Marketing budgets define how fast a small business grows, how many customers it acquires, and whether it survives its first five years. Gartner's 2025 CMO Spend Survey reports that marketing budgets have flat-lined at 7.7% of overall company revenue, yet small businesses face a fundamentally different calculation. Most small businesses in the U.S. allocate between 7% and 8% of their annual gross revenue to marketing, while newer businesses aiming for faster growth often spend up to 12%. The gap between what small businesses should spend and what they actually spend remains significant: 66.3% of small business owners spend less than $1,000 on marketing each year, a figure that reveals both the resource constraints and the untapped growth potential across the SMB landscape.
This article maps the full terrain of small business marketing budgets in 2024–2026. It covers overall spending benchmarks and revenue-based allocation frameworks, then drills into digital marketing investment, social media advertising, email marketing ROI, content and SEO spending, the rising role of AI, and the critical challenges that shape how small businesses deploy limited dollars. Every statistic draws from industry surveys, market research, and established benchmarks to give business owners and marketers a clear, actionable picture of where the money goes — and where it should.
How much small businesses actually spend on marketing
The chasm between recommended spending and real-world behavior tells a striking story about small business priorities. The U.S. Small Business Administration recommends that businesses with revenues under $5 million allocate 7–8% of gross revenue to marketing, but most small businesses fall well below that threshold. A 2023 survey found that small businesses spent an average of $534 per month on marketing, or about $6,400 annually — a number that barely scratches the surface for businesses with serious growth ambitions.
Budget size correlates directly with team size, and the smallest businesses feel the squeeze most acutely. Businesses with 10 or fewer employees are 31% more likely to have a marketing budget under $500 a month, while companies with 50 or more employees tend to have marketing budgets in excess of $100,000.
Overall spending benchmarks and annual budgets:
8.11% of total revenue is the average marketing spend for a small business, slightly above the SBA's recommended floor but still modest by enterprise standards.
The cost of digital marketing for SMBs ranges from $2,500 to $12,000 per month on average, and roughly 55% of SMBs spend less than $50,000 per year.
66.3% of small business owners allocate less than $1,000 annually to marketing, around 19% spend between $1,000 and $10,000, and 15% invest over $10,000 annually.
Eight out of 10 SMBs in the United States spend at least $1,000 in advertising.
62% of SMBs dedicate 4% or more of their revenue to marketing, and 36% spend less than $10,000 on digital marketing annually.
61% of millennial business owners spend more than $50,000 on advertising annually, while 52% of baby boomer business owners spend less than $10,000.
Revenue-based allocation by business stage and model
Budget benchmarks shift dramatically depending on a company's growth stage, business model, and target market. Early-stage or pre-revenue businesses typically allocate 10% to 20% of projected revenue to marketing, growing small businesses target 7% to 10%, and stable or mature businesses settle at 4% to 7%. These ranges hold across most industries, but the B2B-versus-B2C split creates a notable divergence in how the money flows.
B2B companies that sell services devote 12% of their revenue to marketing, while B2B product companies invest 8.3% — and for both categories combined, 11.3% of their overall budget goes to marketing. The distinction matters because it reveals how service-based businesses must spend more aggressively to differentiate in markets where the product itself is intangible.
Budget allocation by revenue size and company type:
Businesses with revenues of less than $10 million allocate 15.6% of their budget to marketing, while those between $10–25 million allocate 12.2%, and those in the $26–99 million range allocate 10.2%.
For firms with $25 million or less in sales revenue, marketing represents 53% of the overall budget, while firms with fewer than 100 employees allocate 46%.
In 2025, B2B companies allocate an average of 9.4% of their revenue to marketing, up from 7.7% in 2024.
B2B companies should spend between 2% and 5% of revenue on marketing, while B2C companies typically need 5% to 10% because they must invest in more marketing channels to reach various customer segments.
The consumer packaged goods industry spends the highest percentage of revenue on marketing at 25.19%, while the transportation industry spends the lowest at 1.52%.
Business-to-consumer companies spend 52% to 71% more to earn the same revenue as B2B companies.
Where the digital marketing dollars go
Digital channels now dominate small business marketing budgets, and the shift keeps accelerating. In 2024, businesses on average allocate 53.4% of their marketing spend to digital channels, with the remaining 46.6% supporting traditional avenues like print, TV, and radio. 72% of marketing budgets now go toward digital channels, a figure that reflects the measurability and cost-efficiency digital platforms offer to resource-constrained small businesses.
The internal allocation within marketing budgets reveals where priorities have shifted most. Paid media accounts for nearly 30% of marketing spend — up from 23% in 2019 — as companies double down on digital channels. Marketing technology investment climbed to 27.9% (from 23.7%), reflecting a push toward automation and deeper analytics.
Digital channel spending breakdown:
The global digital advertising and marketing market for 2024 is estimated at $667 billion and is projected to reach $786.2 billion by 2026.
The average local business puts 5–10% of its revenue toward its digital marketing budget, while for larger businesses, that number climbs to about 14%.
Businesses currently spend about 14.9% of their marketing budget on social media marketing.
Marketers on average allocate 8% of their budget to email marketing.
Mobile advertising accounted for 77% of all digital ad spend in 2024.
Companies are projected to spend $190.5 billion on search advertising globally.
Social media platforms took nearly 30% of U.S. SMBs' advertising budget in 2022, while television captured around 9% and radio 7%.
Small business marketing plans and growth intentions
Despite tight budgets, small businesses overwhelmingly signal intent to invest more. Nearly half (49%) of small businesses plan to increase their marketing budgets in 2025, while 35% plan to keep the same budgets, and only 16% plan to decrease. That optimism extends to digital spending specifically: 70% of SMBs plan to increase their digital marketing spending. The data reveals a market where most small businesses recognize they are underinvesting — and intend to close the gap.
Planning itself delivers outsized returns. Small businesses with a marketing plan are 6.7 times more likely to report marketing success than those operating without one, and those that blend in-house marketing with external professional services report 2.5 times more marketing success than businesses relying exclusively on internal efforts.
Growth plans and investment intentions:
63% of small businesses plan to increase their marketing budget over the next year.
Over half of SMBs plan to invest more in both social media ads and content marketing (51%), while 47% plan to invest more in search advertising and video marketing.
56% of small businesses plan to increase their spending on social media advertising.
41% of small businesses intend to boost their investment in online advertising channels such as Google search, banner ads, and retargeted ads.
50% of small businesses not currently using social media ads plan to invest in them in the next 12 months.
69% of B2B marketers predict their business will increase spending on video marketing.
Social media represents the single most accessible marketing channel for small businesses, and spending patterns reflect that reality. Social media marketing is expected to reach a total spend of $219.8 billion in 2024. For small businesses specifically, social platforms deliver both brand awareness and direct commerce: 53% of American consumers buy through social media weekly, while 43% discover new products through their social feeds.
The ROI from paid social validates increasing investment. 84% of brands report positive ROI from social media marketing, and the intersection of social commerce with advertising creates compounding returns that small businesses can exploit with modest budgets.
Social media and paid ads performance data:
76% of small businesses use Facebook for social marketing.
In 2024, 84.8% of marketers saw influencer marketing as effective, and companies using social selling are 51% more likely to hit their sales goals.
Meta Platforms' ad revenue has grown from $116.60 billion in 2022 to $156.22 billion in 2024.
92% of businesses report plans to increase their budget for creators, and 36% plan to spend at least half of their digital marketing budget on creator marketing.
Digital ads can increase brand awareness by 80%.
PPC returns $2 for every $1 spent, producing an ROI of approximately 200%.
Short-form video ads under 30 seconds convert 3x better than longer videos.
Email marketing: the highest-ROI channel for small businesses
Email marketing consistently delivers the strongest return on investment of any digital channel, and small businesses lean on it heavily. The average ROI for email marketing is $36 for every dollar spent, with some industries achieving $45 per dollar, particularly retail, e-commerce, and consumer goods. 53% of small business owners use email marketing as the most frequent strategy for finding new and retaining repeat customers.
The channel's effectiveness relative to social media is dramatic. Email is almost 40 times more effective than Facebook and Twitter combined in helping businesses acquire new customers. 41% of marketers identify email as their most effective channel, significantly ahead of social media (16%) and paid search (16%).
Email marketing performance and adoption:
81% of small businesses use email marketing as their primary customer acquisition channel, and 80% use it for retention.
The average email open rate across all industries is 21.33%.
Personalized emails achieve an open rate of 29% and a click-through rate of 41%.
Automated emails represent only 2% of total email volume but drive 37–41% of all email-generated sales, yielding 320% higher revenue per message than broadcast campaigns.
Email marketing market revenue is projected to grow from $12.33 billion in 2024 to $17.9 billion in 2027.
79% of millennials and 57% of Gen Z members prefer being contacted by brands via email.
Content marketing and SEO investment patterns
Content marketing and SEO together form the backbone of long-term organic growth for small businesses. Content marketing costs 62% less than outbound marketing and generates 3x as many leads. The SEO industry in 2024 is worth nearly $90 billion, up from $75 billion in 2023, and small businesses are allocating increasing portions of their budget to capture organic traffic that compounds over time.
The data confirms that blog content and SEO work harder for small businesses than for larger competitors. Small businesses are 23% more likely than average to see ROI from blog posts. 49% of businesses say that organic search brings them the best marketing ROI, and the economics of SEO favor patient businesses willing to invest consistently.
Content and SEO spending data:
63% of companies fall into the $500–$5,000 monthly SEO bracket, with the average monthly fee at $3,209 for agency-led programs and $1,348 for freelancers.
58% of companies spend from $5,000 to $10,000 per month on content marketing, and 55% allocate from 11% to 50% of their marketing budget to content.
53% of all website traffic comes from organic searches.
Businesses that blog get 55% more traffic to their websites.
For every $1 spent, SEO delivers $22 in ROI.
37% of small businesses focus on local search tactics, updating Google Business listings and building local reviews.
88.2% of businesses expect content marketing budgets to grow or stay the same in 2025.
AI adoption is reshaping small business marketing budgets
Artificial intelligence is no longer an enterprise luxury — it is rapidly becoming the budget equalizer for small businesses. 59% of small businesses are incorporating AI into their marketing strategy, and those that do are 5.7 times more likely to report greater marketing success. AI tools compress the time and cost of content creation, campaign optimization, and audience targeting, allowing small teams to compete with far larger marketing departments.
The financial impact is direct and measurable. Marketers who use AI see an average 70% increase in ROI, and AI-powered PPC bid management reduces ad spend wastage by 37% while increasing ad ROI by 50%. For small businesses watching every dollar, these efficiency gains translate into significant budget expansion without additional spending.
AI marketing adoption and impact:
Around 89% of small business owners and marketers use AI for content marketing and SEO.
68% of businesses see higher content marketing ROI after adopting AI.
90% of marketers say they will have budgets for AI tools in 2025.
51% of small businesses say they don't incur extra costs on content marketing because they use AI tools.
Marketers who use AI for email personalization report revenue increases of 41% and CTR improvements of 13.44%.
AI copywriting tools improve ad click-through rates by 38% and reduce cost-per-click by 32%.
About 94% of marketers plan to use AI in their content creation processes in 2026.
Biggest challenges shaping marketing budget decisions
Budget constraints don't exist in isolation — they intersect with time limitations, skill gaps, and measurement difficulties that compound the challenge. The biggest marketing challenges for small businesses are limited budget, time constraints, and finding the right marketing channels. 73% of SMBs lack confidence in their marketing strategies, a number that reflects not just uncertainty about spending levels but deeper questions about whether the money is working.
Time poverty is the hidden budget killer. The majority (53%) of SMBs spend between 1 and 10 hours per week on marketing, and about 47% of small business owners handle all of their marketing themselves. These constraints explain why efficiency tools — particularly AI and marketing automation — have surged in adoption among small businesses willing to invest in systems that multiply their limited hours.
Challenge and confidence metrics:
45% of small businesses say getting new leads and customers will be challenging in 2025.
61% of marketers say generating traffic and leads is their most difficult challenge.
44% of businesses lack a quantitative measure of marketing impact.
72% of consumers prefer to buy products from small businesses over larger enterprises.
64% of consumers say that online reviews impacted their decision to support small businesses in the past year.
People spend 50% more with businesses that regularly respond to reviews.
75% of U.S. small businesses use at least two marketing channels to promote products and services.
Small businesses that invest strategically in marketing outperform those that don't
The data paints a clear picture: most small businesses chronically underinvest in marketing, and those that break from the pattern achieve disproportionate results. While 66.3% of small business owners spend less than $1,000 on marketing annually, businesses with a marketing plan are 6.7 times more likely to report success . The gap between planning and spending represents the single largest opportunity for competitive advantage in the small business landscape.
Digital channels deliver the clearest returns. Email marketing returns $36 for every dollar spent, SEO generates $22 for every $1 invested, and content marketing costs 62% less than outbound approaches while producing 3x the leads. AI amplifies these returns further — small businesses incorporating AI are 5.7 times more likely to report marketing success — and the technology eliminates the resource constraints that have historically held smaller organizations back.
The trajectory points in one direction. 49% of small businesses plan to increase marketing budgets in 2025, B2B marketing spend as a percentage of revenue rose from 7.7% to 9.4% in a single year, and AI adoption among small business marketers has crossed the majority threshold. The small businesses that will win the next five years are the ones allocating real budget to marketing today, measuring every dollar's return, and using AI to multiply what their limited resources can achieve.
Social media and paid advertising effectiveness