How Much Should My Business Spend on Marketing?

Are you spending enough on marketing to stay competitive and grow? How much are my competitors spending on their marketing?

If you’re like most business decision-makers, you’ve probably asked yourself these questions more than once. How much should I spend on marketing?

You’re not alone.

I’ve had many conversations with countless business leaders who just assume they are underspending on their marketing. Most want to be doing more with their marketing, and some feel like they’re just “checking the box”, hoping for results.

Here’s the good news: By the time you finish this article, you’ll be armed with the principles I use to help business leaders determine how much they should spend on marketing, where to focus that investment, and how to make sure your marketing dollars actually work for you. I’ll also share insights from the businesses I’ve worked with personally right here in Lancaster County, PA. The goal is to help you maximize your marketing budget without overspending.

Let’s dive in.

1. Are You Spending Enough? How to Evaluate Your Current Marketing Budget

First, let’s address the elephant in the room: ShadBoost is a content marketing company. So it’s good for business if I say you should be spending more, right? Well, no. Sure, it might be good in the short term, but if you’re spending more and not seeing growth, that’s a problem. If you’re spending too little and expecting big results, that’s also a problem. My goal isn’t to tell you to spend more—it’s to help you spend wisely, maximize your impact, and ultimately grow your business.

Here’s another elephant in the room that’s a pet peeve of mine. Why do marketing companies always use the word “investment” instead of “spend”? The generous answer is because marketing can be an investment. But more than likely, they know it makes you feel better about parting with your hard-earned dollars if you view it as “an investment.”

The truth is, not every marketing dollar spent is an investment. A marketing expert at the turn of the 20th century by the name of John Wanamaker once said,

“I am convinced that about one-half the money I spend for advertising is wasted, but I have never been able to decide which half.”

Many today still echo the sentiment.

The best way I can explain it, marketing is about testing the right means for delivering your message to your target customer. Some are going to do the job better than others, and some are not going to do the job at all. You either need to try it to find out, or lean into the advice of someone with more experience… but even then, when something works, everyone starts doing it. When everyone starts doing it, it stops working. So constant experimentation, adjustment, and improvement are needed to keep your marketing from getting outdated. The goal is to see what works and lean into it. Yes, marketing is an investment, but not every dollar will have a return on that investment.

So, let’s dig into what smart marketing spend looks like, how to know if you’re spending enough, and where to focus your efforts to energize your brand and stop wasting money on things that don’t work.

Are you spending enough to achieve the results you want?

This might shock you, but industry benchmarks suggest that most companies should spend 5-10% of their annual revenue on marketing. But this isn’t a hard-and-fast rule. High-growth companies often spend more aggressively, sometimes as much as 12-15%, to expand their market presence and build momentum.

Here are 3 Signs You Might Need to be Spending More:

- Your sales are plateauing, or (worse), declining.

- You’re losing market share to competitors.

- You’re struggling to attract new customers, even though you’re doing “all the right things.”

On the flip side…

Here are 3 Signs When It’s OK to Maintain or Reduce Spending:

1. Your reputation and word-of-mouth referrals are driving consistent,
  organic growth.
2. You’re at capacity and can’t take on more work without scaling your
  operations.
3. You cut what’s not working and move that spend to what is working.

2. Why you shouldn’t cut marketing spending in an economic downturn.

When the economy tanks, that’s the time to spend more and not less. When things are good, it’s easy to see the wisdom in that. But when the leads dry up, and the future looks uncertain, it can be hard to resist the urge to cut back for short-term savings. That’s why so many companies cut advertising when they should be advertising the most.

But when most businesses cut spending, that’s good news for you, because if you maintain or increase your marketing when your competitors stop advertising, your voice will be the one customers are hearing.

Here’s what to do when the economy slows down:

Cut wasteful spending and focus on what is working.
I once heard someone suggest you should call your credit card company and get new cards issued. Then you can review those countless subscriptions one by one as they reach out for a new card number and ask yourself, “do I really need this?” If not, cut it.

First, create a plan for how to position your company when the market changes.
Most businesses won’t have the luxury of business as usual. It might mean changing your product offering, changing your pricing structure, or going after a different segment of the market. Take some time and make a plan. That way, you are 2 steps ahead of the competition if a recession comes.

Take heart and diversify.
A friend of mine who owns a construction business has talked many times about how when one segment of the market is in decline (say residential projects), there has always been an uptick in another segment (ie: Agriculture, industrial, etc…).

Bonus Tip: Keep a journal of every way you find to save money and review it when times are good again. This will help you stay grounded and might remind you of ways to save on operational costs even when the business is doing well to help you get further ahead.

3. Balancing Brand Building vs. Lead Generation

Here’s where many businesses get stuck: Should we focus on building our brand or generating leads?

The answer? Both.

Brand Building: This is the long game. It’s about establishing trust, authority, and recognition. Strong brands don’t have to work as hard to win new business because customers already know and trust them.

Lead Generation: This is more immediate and short-term. It’s about capturing interest and converting prospects into customers… fast. Think PPC ads (pay-per-click), promotions, and direct outreach.

Why does a balanced approach works best? If all you do is chase leads without building a brand, you’ll burn through your budget and get diminishing returns. But if you build a solid brand while strategically generating leads, you’ll energize your business and create sustainable growth.

What is the secret to building a strong brand? Your brand is more than just your logo, fonts, or colors. The brand is what people think about you when they see your product, service, or other marketing materials. You can shape how they view you by taking a strategic look at your process, company image, messaging, website, etc… Ask yourself these questions:

1. Is my messaging and company image consistent across all touchpoints?
2. Does the messaging and visuals reflect what my business is today? Or has the business changed at a faster rate than the branding?
3. Are we truly distinct, or just sounding like everyone else?

If the answer is “no” to any of these key questions, consider ways to strengthen your brand in the coming year.

Sometimes a company name becomes outdated. One of our clients started as a metal roofing supplier. But in the 75 years they’ve been in business, they’ve branched out to lumber, hardware, and general building supplies. They kept having customers show up to pickup their roofing panels and say “I didn’t know you had ______”. Since their name was A.B. Martin Roofing Supply, it makes sense why the customers assumed they would need to go elsewhere for everything except their roof.

So something needed to change.

We helped them through the process of changing the name, updating the branding, and spreading the word to their customers.

4. Why New Companies, Products, and Rebrands Require Higher Spend

Let’s say you’re launching a new company, a new product, or undergoing a rebrand. You’ll need to invest more heavily upfront.

Why?

Because building awareness takes time and money. No one’s going to buy what they don’t know exists. Even if you’re an established business, introducing a new product means re-educating your audience.

Think of it this way:

- A new business has to make a strong first impression.

- A rebrand has to shift existing perceptions.

- A new product from an established company needs extra attention
  to cut through the noise.

If growth is the goal, don’t skimp on getting the word out.

Building a website is not enough.

You have a beautiful website for your new business, product, or service. You hit publish and then sit back and wait for the phone to ring. But it doesn’t. Why? Because that’s like building a fancy office on a backroad and hoping the 5 people who drive by everyday somehow turn into 100’s of paying customers.
It doesn’t work that way. Everyone wants to be on the first page of Google, but only a few ever make it. Search Engine Optimization (SEO), paid ads (digitally/print ads), and social media marketing are the tools that drive traffic to your new website. So make sure your website budget includes the promotion of the new site.

5. Creative Ideas to Maximize Your Marketing Dollars

Want to stretch your marketing budget without sacrificing results? Here are a few proven strategies:

1. Leverage User-Generated Content: Encourage happy customers to leave reviews, share testimonials, and showcase their experience with your product or service. Sharing their photos or videos increases engagement and helps more people see what you can do.

2. Host Events or Workshops: Create opportunities for face-to-face engagement that build trust and credibility. This is a great way to give back to the community and establish your authority in your industry.

3. Focus on Content Marketing: Develop blogs, videos, and social media content that position you as a trusted resource in your industry. Give away value and watch your audience grow.

6. Why Lancaster County Businesses Spend Less on Marketing

Here’s an interesting insight: many of the businesses in Lancaster County, PA that I reached out to spend less on marketing than what the experts recommend.

In fact, when I surveyed a number of construction, retail, and manufacturing companies in the area, I found that most allocated a smaller percentage of their revenue to marketing compared to national benchmarks.

50% of the companies surveyed spent less than 0.5% of their gross sales on marketing. And only 10% were spending more than 2% of their gross sales on marketing.

Why? Because Lancaster County businesses often rely on strong reputations, word-of-mouth referrals, and long-standing relationships to grow.

7. Why a Good Reputation Saves You Marketing Dollars

A strong reputation doesn’t just bring in business, it saves you money.

Why? Because people trust what others say about you more than what you say about yourself. Businesses with solid reputations generate more referrals, need less advertising, and close deals faster.

Case in Point: We’ve seen Lancaster County businesses thrive on reputation-driven growth. But reputation isn’t something you can “buy”. It’s something you build over time by consistently delivering value.

8. The Power of Relationships in Effective Marketing

At the end of the day, marketing is about relationships.

Relationship Marketing Builds Loyalty: Your best customers are the ones who already know, like, and trust you.

Networking and Community Involvement: Engaging with local chambers of commerce and industry groups strengthens ties and builds connections with fellow business leaders.

The bottom line? Strong relationships don’t just generate sales—they create advocates who promote your business without costing you a dime.

9. Where Construction, Manufacturing, and Retail Businesses Should Invest Marketing Dollars

Each industry has its own marketing sweet spots. From my experience, here is where to focus:

Construction:

Progress photography and video (timelapses are extremely popular).
High-quality project photography and video for your website.
Case studies and testimonials that build trust.
Social media marketing to build a following.
Google Ads and SEO to capture local search traffic.

Manufacturing:

Trade shows, industry publications, and LinkedIn marketing.
Content marketing to showcase expertise and innovation.
Open houses and training events.

Retail:

Social media engagement and local SEO.
Loyalty programs and in-store promotions to drive repeat business.

10. If Budget Isn’t the Issue, Why Are You Losing Market Share?

If you’re spending enough on marketing but still losing ground, it’s time to ask a different question:

Are You Letting Your Marketing Team Do Their Job? Micromanaging can stifle creativity and slow progress. I’m not saying you shouldn’t set boundaries. But nothing kills budding creative genius like “I’m forwarding this to the board for changes and approvals.” Remember what I said about marketing being inherently experimental? Embrace failure. If the goal is to avoid a flop, key decision makers and even your marketing team are going to “play it safe” so that they can pass the buck when a marketing piece flops. No risk = no reward.

Has the Market Changed? Customer preferences evolve, and competitors adapt. Are you keeping up, or are you losing ground?

Are New Competitors Outworking You? If your competitors are hungrier and more aggressive, they might be capturing your market share. Resist the temptation to rest on past success. Excellence is an ever-rising standard that keeps you on your toes to stay on top.

11. How to Future-Proof Your Marketing Budget

The marketing landscape is always changing. Here’s how to stay ahead:

Invest in Digital Transformation: SEO, social media content marketing, and automation will keep you relevant and competitive.

Build Marketing Funnels: Guide potential customers through the buyer’s journey, from awareness to conversion (or even advocacy). For a great explanation of the different types of marketing funnels and which ones you should build first, check out this video:

Try New Things: Experiment with emerging platforms and marketing trends to see what works best for your audience.

12. Measuring the ROI of Your Marketing Spend

If you’re going to spend your hard-earned dollars on marketing, you need to know if it’s paying off. And that means tracking the right numbers.

Set Clear KPIs: Define what success looks like—whether it’s more leads, higher sales, or increased brand awareness.

Track What Works: Measure the performance of each marketing channel (email, SEO, PPC, social media) and double down on what’s delivering results.

Adjust Based on Performance: Marketing isn’t “set it and forget it.” It’s an ongoing process of testing, tweaking, and refining.

Pro Tip: Want a simple, yet effective tactic? Email past clients with a thank-you message and ask if there’s anything you can do for them. People often have small-to-midsize projects they’ve been thinking about, but they just haven’t gotten around to asking you. I once had a home remodeling client do this, and he got 4 new jobs without spending a cent. If you only have high-ticket items, this tip might not be as helpful for you. But the principle still applies. Do what you can to stay top of mind.

Thanks for reading!

If you’re ready to bring clarity to your marketing strategy and stop guessing about where your money should go, it might be time to take a fresh look at your budget.

Need help evaluating your marketing plan? Let’s talk. We’re here to help you grow.