Every year, professional services firm leaders ask me the same question:
“How much should we spend on marketing?”
It seems like a reasonable question. Unfortunately, it’s not the right one.
The problem is not that CEOs are asking about marketing investment. The problem is that most people are looking for a benchmark rather than making a strategic decision. They want to know what percentage of revenue similar firms spend on marketing. Is it 2 percent? 5 percent? 10 percent?
The answer is that it depends. Before you stop reading, stay with me.
It’s not because marketing is difficult to measure or because every firm is unique. It depends because marketing budgets are the result of strategic choices. They are not strategic choices themselves.
There is no correct marketing budget. There is only a marketing budget that is consistent with the firm’s growth ambitions.
Why Marketing Benchmarks Are Misleading
Imagine two professional services firms with identical revenue, similar margins, and comparable market positions.
The first firm plans to grow primarily through referrals, existing client expansion, and long-standing relationships. Its objective is steady, predictable growth within markets it already serves. The second firm intends to enter new markets, launch new services, attract new clients, and establish itself as a recognized authority in its category.
Should these firms spend the same amount on marketing? Of course not.
Yet most benchmarking studies imply they should.
The flaw is simple. Marketing budgets are often discussed independently from growth strategy. In reality, the two are inseparable. A firm’s growth objectives determine the level of investment required to achieve them.
The budget follows the strategy. Not the other way around.
The Real Question CEOs Should Be Asking
Instead of asking how much they should spend on marketing, CEOs should ask:
“How much growth are we trying to create, and where will that growth come from?”
That question changes the conversation immediately.
Growth can come from many sources:
- Existing client expansion
- Referrals
- Strategic partnerships
- New service offerings
- New market segments
- Acquisitions
- Improved pricing power
- Increased win rates
Marketing plays a different role in each.
A firm that expects most future growth to come from referrals requires a different level of investment than a firm attempting to create demand in a market where it is largely unknown.
The more ambitious the growth objective, the more deliberate the investment strategy must become.
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Marketing Is Not a Departmental Expense
One reason marketing budgets are often underfunded is that they are categorized as operating expenses.
Marketing gets grouped alongside software subscriptions, office rent, and administrative costs. When economic uncertainty arises, marketing is one of the first areas executives look to cut costs. That mindset creates a significant blind spot.
Most marketing investments are not intended to support current operations. They are intended to increase future earning power.
Thought leadership strengthens expertise. Brand building increases visibility and trust. Market intelligence improves strategic decision-making. Sales enablement improves conversion rates. Content and intellectual capital create demand long before a prospect enters a buying cycle.
These activities are not maintenance expenses. They are investments in future growth.
The firms that consistently outperform their competitors understand this distinction and do not treat marketing as overhead. They treat it as a growth asset.
The Cost of Underinvesting
Most discussions about marketing budgets focus on overspending. Almost nobody discusses the cost of underinvesting.
- What is the cost of remaining invisible in a crowded market?
- What is the cost of being perceived as interchangeable with competitors?
- What is the cost of entering every opportunity through an RFP process?
- What is the cost of reduced pricing power?
- What is the cost of failing to identify emerging client needs before competitors do?
These costs rarely appear on financial statements. Yet they often have a greater impact on long-term firm value than the marketing budget itself.
A weak market presence is expensive. A lack of brand preference is expensive. Being unknown is expensive. The challenge is that these costs are difficult to see because they appear as opportunities that never materialize.
Growth Ambitions Determine Marketing Investment
The appropriate marketing budget is not determined by revenue. It is determined by the firm’s growth ambition.
A firm seeking modest growth from an established client base can often operate effectively with a relatively modest marketing investment. A firm seeking accelerated growth, premium pricing, expanded market relevance, or category leadership requires a very different level of commitment.
The larger the growth objective, the more important marketing becomes. Not because marketing creates growth by itself, but because growth becomes increasingly difficult without it.
Marketing helps firms demonstrate expertise, communicate differentiation, identify market opportunities, strengthen client relationships, and build preference before a prospect enters the buying process.
These capabilities become more valuable as growth ambitions increase.
The Bottom Line
There is no universal answer to the question, “How much should we spend on marketing?”
The answer depends entirely on what the firm is trying to accomplish. A marketing budget is not a spending decision; it is a growth decision.
The firms that outperform their competitors do not begin with benchmarks. They begin with strategic objectives. They determine where growth will come from, what capabilities are required to achieve it, and what investments must be made to support those objectives. Only then do they establish a marketing budget.
The question is not how much marketing costs. The question is how much growth costs—and are we willing to invest enough to achieve it?
Be prudent.
