How Much Should a Small Business Spend on Digital Marketing?

Determining the right budget for digital marketing can feel like chasing a moving target. For many small businesses in the UK, the real challenge lies in balancing affordability with impact. 

At TIEM Design, we believe that good marketing doesn’t have to come with huge costs. With the right structure, you can spend wisely, focus on growth, and achieve genuine value without overstretching your resources. 

Why Budgeting Matters

Digital marketing has one big advantage over traditional methods: it’s measurable. You can see exactly what you’re getting back for your investment. But without a clear budget, campaigns can easily spiral out of control.

To make things more complicated, although we live in a digital world, marketing cannot be digital alone, and not every pound spent can be 100% measurable.

Many small businesses dive in with enthusiasm and a small budget, only to find themselves struggling to justify the ongoing costs. A structured approach, one that ties spend directly to objectives, chosen channels, and expected returns, makes campaigns more predictable and sustainable. Importantly, affordable digital marketing doesn’t mean cutting corners. It’s about focusing on cost-effective strategies that genuinely align with your growth goals.

What to Include in a Marketing Budget

A well-rounded budget should cover the essentials that keep your marketing running smoothly. This typically includes the basics: a strong website that converts visitors into leads or customers, content marketing that attracts organic traffic, and search engine strategies, both SEO and paid search, to boost visibility. Social media should also play a role, whether through consistent organic posting or targeted paid campaigns. Add in email marketing to nurture leads, plus analytics and tools that help measure performance and guide decisions. Finally, don’t overlook creative production, design, video, and copywriting all elevate your campaigns and ensure they stand out.

However! Not all businesses need all of this at once. That is very overwhelming. We like to break things down and take it a little bit slower, which certainly helps with cashflow!

When aiming for affordability, the key is to be selective. Look for cost-effective tools, scalable tactics, and the channels that best match your audience. The goal isn’t to spread your budget thin across every option, but to invest where the return is most likely.

How Much to Spend

So, how much should you actually set aside? There’s no one-size-fits-all answer, but there are a few helpful benchmarks. A common rule of thumb is to allocate between 5% and 12% of your gross revenue to marketing. Younger businesses or those going through a rebrand often need to spend toward the higher end to establish momentum, while more established companies may be able to sustain growth on less.

Another way to guide your spend is to consider customer lifetime value. If your average customer stays with you for years, you can afford to invest more upfront in acquiring them. If your customer base has a lower lifetime value, your budget should focus on tactics that shorten the sales cycle and minimise upfront risk.

It also pays to look at channel-by-channel ROI. For example, if you know every £1 spent on paid search brings back £3, you can confidently scale that channel. At the same time, it’s wise to reserve a small portion of your budget for testing. Trialling new channels or tactics, perhaps three per quarter, can uncover hidden opportunities without risking the bulk of your budget.

But not all businesses work this way and can use these benchmarks. If you’re struggling to use them, it is worth considering how much you could comfortably allocate a month to marketing and draw up a list of things you think you really need support with, that gives us, as an agency, something to start with and work out how we can get the best out of that budget.

Choosing the Right Channels

Not all channels deliver equal results, and spreading yourself too thin can make marketing both ineffective and expensive. Instead, prioritise the platforms that offer the best mix of reach, relevance, and measurable ROI. SEO and content marketing are excellent long-term bets, generating cost-effective traffic once the groundwork is in place. Email marketing is another high-return channel, especially when messages are segmented and targeted.

Social media can be trickier, organic reach is often limited, but with paid amplification and careful audience targeting, it can be highly cost-effective. Meanwhile, pay-per-click advertising works best when approached cautiously: start small, track conversions, and pause anything underperforming. Whatever mix you choose, remember that retaining customers is usually cheaper than acquiring new ones. Balancing acquisition with retention strategies can significantly improve your overall return.

Affordable Tactics That Work

For small businesses working to keep budgets tight, there are plenty of tactics that deliver strong results without heavy spending. A lean content strategy focused on evergreen topics can bring in consistent traffic, especially when paired with keyword optimisation and content repurposing. Local SEO is essential for businesses with a physical presence, optimising your Google Business Profile and collecting reviews can help attract nearby customers.

Email remains one of the most affordable tools at your disposal. Simple onboarding sequences, educational campaigns, and post-purchase follow-ups build customer relationships at minimal cost. Social proof, reviews, case studies, and user-generated content, further boosts trust without draining your budget. Even small tweaks through conversion rate optimisation, such as refining landing pages or streamlining checkout, can lift results significantly. Automation also saves both time and money: affordable tools for scheduling, email, and analytics can reduce manual work, while partnerships and referral programs open new customer pipelines at little to no cost.

Measuring Success

A marketing budget only pays off if you know what’s working. Clear objectives, whether that’s raising awareness, generating leads, driving sales, or improving retention, should guide every campaign. Key performance indicators such as cost per acquisition, return on ad spend, and customer lifetime value help you evaluate efficiency. Attribution models can also show which channels and touchpoints contribute most to your results.

Regularly reviewing dashboards and reports is crucial. This allows you to double down on profitable channels and cut those that underperform. Above all, view every campaign as a learning opportunity. Understanding what resonates with your audience and where your spend generates the most return ensures smarter allocation over time.

Common mistakes

It’s easy to waste money if you’re not careful. Common mistakes include overinvesting in vanity metrics such as follower counts without focusing on conversions, ignoring mobile optimisation and site speed, or neglecting proper data tracking. Running blind tests without clear baselines makes it impossible to measure impact, while failing to consider retention can mean constantly chasing new customers without building loyalty.

Would you like to chat to TIEM Design about your marketing budget?

Budgeting for digital marketing is ultimately about discipline: allocating resources wisely, testing strategically, and measuring consistently. For small businesses, affordable digital marketing isn’t about spending less, it’s about spending smarter. By setting clear goals, prioritising the right channels, and optimising based on real data, even modest budgets can drive sustainable growth. With the right approach, your business can compete effectively and thrive in today’s digital landscape.

We can work with a range of budgets and work to get the best from it. If you are thinking about some marketing options, get in touch with us today and we will walk you through.