How much should you spend on marketing for e-commerce?

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What percentage of revenue should you allocate to marketing at different growth stages?

E-commerce platforms should allocate 7-12% of total revenue to marketing, with the exact percentage varying based on growth stage and competitive positioning.

Early-stage e-commerce platforms typically invest 15-20% of projected revenue to build initial brand awareness and acquire their first customers. This higher investment is necessary because you're starting from zero brand recognition and need to establish market presence quickly.

High-growth platforms aiming for aggressive expansion often push marketing spend to 10-15% of revenue to stay competitive and capture market share. Established platforms with strong brand recognition can operate efficiently at 7-10%, focusing more on retention and optimization rather than pure acquisition.

The key is matching your marketing investment to your growth objectives—startups need to spend more proportionally to gain traction, while mature platforms can leverage existing brand equity for more efficient spending.

How does customer acquisition cost compare to lifetime value in e-commerce?

The average customer acquisition cost for e-commerce platforms in 2025 is approximately $70, but successful platforms maintain a lifetime value that is at least three times higher than this cost.

CAC has increased dramatically—by 222% over the past eight years—due to rising advertising costs and increased competition across digital channels. Many e-commerce platforms now face an average loss of $29 per newly acquired customer, indicating that immediate returns often don't cover acquisition costs.

To build a profitable e-commerce platform, you must maintain an LTV-to-CAC ratio of at least 3:1. This means if your CAC is $70, your customer lifetime value should be at least $210. This ratio ensures you have sufficient margin to cover not just acquisition costs but also operational expenses and generate profit.

Smart platform owners focus heavily on retention strategies to maximize LTV and offset rising acquisition costs. Repeat purchases, subscription models, and loyalty programs become critical for achieving healthy unit economics.

You'll find detailed market insights in our e-commerce platform business plan, updated every quarter.

What return on ad spend should you expect across different marketing channels?

E-commerce platforms should target a return on ad spend between 4x and 6x, meaning every dollar spent on advertising generates four to six dollars in revenue.

How do marketing budgets differ by annual revenue size?

Marketing budget allocation for e-commerce platforms varies significantly based on annual revenue, with smaller platforms investing proportionally more to achieve growth.

Platforms generating under $1 million annually typically allocate 15-20% or more of revenue to marketing. This higher percentage is essential for building initial market presence, testing channels, and acquiring the first cohorts of customers who will provide valuable data for optimization.

E-commerce platforms in the $1-10 million revenue range stabilize their marketing spend around 7-12% as they optimize their customer acquisition strategies and improve efficiency. At this stage, platforms have identified their most effective channels and can allocate budgets more strategically.

Platforms exceeding $10 million in annual revenue often spend 7-10% on marketing, with a stronger emphasis on retention, brand building, and efficiency. These established platforms benefit from brand recognition, organic traffic, and word-of-mouth, allowing for more efficient customer acquisition.

What conversion rate benchmarks should guide your marketing decisions?

The average e-commerce conversion rate in 2025 ranges from 2-4%, but this varies significantly by industry niche and device type.

Conversion rates differ dramatically across product categories: personal care products achieve the highest conversion at 6.8%, food and beverages convert at 4.9%, electronics at 3.6%, while fashion and jewelry lag at approximately 1.9%. Understanding your niche's benchmark helps you set realistic expectations and identify optimization opportunities for your e-commerce platform.

Device type also impacts conversion significantly—desktop users convert at approximately 4.8% while mobile users convert at only 2.9%, despite mobile driving the majority of traffic. This gap represents a critical optimization opportunity for e-commerce platforms to improve mobile user experience and checkout flows.

Your marketing spend decisions should account for these conversion benchmarks. If your platform converts below industry standards, investing in conversion rate optimization may deliver better returns than simply increasing ad spend. A platform converting at 2% that improves to 3% effectively increases revenue by 50% without additional marketing cost.

This is one of the strategies explained in our e-commerce platform business plan.

How much should you invest in brand marketing versus performance marketing?

E-commerce platforms should aim for a 60/40 split—allocating 60% to brand marketing and 40% to performance marketing—to balance long-term growth with short-term sales.

Brand marketing builds top-of-funnel awareness, emotional connections, and long-term equity that reduces customer acquisition costs over time. Performance marketing drives immediate conversions and measurable ROI through direct response campaigns focused on specific actions like purchases or sign-ups.

Overemphasizing performance marketing alone leads to diminishing returns, increased price sensitivity among customers, and platform fatigue. Customers repeatedly exposed only to promotional messages become conditioned to wait for discounts, eroding profit margins on your e-commerce platform.

The 60/40 ratio helps e-commerce platforms build sustainable competitive advantages while maintaining consistent revenue flow. Brand investment pays off through improved organic search rankings, higher trust levels, lower future CAC, and reduced dependency on paid channels.

What portion of your budget should go to retention versus acquisition?

The allocation between acquisition and retention should evolve as your e-commerce platform matures, shifting from acquisition-heavy to retention-focused spending.

• Early-stage platforms (first 1-2 years): Allocate approximately 70% to acquisition and 30% to retention. At this stage, building your customer base is the priority, though you should still invest in basic retention tools like email marketing and customer service.
• Growth-stage platforms ($1-10M revenue): Shift to 60% acquisition and 40% retention. As your customer base grows, the compound value of repeat purchases becomes significant, justifying increased retention investment in loyalty programs, personalized communications, and customer experience improvements.
• Mature platforms (over $10M revenue): Reverse the ratio to 40% acquisition and 60% retention. Established e-commerce platforms benefit more from maximizing customer lifetime value through sophisticated retention strategies than from aggressive new customer acquisition.
• Retention efficiency advantage: Retention marketing is 3-5 times more cost-effective than acquisition. Existing customers already trust your platform, have lower persuasion costs, and typically generate higher average order values.
• Channel priorities for retention: Focus retention budgets on email marketing, SMS campaigns, loyalty programs, personalized recommendations, and exclusive customer experiences that drive repeat purchases on your e-commerce platform.

How much budget should you reserve for testing new channels?

E-commerce platforms should set aside 5-10% of their total marketing budget specifically for testing new channels and creative strategies without risking core performance.

This testing budget allows you to experiment with emerging platforms, new ad formats, different messaging approaches, and untested audience segments. Approximately 8% represents the sweet spot—enough to run meaningful tests but not so much that failures significantly impact overall performance.

Testing is essential because the digital marketing landscape constantly evolves. What works today may become saturated or less effective tomorrow. E-commerce platforms that continuously test discover new efficient channels before competitors, gaining first-mover advantages and lower costs.

Structure your testing with clear hypotheses, defined success metrics, and predetermined budgets. Run tests for sufficient duration to gather statistically significant data—typically 2-4 weeks minimum. Successful tests should graduate to your core budget allocation, while unsuccessful tests provide valuable learning for future experiments.

What percentage of ad spend should go to remarketing versus prospecting?

E-commerce platforms should typically allocate 20-30% of ad spend to remarketing campaigns and 70-80% to prospecting new customers.

Remarketing targets people who have already engaged with your e-commerce platform—visited your site, viewed products, added items to cart, or previously purchased. These audiences convert at significantly higher rates and lower costs because they already have awareness and interest.

Prospecting reaches entirely new audiences who haven't interacted with your platform. While more expensive and lower converting than remarketing, prospecting is essential for growth—it expands your customer base and feeds your remarketing audiences with new potential customers.

The 70/80 prospecting allocation ensures you're constantly building top-of-funnel awareness and bringing fresh customers into your ecosystem. The 20/30 remarketing allocation captures those who need additional touchpoints before converting, maximizing the return on your prospecting investment.

Get expert guidance and actionable steps inside our e-commerce platform business plan.

How should you adjust marketing budgets seasonally?

E-commerce platforms should implement flexible budget allocation that increases during peak sales periods and emphasizes efficiency during slower months.

What fixed and variable costs beyond ad spend must you budget for?

E-commerce platform marketing budgets must include 20-30% additional costs beyond pure advertising spend to cover essential operational expenses.

Creative content production represents a significant ongoing cost—professional photography, video production, graphic design, and copywriting are essential for effective campaigns. E-commerce platforms need fresh creative assets regularly to combat ad fatigue and maintain performance.

Marketing technology and tools add up quickly: email marketing platforms, SMS services, analytics software, attribution tools, A/B testing solutions, customer data platforms, and social media management tools typically cost $500-$5,000 monthly depending on platform size.

Agency fees and management costs should be factored in if you're not handling marketing entirely in-house. Agencies typically charge 10-20% of ad spend as management fees, while freelance specialists command $50-$200 per hour. In-house marketing salaries must also be allocated as part of your total marketing investment.

Platform fees for loyalty programs, referral software, and customer relationship management systems add recurring costs. Successful e-commerce platforms also budget for ongoing conversion rate optimization tools, heat mapping software, and user testing platforms to continuously improve performance.

What percentage of revenue are leading e-commerce brands spending on marketing?

Leading e-commerce brands in 2025 typically invest 7-12% of revenue on marketing, with aggressive growth-focused platforms allocating up to 20% in competitive niches.

The most successful e-commerce platforms take a balanced approach that spans acquisition, retention, brand-building, and continuous testing. They don't put all resources into a single channel or tactic but instead diversify across proven channels while experimenting with emerging opportunities.

Top-performing platforms increasingly emphasize retention marketing as they mature, recognizing that maximizing customer lifetime value provides more sustainable growth than constantly acquiring new customers at rising costs. They invest heavily in personalization, loyalty programs, and customer experience improvements.

These leading brands also maintain strategic reserves for defensive spending—when competitors launch aggressive campaigns or new market entrants appear, having budget flexibility allows them to respond quickly and protect market share on their e-commerce platforms.

We cover this exact topic in the e-commerce platform business plan.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

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2. Hostinger - Ecommerce Marketing Budget
3. TCF Team - Ecommerce Marketing Budget
4. WiziShop - Ecommerce Marketing Costs
5. LoyaltyLion - Average CAC Ecommerce
6. Amra & Elma - Customer Acquisition Cost Statistics
7. Billo - What is a Good ROAS
8. Mesha - Comparing TikTok Ads Meta Ads and Google Ads
9. Speed Commerce - Ecommerce Benchmarks Conversion Rates
10. LinkedIn - Brand Marketing Performance E-commerce