What’s a Common Budget Strategy in Traditional Marketing Organizations?

So ask 10 marketers the question, and 10 of them will say the same two words: percentage of revenue. A company determines the amount of money that it expects to make, saves a percentage of that, usually in the range of 5% to 12%, and that is the marketing budget for the year. However, there is another aspect of how traditional organizations manage to operate with a budget once it is set that is equally important: budgets tend to remain fixed once approved. A traditional marketing organization will usually allocate a fixed amount for marketing at the beginning of the fiscal year and stick to it regardless of the maintenance levels that come up throughout the year.

Put those two pieces together, and you have the real answer. The percentage of the revenue determines the size of the budget. Fixed-budget thinking determines the actions of that budget for the next 12-months, no matter what the market does in the interim. That’s the way that the department stores, insurers, manufacturers, and a host of household names have been scheduling marketing dollars for years. It’s not really that adaptive, it’s not that flashy, it’s that durable. It’s actually the opposite: how it works, why it has lasted so long, and where it easily goes wrong.

What a Marketing Budget Strategy Actually Means

In any marketing budget strategy, a company must answer two distinct questions, one being, “how much money do we spend on marketing in this period?” and two, “how do we allocate that money among marketing channels: TV, print, paid search, events, sponsorships, direct mail and everything in between?” Some companies work it out from the top, using a percentage of the revenue. Others build it the other way, bottom-up, making sure that it’s priced at a specific level, say, 3,000 qualified leads and a launch in two new markets. As a general rule, traditional organisations are more inclined to the first approach, and it influences pretty much every other aspect of how they operate marketing.

This is how the Percentage-of-Revenue Method works

For better or worse, percentage-of-revenue budgeting is widely used for reasons that are more related to finance theory than marketing theory. The CFO can see a request in the context of 8% of expected revenue and know exactly what it is and what it means without having to be explained to them what attribution is or how many stages are in a funnel. It’s the same rationale as a family uses when determining that groceries take about 15% of the income: easy, understandable, and predictable.

The exact percentage will be dependent on the category, the competitive level of a category, and the company size. According to Gartner’s 2026 CMO Spend Survey from senior marketing leaders at large enterprises, the average marketing spend is 7.8% of company revenue, which is basically unchanged from 12 months ago and significantly lower than the 11% that enterprises were spending prior to 2020. However, a wider study, the CMO Survey, conducted in partnership with the American Marketing Association, Duke University, and Deloitte, places the number at 9.4%, which tends to be higher because it incorporates more small and midsize companies that would be spending more of their revenue to try to beat the larger companies.

Industry matters too. Retailers and manufacturers generally fall toward the low end of the spectrum, often in the 4-7% range, for two reasons: margins are traditionally lower, but also because much of their business is based on relationships and repeat sales, and not fresh marketing efforts. In consumer brands, healthcare and software companies, this is often on the higher end, well above 10% and sometimes in the high teens, particularly when they are still establishing themselves in the category. These are not rules, and none of these numbers. They’re just what’s customary, and a company that has an abnormal growth goal or has a particularly good reputation currently has all cause to end up somewhere quite different.

Why the Fixed-Budget Habit Persists

The second half of the traditional method, locking the number in for the year, is a result of the structure of these organizations, not the belief that markets do not move. In most traditional companies, their planning cycle is based on the yearly period. Finance and leadership approve budgets, which are then used to implement for the next 12 months in the third or fourth quarter. Going back and getting that re-signed mid-year typically translates to another round of sign-offs and another justification meeting, and that friction is not something that many traditional organizations can handle upwind when the market is demanding it.

As a result, they get a strategy with some real merits, and marketers who have experience in both slow-moving and fast-moving digital-first companies know them all.

It’s easy to track because once the number is decided, everyone from the CMO to the finance team can know the spend against one simple benchmark throughout the year. It grows with the business automatically, which means that the revenue grows and so does the budget for the coming year, without having to enter into negotiations separately. It continues to spend within a crude return guardrail because if the budget is tied to the revenue, it becomes more difficult to sustain spending that the business cannot afford. But it’s easy to get approved again, as a finance team that has seen ten years of success with percentage-of-revenue shouldn’t need much convincing to sign off again.

The tradeoff is flexibility. A fixed annual budget doesn’t allow for much maneuvering if you run an aggressive campaign in March or if a channel that had been working well stops working, without having to go through a formal reallocation process. That’s the only thing for which marketers gripe about the model, and they’re right to gripe.

Where the Traditional Marketing Budget Actually Goes

Twenty years ago, the terms traditional marketing budget and TV, print, and radio budget were virtually synonymous. That’s changed substantially. Today, digital makes up about 75% of global ad spend, and this percentage continues to rise annually with search, social, video, and retail media. But TV has quietly taken in a fifth of total ad spending, which would have seemed unfathomable to the medium a generation ago.

That’s not to say that traditional channels are out of the budget. They’ve become the smaller, more deliberate slice. In the remaining part of a traditional allocation, television’s disinclination to cede ground to other media, particularly Internet video, remains strong, due to its unique ability to deliver reach and brand-building impact that is difficult to replicate at low cost online. The remaining split is almost evenly between print, radio, direct mail and out-of-home. The spend for a regional bank on local radio spots is vastly different from that of a national CPG brand on TV at a big game.

Even die-hard digital marketers don’t suggest eliminating all outbound advertising. Gartner’s industry research reveals that there are still many companies spending a substantial proportion of their budget on traditional channels, mostly because there are some audiences often in the old teens and twenties age group, as well as local and regional markets, and even categories where trust and familiarity take priority over speed that still respond to traditional channels in a way that digital has not yet matched.

Coca-Cola’s Marketing Budget: The Traditional Model at Enterprise Scale

One of the most obvious manifestations of this kind of approach in the enterprise is at Coca-Cola. In 2024, the company’s annual report lists its spending on advertising at approximately $5.15 billion, which increased from approximately $5 billion in 2023. There’s a significant portion of that that remains for television, print, and sponsorships, and it’s not being replaced by digital, it’s adjacent to it.

This is a combination of the old and new. The overall spend is broadly in line with revenue, and then across markets by geography, season, and which products are being pushed that Quarter. It is not a 100% percentage-of-revenue formula, and it’s not a 100% fixed budget either. It’s a hybrid, and that’s how the bigger, more traditional brands work in practice and not just by way of a textbook model.

Other Budgeting Strategies Traditional Companies Lean On

The default is percentage of revenue, but that’s not usually the only one at a large organisation. A few others are quite common.

Objective-based budgeting, sometimes called task-based budgeting, flips the logic around. Rather than beginning with revenue, it begins with a goal like getting three thousand leads or introducing in two new markets and then works out the costs of achieving that goal. This is likely to happen when a business has a particular venture and a flat percentage won’t be sufficient to do the job all alone. It’s a common approach for a B2B company entering a new market, where a flat percentage of revenue wouldn’t fund the initiative adequately on its own.

Competitive parity budgeting is a type of budgeting that tries to match competitor’s spend and maintain a similar share of voice in the category. It’s very common in categories where visibility is a competitive advantage, such as beverages, insurance, and quick-service restaurants, but it has a glaring downside: It assumes that competitors are spending their money wisely, and that’s not always the case.

The affordable approach is the simplest and least strategic and is sometimes referred to as the all-you-can-spare approach. Marketing gets what’s left after all other departments. It’s most commonly seen in smaller companies, which cannot afford to, and it is not necessarily the best option, but it is certainly a viable option for companies that are not flush with money.

Zero based budgeting is not as widely used but mentioned for good measure as more and more companies seek to reduce waste. Each cycle, all dollars must be re-justified, instead of working off of last year’s dollar amount. It is much more work to build, but can make all sorts of legacy spending surface that no one remembers agreeing to, or a print placement that doesn’t really perform but was continuing to run on a percentage-of-revenue model.

Most large traditional enterprises ultimately come down to percentage of revenue as an anchor, with borrowing slices of the other when it’s needed: Reevaluate based on percentage of revenue every few years, set aside a slice for competitive parity when a competitor gets aggressive, reserve a slice for a specific objective carve-out for one major launch.

When Percentage of Revenue Works, and When It Doesn’t

Not all business, even all traditional business, is suitable for this type of model. It is a good fit for companies with fairly predictable and consistent income, when the financial department is more interested in ease than exactitude, and when marketing is primarily running established channels instead of exploring new ones.

It works poorly when revenues are fluctuating, when a true growth opportunity requires an investment before there is the available revenue stream to support it, or when the market is changing so quickly that the mix of channels that worked well last year may no longer be the mix that is needed. That’s the second scenario that is causing many traditional organisations to consider mixed models rather than committing to a single one forever.

Return on Traditional Marketing Spend

One of the chief complaints regarding traditional channels is that they are not as measurable as a paid search program where every click and conversion can be tracked automatically. True, but that’s not a justification for not measuring. Marketers who are deriving some value from TV, print, and radio have generally found alternatives.

Single print ads or radio spots have unique phone numbers or landing page URLs that allow responses to be tracked back to that specific ad or radio spot. Promo codes that are attached to one campaign and can be used in-store or online are an easy, low-tech attribution tag. Pre and post campaign brand lift surveys can reveal that awareness or purchase intent has shifted even if no one clicked on any link. As well as if there’s a jump in either direct traffic or branded search traffic the following days after a TV or radio flight, that’s a decent though not foolproof indicator that the flight was successful in reaching people.

None of these methods are as clean as dedicated attribution tooling built for digital campaigns. None of these methods are as clean as digital attribution. But if it’s one or two that they use regularly, an organization has a much better idea of what their traditional ROI is versus one that spends the money and hopes it had an impact.

Traditional Marketing vs. Digital Marketing Budgets: What are the actual differences?

It’s important to be specific about the differences between a traditional budget and a digital budget, these two are often grouped together incorrectly. A more traditional budget is typically allocated in a top-down fashion as a percentage of revenue, and is allocated for channels such as television, print, and even radio, where the results will be measured in brand awareness and longer, slower sales cycles, not clicks. This makes it more difficult to monitor accurately, but is perfect for large brands that have been around for a long time with a consistent stream of income.

A digital-first budget tends to work the other way. It’s flexible and test-based: money is spent on a theory which is then measured in days and then redirected according to the results of the test. Spending gravitates towards social media, search and email, where almost every dollar can be attributed to a result. That responsiveness is good for startups and online-first businesses that haven’t got the revenue record to warrant a fixed number per year, and need to know quickly whether a channel is delivering or not.

Neither approach is objectively better. They are geared for various contexts, and that is why most large companies these days use some kind of both instead of either-or.

Applying a Traditional Budget Strategy to Your Own Business

If you’re a smaller company and wish to take this style of borrowing without the hassle, it is actually very simple to do.

Don’t begin with what you want to make, start with what you have made. Whether you’re at the lower end 5% or higher end (10%) of the spectrum, consider what you’re making today or what you can realistically expect to be making in the coming year and dedicate between 5% and 10% of that amount to marketing. On $15,000 a month in revenue, that works out to roughly $750 to $1,500 to spend.

Decide your channel split before spending a dollar of it. If you’re in the offline camp, a good rule of thumb is to allocate nearly half your budget to your strongest channel, whatever that may be, print, local sponsorships, or direct mail and share 1 or 2 other channels the rest, plus a small pot for experimentation. In digital, move a significant amount typically a third to half, depending on the audience into search, social, or email, as you will get the best sense of what’s working in those channels.

Make a review date and stick to it. There’s nothing wrong with the number being revisited with a traditional budgeting approach. It signifies that the number is not going around freely, at will. Choose a monthly or quarterly benchmark date, take a realistic assessment of each channel’s performance, and redistribute the share, not the volume, accordingly.

The kind of strategy that works best for small businesses isn’t the one that you never mess with. It’s a percentage of revenues to size the budget, and a real commitment to reallocating dollars when real data becomes available after a quarter or two.

Where Traditional Marketing Budgeting Is Heading

It’s not the organizations claiming this as the only right answer that are benefiting the most from it today. They’re the ones who see it as a springboard and not an endpoint. Set the total on a percentage of revenue basis for stability and for easy approval, then include a small and deliberate reserve, even 10-15% of the total, that’s neither dedicated to any channel and could shift toward whatever works once the year is up and running.

This is also where the latest challenge to the old budgets is coming from. Despite most of the organizations surveyed in Gartner’s 2026 report on CMO spending on AI tools and initiatives saying they aren’t ready to use that investment at scale yet, 15.3% of their marketing budget is now being invested in AI. If the company has a percentage of revenue budget and it didn’t provide for this, it is already behind, no matter how effective it was for the company in previous years.

Such a reserve can be used to buffer against channel testing, as well as new tools, while still retaining the simplicity that makes a percentage-of-revenue budgeting model attractive in the first place, without requiring a finance team to become less traditional.

Final Thoughts

Then what is the typical budget planning approach for traditional marketing organisations? In the end, it’s a number that is the percentage of revenue and remains fixed year on year and is mostly dedicated to channels that are assets for long-term brand awareness instead of short-term click-throughs. It’s not so much outdated as it is intentional, designed for organizations where predictability is prized over agility, and they’re willing to sacrifice the potential for some agility in exchange for that predictability.

That doesn’t imply it ought to be utilized indiscriminately. The businesses that are doing best with a traditional style budget are those that discipline the model with the measurement habits that digital marketing has made a normalized norm: what’s working is measured, and there’s enough room in the budget to do something about it when something is.

We work through exactly this kind of budgeting and channel-planning question with clients regularly at Tech Trick Solutions, and it usually comes down less to picking the theoretically right model and more to matching the model to how your business actually operates.