Why your 2027 marketing budget gets cut in June
Key Illuminated Insight
A marketing budget gets cut when nobody can defend it, and a number borrowed from an industry percentage is indefensible by construction. Build the 2027 number backward from the revenue you are trying to add, so you can say what it buys, what the target requires, and what a cut would cost.
Step into full illumination.
For years I sat through budget season inside large financial institutions. Months of it. Spreadsheets, submissions, revisions, and defence meetings. By December the number was set, and everyone went into January believing they knew what the year looked like.
Then somewhere around June, targets would be re-evaluated and we would be asked to give money back.
This happened often enough that people adapted. The lesson everybody learned was to spend hard in the first half of the year, because whatever was left in the second half was at risk. Teams front-loaded campaigns that belonged in the fall. Money went out the door early to protect it from being taken.
I understood why people did it. I have never been a proponent of it. Spending to protect a budget produces a very different result from spending to produce a result, and the calendar it creates has nothing to do with when customers are ready to buy.
What I want to name is why the cuts kept happening.
Marketing was carried as an expense
Nobody in those rooms was hostile to marketing. They were doing what any finance function does with a cost when the number has to move. Expenses come off first because reducing them is fast and the effect is immediate.
An investment gets treated differently. An investment gets defended, because cutting it has a visible cost attached to it. The line between the two comes down to one thing: whether anyone can show what the money produced.
That is where most marketing budgets lose the argument. The spend was real. The activity was real. When the question came, nobody could connect a dollar to a dollar, so the dollar came back.
A budget should move during the year, for the right reason
None of this means a budget should be set in January and left alone.
A marketing budget should change through the year. It should change because of what the numbers are telling you.
When something is working and there is room to meet or exceed a target by putting more behind it, the investment should increase. When something is not working, it should stop, and that money should move to what is producing. Reallocation based on evidence is a budget doing its job.
The version I watched for years was different. The money moved because a target got revised somewhere above the marketing function, and marketing had the least defensible line item in the room.
Those are two very different reasons for the same amount of money to move, and only one of them makes the next year easier.
A number you can defend
The budgets that survived those meetings were the ones where somebody could explain the arithmetic. Where the number came from, what it was expected to produce, and what would be lost if it came down.
A number borrowed from an industry percentage cannot do that. Seven point eight percent of revenue is a figure someone else's companies produced. When the question comes in June and someone asks what happens if it drops by a fifth, there is nothing underneath it to answer with.
A number built backward from your own growth target answers on the spot. It says this funds a specific number of new customers, the revenue target requires a different number, and a cut of this size takes the plan out of reach by this much. That turns a request for money into a conversation about trade-offs, which is a conversation you can win.
This is the pattern I wrote about in The Work That Holds You. Growth built on effort resets every year because nothing underneath it carries forward. A budget built on arithmetic you can repeat is one of the places that difference shows up first.
What percentage of revenue should go to marketing in 2027?
There is a widely quoted figure that marketing should run at somewhere between seven and eight percent of revenue. Gartner's 2026 survey puts it at 7.8 percent, and it is a real number.
It is also drawn from a sample where the large majority of respondents report annual revenue above a billion dollars. Applied to a growth-stage company, it understates what the growth target requires by roughly half. Companies at seed stage commonly invest between fifteen and twenty-five percent of revenue, and Series A companies between twelve and eighteen. Community banks and credit unions do not work in percentage of revenue at all. They budget in basis points of assets, and the peer average sits well below what a growth target requires.
Planning against the wrong benchmark is how a founder ends up defending a number that was never going to reach the target it was built for.
How do you calculate a marketing budget from a revenue target?
The sequence runs backward. Start with the revenue you are trying to add. Work out how many customers that takes, how many qualified leads that takes at your close rate, and what those leads cost in your category right now. The percentage falls out at the end, as a check.
If the number that comes out sits far outside what companies at your stage invest, that is worth knowing in October. It usually means the target is ahead of what the current funnel can carry, or the close rate in the model has not been tested against last year's real numbers.
Either way, it is a better problem to have in the fall than in June.
I built a tool that runs this math for you. It takes about two minutes, it works differently depending on whether you are a founder, a bank, a credit union, or an advisory firm, and it tells you whether your foundations can carry the number it produces before it congratulates you on the number.
Growth built on systems compounds. Growth built on effort resets.
Common questions about 2027 marketing budgets
What percentage of revenue should a company spend on marketing?
Gartner's 2026 CMO Spend Survey puts the all-industry average at 7.8 percent of revenue, but the large majority of that sample reports revenue above a billion dollars. The CMO Survey, which includes more small and mid-sized firms, reports 9.0 percent. Neither figure describes a growth-stage company well. Stage matters more than industry average.
How much should a seed stage company spend on marketing?
Seed stage companies commonly invest between fifteen and twenty-five percent of revenue, and Series A companies between twelve and eighteen percent. Financial services firms generally run between eight and fourteen percent, with fintech in aggressive growth pushing higher. The right number comes from your growth target rather than the band, with the band used as a check.
What should a credit union or community bank spend on marketing?
These institutions budget in basis points of assets rather than percentage of revenue. Credit unions between $100 million and $5 billion in assets average between 0.110 and 0.118 percent of average assets, while growth-focused institutions run between 0.20 and 0.25 percent. Community banks fall between 0.08 and 0.20 percent of assets, or around 2.5 percent of noninterest expense for banks between $1 billion and $10 billion.
What counts as marketing budget?
People and contractors, including fractional or in-house marketing leadership and agency retainers. Media spend. Content production. Marketing tools and technology. A testing reserve. In-house labour typically accounts for around a quarter of total marketing budgets, so a plan that counts only media understates itself substantially. Product costs and sales compensation usually sit in other budgets. A website rebuild or rebrand is a decision to make explicitly, because if it is not funded as a capital project, marketing carries it.
How much does a lead cost in financial services?
Cost per lead in financial services runs between $450 and $760 depending on channel, and acquisition costs across the category have climbed between forty and sixty percent since 2023. A 2027 plan built on 2023 cost assumptions will be underfunded before the first dollar is spent.