How a CFO should evaluate marketing spend

For many CFOs, marketing is the uncomfortable line in the budget. It is large, it is discretionary, and the evidence offered for it rarely looks like the evidence offered for any other investment. A capital project comes with a cost, an expected return and a payback period. A marketing budget comes with impressions, engagement and a promise that results take time.

The result is that marketing budgets in many companies are decided by precedent. Last year's figure is adjusted up or down depending on how the year went, contracts renew because cancelling feels riskier than continuing, and nobody can say with confidence what the spend produced. That is not a marketing failure. It is a gap in the sixth area of the growth system: how investment decisions are made.

Why benchmarks don't settle the question

The first instinct is to compare spend with an industry benchmark. The most widely cited figure comes from Gartner's annual CMO Spend Survey, which in 2025 put average marketing budgets at 7.7 percent of company revenue, unchanged from the year before. It is a useful reference for large enterprises. It is a weak guide for a company of five or ten million dollars: the large majority of the companies surveyed had annual revenue above one billion dollars.

More importantly, a percentage of revenue says nothing about whether the money is working. Two companies can spend the same share of revenue and get completely different results. The question a CFO needs answered is not "are we spending the normal amount?" but "is what we spend producing customers worth more than they cost?"

Spending the average amount is not evidence that the spending works.

Six questions, and the evidence that answers them

The first five questions establish whether marketing, as a whole, is a sound investment. The cost per new customer and lifetime value together show whether growth is profitable, and the payback period shows whether the company's cash can fund more of it. The sixth question is what makes individual budget lines discussable: it connects each major item of spend to the customers it produced.

Separate maintenance spend from growth spend

Not every marketing dollar is meant to win new customers. Some maintains demand the company already has: keeping the website running, staying visible to existing clients, protecting the brand name in search results. Some is meant to grow: reaching new segments, new regions or new buyers.

Mixing the two makes both harder to judge. Maintenance spend can be managed like an operating cost, with a stable budget and an expectation of efficiency. Growth spend should be managed like an investment, with an expected return, a payback period and a date by which the evidence will be reviewed. Asking the marketing leader to split the budget this way is often the most productive single conversation a CFO can start.

Make renewal a decision

The most common weakness in marketing investment is not overspending. It is the absence of decisions. Agency retainers, software subscriptions and recurring campaigns renew automatically, and each renewal is easier than a review. Over several years, the budget becomes a collection of commitments nobody actively chose to continue.

• List every recurring marketing commitment with its annual cost, its renewal date and its owner.
• Require a short written case for each renewal: what it produced last year, measured in customers where possible, and what is expected next year.
• Schedule the review before the notice period, not after it, so that stopping is a real option.
• Record the decision, including decisions to continue, so that next year's review starts from evidence rather than memory.

When the numbers can't be produced

In many companies, the honest answer to several of the six questions is "we don't know." That is not a reason to cut marketing. Cutting blindly can remove the channels that were quietly producing the best customers. It is a reason to fix measurement before increasing spend: build an inquiry log, match it to invoices, calculate acquisition cost and lifetime value, and review again in two quarters.

When a company cannot answer these questions, the constraint in its growth system is usually not the marketing. It is the ability to see what the marketing does. Making that visible, with every figure traced to the company's own records, is the core of our assessment, and it gives the CFO and the marketing leader a shared basis for every decision that follows.