How Much do Small Businesses Spend on Advertising?

Sam December 15, 2024

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Small businesses are increasing their marketing budgets. In fact, advertising expenses have risen nearly 4% compared to the prior two years. Deloitte reports that advertising budgets will constitute about 13.6% of the total for these enterprises moving forward. If you are wondering how much do small businesses spend on advertising, this information is crucial.

What is The Average Marketing Budget for a Small Business?

The average marketing budget for a small business varies depending on the industry, the size of the business, and the marketing goals. However, a good rule of thumb is to spend between 7% and 10% of your gross revenue on marketing. According to Salesforce, B2C companies should spend 15% of their revenue on campaigns. Hubspot reports the average spend for a business was 8.7% of total revenue last year.

For example, a small business with $1 million in annual revenue could have a marketing budget of $70,000 to $100,000. This budget could be used to cover a variety of marketing expenses, such as:

Advertising: This includes paid advertising on channels such as Google, Facebook, and Instagram.
Content marketing: This includes creating and distributing blog posts, articles, e-books, and other content that attracts and engages potential customers.
Public relations: This includes generating positive media coverage for your business.
Events and trade shows: This includes attending and exhibiting at industry events and trade shows.
Search engine optimization (SEO): This process focuses on enhancing your website to achieve a higher ranking in search engine results pages (SERPs).

The specific marketing channels that you use will depend on your target market and your marketing goals. However, by investing in a solid marketing budget, you can reach more customers, generate more leads, and grow your business.

Here are some additional tips for creating a small business marketing budget:

Begin by defining your marketing objectives. What are the outcomes of the marketing activities you desire? Once you have a clear understanding of your goals, you can begin to create a budget that will assist you in achieving them.
Investigate your industry and competitors. What marketing strategies are other businesses in your sector employing with their advertising budgets? This information can serve as a valuable benchmark for creating your own budget.
Be flexible. Your marketing budget may need to change as your business grows or as your marketing goals change. Be prepared to adjust your budget accordingly.
Track your results. It’s important to track the results of your marketing campaigns so that you can see what’s working and what’s not. This will help you make informed decisions about how to allocate your marketing budget in the future.

What Marketing Costs Need to be Taken into Account?

Small businesses have two different marketing and advertising budget costs. These can be subdivided for a target audience that prefers online marketing or offline small business tools.

Online Advertising Budget

Online advertising is increasingly significant, with billions spent globally. Google Ads are vital for attracting potential customers using targeted keywords. Social Media Marketing across various platforms like Instagram and Facebook is crucial for engagement.

SEO enhances online visibility through organic searches. Digital Marketing encompasses diverse online channels, including email and pay-per-click marketing. Platforms like Facebook and TikTok offer unique advertising opportunities, and content marketing remains a popular and effective strategy.

Digital advertising had an estimated worth of $210 billion in recent times.

Offline Advertising Budget

Offline advertising remains relevant, with substantial investments in traditional mediums. Local newspapers offer targeted advertising opportunities, aligning with digital strategies for a comprehensive marketing approach.

Trade publications are excellent for reaching specific industries, and business cards remain a fundamental tool for personal branding and networking. These traditional methods complement online strategies, forming a holistic approach to marketing.

Online Advertising: Marketing Budgets for Small Businesses

Last year alone, around $616 billion USD was spent on digital advertising globally. The following are some of the best investments in that space.

Strategy	Description
Google Ads	A simple way to attract potential customers using Google's online advertising tool. Requires selecting keywords that align with business goals. Also known as Google Adwords.
Social Media Marketing	Involves creating content that promotes products and services across various platforms like Instagram and Facebook. It is important to diversify platforms and not put all efforts into one.
Search Engine Optimization	SEO is the practice of optimizing content and websites to rank on search engines through non-paid or organic searches. This can involve the use of both internal and external links.
Digital Marketing	The process of using different online channels to attract customers. This can involve messaging and email marketing. Other options include pay-per-click and content marketing.
Pay Per Click Advertising	A strategy where advertisers pay every time a user clicks on their ads. In 2022, it was reported that a PPC campaign brought in $2 for every $1 spent.
Facebook Page	Useful tools for small businesses, these pages can help to grow a customer base. Tips for success include having a clear profile picture (a headshot for a freelancer) and utilizing social media statistics to evaluate campaigns.
Email Marketing	Small businesses often spend between $9 and $1,000 a month on email marketing. Services like Mailchimp offer A/B testing.
TikTok Advertising	A competitive advertising platform that offers instant forms that load faster than landing pages. As per a recent survey, 24% of professionals use TikTok advertising to increase sales.
Amazon Advertising	Success with Amazon advertising often involves crafting clear product detail pages. This is a good marketing investment.
Content Marketing	A popular method of advertising which involves sharing social media posts, blogs, articles, and videos. Two out of three consumers reportedly prefer branded content over traditional advertising. Hiring freelancers can be a cost-effective way to manage a content marketing strategy.

Google Ads

This is a fairly simple way to draw in potential customers. It is Google’s online advertising tool. Your business needs to choose keywords that align with your goals. This option is also called Google Adwords.

Social Media Marketing

Simply put this is about creating content that promotes your product and services. Don’t put all your eggs in one basket — many businesses use a variety of platforms like Instagram and Facebook.

Search Engine Optimization

SEO involves optimizing content and websites to improve their ranking on search engines through unpaid or organic searches. Both internal and external links play a significant role in attracting new customers.

Digital Marketing

This is the art of using different online channels to attract customers to your target market. Small business advertising ideas in this space include messages and email marketing. Pay-per-click and content marketing are other choices.

Pay Per Click Advertising

PPC is a strategy whereby advertisers pay when users click on their ads. Selecting a PPC campaign typically brings in $2 for every $1 spent. Additionally, many wonder how much small businesses spend on advertising.

Facebook Page

These are good tools for small businesses, which is a smart part of US spending. Little things matter to a customer base here. A profile picture should be a headshot for a freelancer. Adopt social media statistics to gauge the campaigns.

Email Marketing

Small businesses generally spend somewhere between $9 dollars to $1,000 a month on this strategy. Places like Mailchimp offer A/B testing.

TikTok Advertising

TikTok advertising is a competitive landscape. This advertising for business offers instant forms that load faster than landing pages. A recent survey found that 24% of professionals use this method to increase sales.

Amazon Advertising

One of the big tips to be successful and make more money with Amazon advertising is to craft clear product detail pages. These are good marketing investments.

Content Marketing

This is one of the more popular methods for good reason. Two out of three consumers like branded content better than conventional advertising. These types of online ads are all about sharing social media posts, blogs, articles, and videos. Hire freelancers here to save on your marketing strategy.

Offline Advertising: How Much Small Businesses Spend

This is any technique that is used to increase brand awareness that’s not Internet-based. Last year the spend on print ads and other mediums was $207.6 Billion.

Local Newspapers

A business should consider ads in local papers. Images need to line up with each other. This can be an effective omnichannel strategy that includes social media platforms.

Trade Publications

These publications are an excellent place for strategy development if you’re looking to boost sales with limited funds. Here’s a resource guide to get started.

Business Cards

Taking advantage of print mediums for better sales can include business cards. Consistency is key. Use the same logo on the card and in other areas, like your website, for these marketing campaigns.

The Average Marketing Budget of Small Businesses by Industry

Any successful advertising spend varies by industry. Here’s a quick rundown of some of the costs involved and marketing methods. Businesses allocated 8.7% of their revenue to marketing last year.

Real estate agents and brokers spend about 3.84%.
Furniture stores about 4%.
Beverage production is about 2.73%
Restaurants and other dining establishments 1.93%

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What Factors Would Decide The Marketing Budget for a Small Business?

Marketing is essential for any small business that wants to grow and succeed. However, marketing can be expensive, so it’s important to determine how much you can afford to spend before you start creating a marketing plan.

There are a number of factors that will affect the size of your marketing budget, including:

Your business goals. What do you aim to accomplish through your marketing efforts? Are you looking to enhance brand awareness, generate leads, or boost sales? Your objectives will guide you in deciding how much do small businesses spend on advertising.
Your industry. Certain industries are more competitive, which means you may need to invest more in marketing to effectively reach your target audience.
Your target market. Where are your customers located? What are their interests? Once you know who your target market is, you can start to determine which marketing channels are most effective for reaching them.
Your budget. How much money can you afford to spend on marketing? It’s important to be realistic about your budget and not overspend.
Your competition. What are your competitors doing with their marketing budgets? This will give you a good idea of how much you need to spend to stay competitive.

Once you have taken all these factors into account, you can begin to develop a marketing budget that suits your requirements. Here are some tips for creating an effective budget:

Begin by defining your marketing objectives. What are the outcomes of your marketing activities you desire? Once you have a clear understanding of your goals, you can begin to create a budget that will assist you in achieving them.
Investigate your industry and competitors. What marketing strategies are other businesses in your sector employing with their advertising budgets? This information can serve as a valuable benchmark for creating your own budget.
Be flexible. Your marketing budget may need to change as your business grows or as your marketing goals change. Be prepared to adjust your budget accordingly.
Track your results. It’s important to track the results of your marketing campaigns so that you can see what’s working and what’s not. This will help you make informed decisions about how to allocate your marketing budget in the future.

Here are some additional tips for creating a small business marketing budget:

Start small and grow your budget over time. If you’re just starting out, don’t feel like you need to spend a lot of money on marketing. You can start with a small budget and gradually increase it as your business grows.
Focus on the most effective marketing channels. Not all marketing channels are created equal. Some channels are more effective than others for reaching your target market. Do some research to find out which channels are most effective for your business and allocate your budget accordingly.
Get creative with your marketing. There are a lot of ways to market your business without spending a lot of money. For example, you can create content, participate in social media, or attend industry events. Get creative and find ways to market your business that fit your budget.

By following these tips, you can create a marketing budget that helps you achieve your business goals.

Here are some additional factors that may affect your marketing budget:

The size of your business. The larger your business, the more you’ll need to spend on marketing to reach a wider audience.
Your stage of business. If you’re just starting out, you’ll need to spend more on marketing to build awareness and generate leads. Once you’re established, you can start to scale back your marketing budget.
Your location. The cost of marketing can vary depending on where you’re located. For example, marketing in a major city is typically more expensive than marketing in a rural area.
The economy. The state of the economy can also affect your marketing budget. If the economy is in a recession, you may need to reduce your marketing budget.

It’s important to remember that your marketing budget is an investment in your business. By investing in marketing, you can reach more customers, generate more leads, and grow your business.