The question of how much a business should spend on digital marketing is one of the most common ones we get. However, the answer isn’t a fixed amount or a specific percentage of turnover. A sensible marketing budget depends on the company's goals, the value of a new customer, and, crucially, the capacity to handle an increased volume of enquiries or sales.
Start with concrete goals
Before you land on a figure, you need to define what your marketing should achieve. Goals can vary widely, from generating more specific enquiries and online orders to more long-term objectives like building brand awareness or driving footfall to a physical shop. A company that needs ten new customers a month to meet its growth targets requires a completely different budget and strategy than a business that primarily wants to become a recognised name in its industry. A good marketing budget, therefore, always starts with a clear definition of the goal, not with the figure itself.
Understand the value of a new customer
One of the most important questions you need to ask yourself is how much you can actually afford to pay to acquire a new customer. Imagine a plumbing business where an average new customer generates kr 20,000 in revenue. If the cost of acquiring this customer through advertising is kr 1,500, the marketing is highly profitable. If, on the other hand, the cost is kr 15,000, the investment yields a significantly lower return. It is therefore crucial to have a clear overview of both the customer's lifetime value and your own margins before deciding how much to invest.
Why is there no one-size-fits-all answer?
Some businesses can achieve great results with relatively small budgets, for instance, if they operate in a niche with a clear target audience and limited competition. Others are in markets where significant investment is required to gather enough data and visibility to become profitable. The cost level is influenced by a range of factors such as industry, competition, geography, and the efficiency of your sales process. A local trades company in Bergen has a completely different starting point than a national e-commerce store selling clothes, where competition for the same customers is much fiercer and requires a larger budget to stand out.
The distinction between ad spend and labour
A common misconception is that the entire marketing budget goes directly to ad platforms like Google or Meta. In reality, digital marketing consists of two separate costs: the ad budget itself and the payment for the work required to get results. The ad budget is the money paid to the platforms to display your ads, while the labour cost covers everything from strategy and analysis to copywriting, design, and continuous optimisation. A large ad budget has little value if the campaigns, messaging, and landing pages aren't designed to convert visitors into customers.
Start small to gather insights
For most businesses, it's wise to start with a controlled and manageable budget. This provides an opportunity to test the market on a smaller scale and gather valuable insights before investing heavily. During this phase, you can find answers to important questions:
- Which target audiences respond best to your messaging?
- Which keywords generate profitable enquiries?
- Which ads produce the most clicks and conversions?
- What is the actual cost of a new customer?
Once you have enough data to see what works, you can confidently increase your investment in the channels and campaigns that deliver the best return. This approach reduces risk and ensures your budget is spent more effectively over time.
Focus on return, not just cost
It’s easy to view marketing as a pure expense, but it’s more fruitful to see it as an investment. A marketing budget of kr 50,000 that generates profitable sales of kr 200,000 is a far better investment than a kr 10,000 budget that produces no results at all. The question shouldn't just be "how much are we spending?", but rather "what are we getting for the money we spend?". The focus must be on the return, or ROAS (Return On Ad Spend), to be able to assess whether the marketing is a success.
As you gather data, you will be able to make increasingly informed decisions. By starting where the potential is greatest, testing what the market responds to, and building on what is proven to work, the marketing budget can be adjusted to create predictable and profitable growth.
Want help figuring out the smartest place for your business to start? Get in touch with us at Vekstloop.
Get started← All articles
