If you’re a business owner or CMO, you already know advertising is one of the
levers that can make or break your growth. But here’s the million-dollar question (sometimes quite literally): are you actually spending enough to hit your goals?
The short answer, backed by Nielsen’s ROI analysis, is: probably not. Their “50-50-50 Gap” shows that roughly half of media plans are underfunded by about 50%, leaving up to 50% ROI gains on the table. That’s a lot of “fifty” — and a lot of missed opportunity.
In this article, we’ll walk through how different U.S. industries are budgeting for advertising, where the gaps are, and what history tells us about ad spend leading up to 2020 and beyond. You’ll see how your sector stacks up, and where you might be falling short.
Why Underinvestment Happens More Than You Think
Before we dig into industries, let’s address why so many brands underfund advertising.
Fear of “waste” – In lean times, ad budgets are often first on the chopping block because ROI can be tricky to measure.
Overreliance on loyal customers – Brands assume existing customers will keep buying, so they shift spend away from acquisition (even though competitors may be wooing those same customers).
Mismatched budget formulas – Spending a flat dollar amount year after year without adjusting for growth goals or inflation means your share of voice shrinks over time.
Gartner’s surveys reinforce this: only 30% of top marketers say they have the funding they need to fully execute their strategy. That means seven out of ten CMOs feel they’re fighting with one hand tied behind their back.
Retail:
The Big Spenders (and Why ROI Still Matters)
Ad Spend as % of Revenue: 3–4% average, but ranges from less than 1% (grocers) to 7%+ (jewelry, specialty retailers).
Total Ad Spend: Over $50 billion annually, making retail the single largest ad-spending vertical in the U.S. — roughly 15% of all ad dollars.
Growth Pattern: Retail ad spend has about doubled since 2010, driven by e-commerce, omnichannel campaigns, and retail media networks.
CMO Takeaway: Retailers invest heavily, but the challenge isn’t whether to spend — it’s how to allocate. Many say budgets are strong for acquisition but not enough for loyalty-building and brand storytelling. If your repeat business is lagging, shifting budget could be smarter than simply increasing it.
Automotive
Big Purchases, Small Percentages
Ad Spend as % of Revenue: Typically 1–2%. Manufacturers average around 1.1%.
Total Ad Spend: About $20.8 billion in 2023, up from pandemic lows but still shy of mid-2010s peaks.
Growth Pattern: Cyclical. Ad spend climbs in strong sales years and falls sharply when inventory is tight (like during chip shortages).
CMO Takeaway: Auto brands tend to underinvest during transition periods (e.g., electric vehicle launches), which can slow adoption. If you’re introducing new tech, cutting ad spend is risky — it leaves consumers uninformed, and competitors with an open lane.
Financial Services:
A Game of Extremes
Ad Spend as % of Revenue: Banks often 2–3%, insurers around 2–4%, while credit card issuers and fintechs can push 8–10%.
Total Ad Spend: Around $35–40 billion annually, with insurance alone responsible for billions (Progressive, State Farm, GEICO, and Allstate together spent $3.7B in 2023).
Growth Pattern: Strong decade-long growth with recent pullbacks in insurance due to profit pressure. Fintech and payment brands are still spending aggressively.
CMO Takeaway: If you’re in finance, sufficiency depends on your segment. Some insurers have arguably overinvested, but banks and emerging fintech brands often underfund long-term brand building. The right balance is crucial — too little and you disappear, too much and margins suffer.
CPG:
From Frugality to Fighting Back
Ad Spend as % of Revenue: Often 5–10%; cosmetics and personal care can exceed 13%.
Total Ad Spend: Estimated $30–35 billion across food, beverage, personal care, and household goods.
Growth Pattern: Modest growth through the 2010s, followed by a post-2021 surge as big brands fought back against disruptors and retailer private labels.
CMO Takeaway: After years of underinvestment, many CPG leaders admit they need to commit more of their sales revenue to advertising. If you’re losing ground to smaller, scrappier brands, upping your spend — and sharpening your creative — could be the most direct way to win back share.
Technology:
Marketing Meets Measured Growth
Ad Spend as % of Revenue: Hardware/electronics ~1%, software/IT ~2–3%, with consumer tech launches hitting 5%+.
Total Ad Spend: Around $20–25 billion annually in the U.S.
Growth Pattern: Fast growth through the 2010s, slower post-2022 as tech companies tightened costs.
CMO Takeaway: Tech brands historically relied on product-led growth, but competition now demands brand marketing. If you’ve been trimming spend, ensure your cutbacks aren’t eroding awareness in critical segments.
Travel & Hospitality:
From Collapse to Comeback
Ad Spend as % of Revenue: Airlines ~0.5%, hotels ~2–3%, OTAs much higher.
Total Ad Spend: About $9.8 billion in 2024 forecast — finally above 2019 levels.
Growth Pattern: Steady until 2020, catastrophic drop during COVID, slow rebound since.
CMO Takeaway: Many travel brands are still underinvesting relative to pre-pandemic potential. If you’re banking on pent-up demand, remember: awareness fades fast, and competitors are eager to fill the void.
Healthcare & Pharma:
Spending Big, Drawing Scrutiny
Ad Spend as % of Revenue: Pharma averages ~3%, hospitals often <1%.
Total Ad Spend: Pharma ~$15–16 billion, with DTC drug ads at $7.6B in 2022 — double 2010 levels.
Growth Pattern: Steady increases, barely disrupted by the pandemic.
CMO Takeaway: Pharma rarely feels underfunded in advertising. If you’re in healthcare, the conversation is less about sufficiency and more about effectiveness — and public perception. ROI matters, but so does responsible messaging.
Telecom:
Always On
Ad Spend as % of Revenue: Wireless ~3.3%, cable/pay-TV ~6%.
Total Ad Spend: Roughly $20–25 billion annually.
Growth Pattern: Moderate, tied to technology rollouts (4G, 5G) and competitive shifts.
CMO Takeaway: In telecom, cutting ad spend is asking to lose market share. The battle is continuous, so budgets are less about “how much” and more about “where to place the bets” — mass media, digital, or direct offers.
Media & Entertainment:
Spending to Stand Out
Ad Spend as % of Revenue: Can be high — a blockbuster film might have a marketing budget equal to half its production cost.
Total Ad Spend: Around $42 billion annually, second only to retail in share of U.S. ad spend.
Growth Pattern: Strong decade-long growth, briefly hit in 2020, then surging past pre-pandemic levels.
CMO Takeaway: Underinvestment here is rare — if your content can’t find an audience, the ROI from even a big campaign can vanish. The challenge is managing fragmentation and ensuring your budget covers the right mix of channels.
How to Decide if You’re Spending Enough
Here are a few practical benchmarks:
Nielsen’s guideline: 1–9% of revenue, depending on industry.
Share of voice vs. share of market: If your share of voice lags your share of market, you’re at risk of losing ground.
Competitive monitoring: Track what your top 3 competitors are spending — not just total, but by channel.
ROI experiments: Test incremental budget increases in high-performing channels.
Final Word for CMOs and Owners
Underinvestment in advertising isn’t just a missed opportunity — it can actively erode your brand’s position. The data shows that across many industries, budgets are often short of optimal. Whether you’re in retail, finance, CPG, tech, travel, healthcare, telecom, or entertainment, the takeaway is the same: spend enough to own your category’s conversation, and allocate it where it counts.
If you’re cutting budgets, be certain it’s due to efficiency gains — not because you’ve mistaken a quiet quarter for proof you can afford to go silent. The brands that win over the long term are the ones that keep showing up, loud and clear.
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