How Much Should an Online Product Business Spend on Marketing?
If you sell physical products online, one of the most important business questions you can ask is: how much of my revenue should I be putting back into marketing? The answer is more nuanced than a single percentage - and understanding it could be the difference between a business that grows and one that stagnates.
Marketing Budget by Business Type
The 15.5% benchmark applies specifically to businesses selling physical products direct to consumers. Marketing spend varies considerably across different business models:
| Business Type | Typical Marketing % |
|---|---|
| B2C product (online retail, e-commerce) | 12-18% |
| SaaS / subscription services | 15-25% (growth phase) |
| B2C local services (chiropractic, dental, trades) | 5-12% |
| Healthcare / allied health | 5-10% |
| B2B professional services | 3-8% |
The rest of this article focuses on the online product business model - where marketing spend is highest and the variables most complex.
The Benchmark for Online Product Businesses
According to the Deloitte/Duke CMO Survey, B2C product companies - businesses that sell physical products directly to consumers - allocate an average of 15.5% of revenue to marketing. That is the highest of any business category, and for good reason.
When you sell physical products online, you are competing for attention in a space where the next product is one scroll away. Your marketing budget is what keeps you visible - in search results, in social feeds, and in the inbox.
B2C product companies spend nearly 2.5 times what B2B product companies do on marketing as a percentage of revenue. The gap reflects a fundamental difference: when a consumer can switch to a competitor with a single tap, brand visibility is not optional.
- Deloitte / Duke CMO Survey, 2025
What Does "Gross Margin" Mean - and Why Does It Matter?
Before deciding on a marketing budget, you need to understand your gross margin. It is the number that tells you how much money is actually left over after you have paid for the product itself - before you spend a dollar on marketing, staff, rent, or anything else.
Gross Margin = (Revenue − Cost of Goods Sold) ÷ Revenue × 100
Example: You sell a product for $100. It costs you $40 to source, package and ship it to the customer. Your gross margin is 60% - meaning $60 of every $100 in sales is available to pay for everything else in your business.
Gross margin is not profit - it is the pool of money from which you pay for everything else in your business, including your marketing. This is why your margin changes everything about what you can afford to spend on promotion.
A simple way to think about it: if your gross margin is 30%, and you spend 20% of revenue on marketing, you are left with just 10% to cover wages, rent, software, accountants, and actual profit. The maths only work if your margin is high enough.
| Gross Margin | Typical Industry | Sustainable Marketing % |
|---|---|---|
| 60–70% | Cosmetics, specialty supplements, digital products | 15–25% |
| 40–60% | Apparel, homewares, specialty food | 12–18% |
| 25–40% | General consumer goods, electronics accessories | 8–12% |
| Below 25% | Commodity goods, low-cost physical products | 5–8% (challenging) |
Where Does That Budget Actually Go?
For a typical Gold Coast e-commerce business selling physical products, a 15% marketing budget might break down something like this:
Paid Advertising
Google Shopping, Meta ads, and remarketing typically consume the largest share - around 6–8% of revenue. This is your most direct lever for driving immediate traffic and sales.
Website & SEO
Your website is your shopfront. Hosting, maintenance, product photography, and SEO typically account for 3–4% of revenue - and this is where video content delivers outsized long-term returns.
Email & Social
Email marketing, social media management, and content creation round out the budget at roughly 2–3% of revenue. These channels build the repeat customer base that improves your long-term margins.
Does the Website Count as Marketing?
For small and medium businesses, the practical answer is yes - and it should. Your website is not infrastructure in the same way your office internet connection is. It is your primary sales tool, your brand's first impression, and the destination for every dollar you spend on advertising.
- Hosting and platform fees - Shopify, WooCommerce, or a custom platform all have ongoing costs that serve a direct marketing function.
- Product photography and video - Visual content directly influences conversion rates and should sit inside the marketing budget, not outside it.
- SEO and content - Organic search traffic is earned through consistent investment in content and technical optimisation.
- Speed and user experience - A slow or confusing website destroys the return on every paid ad you run. Site performance is a marketing cost.
How Revenue Stage Changes Everything
Early Stage - Under $250k Revenue
Expect to spend 20–30% of revenue on marketing. You are buying data, building an audience, and testing what works. This phase is expensive by design - the goal is to find your profitable channels before scaling.
Growth Stage - $250k to $1M Revenue
The 15–18% benchmark becomes more realistic here. You have enough revenue to spread across multiple channels, and your repeat customer rate starts to reduce your effective cost of acquisition.
Mature Stage - $1M+ Revenue
Larger businesses can often operate at 10–14% of revenue as brand recognition does more of the heavy lifting. However, cutting below 10% in a competitive product category is a risk - competitors will fill the space you vacate.
The Role of Video in Your Marketing Budget
For physical product businesses, video is no longer a nice-to-have - it is a conversion tool. Product demonstration videos, unboxing content, and brand storytelling consistently outperform static images across every major platform.
Businesses that use video in their product marketing report up to 80% higher conversion rates on landing pages compared to those using static images alone.
- HubSpot State of Marketing Report
Allocating a portion of your website and content budget to professional video production delivers returns across paid ads, organic social, and SEO simultaneously - making it one of the most efficient uses of your marketing spend. A single well-produced product video can run as a paid ad, sit on your product page to lift conversion, be clipped for Instagram Reels, and improve your Google rankings through increased time-on-page.
A Practical Starting Point
If you are unsure where to start, this framework works for most Gold Coast e-commerce businesses:
- Calculate your gross margin first - it tells you what you can afford to spend.
- If your gross margin is above 40%, aim for 15% of revenue as your marketing target.
- Include your website costs, photography, and video production in that figure.
- Track return on ad spend (ROAS) for paid channels and adjust allocation quarterly.
- As repeat customers grow, your effective marketing cost per sale will fall - reinvest the difference rather than pocket it.
The Key Takeaway
There is no single right answer, but there is a framework. Start with your gross margin - it determines what you can afford. Match your budget to your growth stage. And treat your website, your content, and your video production as marketing investments, not overhead costs.
A business spending less than 8% of revenue on marketing in a competitive product category is almost certainly underfunding its growth - and its competitors are filling the space it leaves behind.
References and Sources
Deloitte / Duke CMO Survey 2025 - marketing budget benchmarks by business type
Gartner CMO Spend Survey 2026 - gartner.com
Emulent Marketing Budget Benchmarks 2026 - emulent.com
HubSpot State of Marketing Report 2026 - hubspot.com
