a few key tactics rather than 20 different things all at once.

Achieve this by identifying your top three marketing priorities and executing them well, and then following the consumer journey.

Layer 1: The Foundation – Brand Awareness

This layer is where you’ll find display ads, video/OTT, Facebook ads, and YouTube campaigns. This layer is how you introduce yourself to your audience and really allow them to get to know you – so you can get to know them! Establishing brand awareness and trust with your customers is how you can ensure that your business will come to the forefront of their minds as they’re searching for relevant solutions. 

This layer might not drive fast and immediate conversions, but that’s okay. That’s not what it’s here to do.

CTV and OTT can shine here, as both are growing at an astronomical rate. CTV ad spending is projected to reach $33.35 billion this year, in 2025, and will surpass traditional TV advertising by 2028. On top of that, Wyzowl’s State of Video Marketing report shows that 91% of businesses use video as a marketing tool, and 89% of marketers report a good ROI from it.

“What’s powerful about streaming video is that we’re reaching people at a very critical point in the consumer journey,” Shannon explains. “They’re sitting in their living room, they’re engaged, and the targeting capabilities mean we can deliver the right message to the right person better than we’ve ever been able to do with traditional TV or cable.”

More people than ever are now streaming video through services like Hulu, Peacock, and YouTube. With CTV and OTT, we can deliver highly personalized, unskippable ads on these platforms at a cost-effective rate. 

Just as much as video, display ads are critical in this layer. According to Wordstream, consumers are 155% more likely to search for your brand after seeing a display ad from you. Display advertising offers amazing targeting capabilities, allowing you to reach customers in a crucial place in the consumer journey, following along with them and delivering relevant ads within 45 minutes of them making a search. 

It’s not about choosing between display or video – it’s not an either/or situation. It’s about using both together to make the best impact. 

Layer 2: The Performance – Lead Generation 

Here, you’ll find paid search (SEM), which helps you capture the demand that you already have. SEM makes sure that your business can be found when consumers are searching for the products and services that you offer.

There’s so much value to be had in SEM. About 39% of digital spending goes towards it for good reason. Even though AI is swiftly changing the search landscape, paid search continues to outperform organic search in many instances. Because AI is handling so many organic searches, SEM can shine for high-intent customers. 

If you’re a B2B company with a six-month sales cycle, you might not place as much budget in this layer because brand awareness matters more in complex purchases. However, if you’re a B2C business, you might place more weight on this layer because capturing instant, immediate intent is important.

You also want to make sure that your business is able to be found when people are searching for it. Ensuring your business listings are accurate across the web builds trust with consumers and makes it easy for them to call your store or find your brick-and-mortar location to shop.

Layer 3: The Engagement – Social Connection 

You’ll find social media management, content creation, blogs, email marketing, and community building in this layer. Here, we focus on creating lasting relationships and nurturing the existing relationships with established customers. The value here goes beyond single transactions and isn’t tied directly to a sale. It builds over time. 

According to Hubspot, companies that publish blogs see about 67% more leads per month over companies that don’t. You absolutely need high-quality, informative content on your website so that you rank in AI search. When a consumer asks an AI tool for recommendations or information, that AI tool is going to pull from legitimate and authoritative sources across the internet. You can become one of those sources by investing in strong, SEO-optimized content where you demonstrate your expertise and knowledge in a blog. 

At its heart, social media is about being social and cultivating an audience who trusts you and looks to you as the expert in your industry. Audiences on social media have an expectation to be a part of your brand’s story. That means it’s more critical than ever to be present on social media and to engage with your audience.

Integrating The Layers

“The key here is integrated digital strategy,” Shannon emphasizes. “You have to be very careful about siloed channel approaches. We follow the consumer journey on whatever device, whatever platform, wherever they are. On each platform, we deliver the desired message with the same frequency and consistency.” 

For your business, using the framework might mean choosing fewer channels with a focus on consistency. Not every business will need every layer immediately – many successful clients at FDS focus on just one or two based on their budget and personal business goals. 

What’s most important is executing your chosen strategies well rather than spreading your budget too thinly. 

When planning your 2026 budget, ask yourself these questions:

1. What are your top three marketing priorities, in order of importance?
2. What are your top three priorities in order of profitability?
3. Do they match? If not, why?

Focus on past performance and use that as your blueprint. Don’t chase every new, shiny tactic. Stick to the proven fundamentals: CTV, display, SEM, and quality content, then build an integrated strategy that follows your customers throughout their journey.

Planning Your Marketing Budget For 2026

Putting together your marketing budget for the year can feel overwhelming. There are always new platforms to become aware of, shifts in the algorithms to keep up with, and the pressure to prove yourself with ROI.

With such a heavy weight on your shoulders, it’s tempting to either freeze or toss money at whatever worked last year. We’re here to encourage you not to fall into either of those traps!

The biggest shift of 2026 comes with the onset of AI and its integration across all channels. It’s important to understand how to make AI work for you and how to massage your content so it fits within the new landscape that AI is creating. 

Remember, the businesses that will thrive in 2026 aren’t the ones with the most money; they’re the ones who know how to spend their money wisely. Start looking at your marketing budget as an investment rather than an expense, and you’re on the right track to visibility, credibility, and overall growth.

For help on crafting your budget, get in touch with our experts at Federated Digital Solutions today.

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