Why ambitious businesses need to rethink their marketing investment

The AI boom is making it faster and cheaper to build digital products, launch businesses and create content but as barriers to entry get smaller and markets become more competitive, we're asking, is marketing becoming the most important investment a growing business can make? In this article we'll explore the changing economics of growth, what the research out there can tell us about marketing budgets and why investment in brand could be the biggest competitive advantages of all.

Since the early 2000s technology has been one of the leading competitive advantage for businesses. Building a sophisticated digital product or software platform required teams of developers, high capital investment, technical infrastructure and a bold vision.

The AI boom has already changed those economics in a very short space of time. Software can be developed and launched super fast and businesses can bring products and services to market with significantly fewer resources than would have been required just a few years ago.

For ambitious businesses, particularly those backed by private equity and venture capital, this presents an enormous opportunity. Speed to market has always been critical and that isn't going to change. However, there's another side to this shift that we believe deserves just as much attention.

If it's becoming easier and cheaper for your business to develop and launch new products, exactly the same is true for your competitors.

As barriers to entry get smaller, markets become more accessible, competition increases and customers are presented with an ever-growing number of choices. The challenge isn't just having the capability to create something valuable through tech alone; it's about ensuring your business, product or service, is the one customers notice, trust and choose.

And this is where the role of brand and marketing and how much growing businesses should be investing in both plays a big part and we'll explore that next...

The changing economics of business growth

At Show + Tell, we work extensively with private equity and venture capital firms, as well as the businesses within their portfolios. We also have members of our leadership team who invest personally in growing businesses, giving us an appreciation of the commercial pressures and opportunities that come with investment-backed growth.

One thing we've learned is that speed matters. Whether a business is preparing for its next funding round, expanding internationally, entering a new market or working towards an eventual exit, the ability to move quickly and demonstrate progress is incredibly important.

Traditionally, a considerable proportion of that investment would have been directed towards developing the technology, infrastructure and teams required to bring a product to market. While these investments remain essential, AI is creating opportunities to deliver certain aspects of product development more efficiently.

Research from Benchmarkit's 2025 SaaS Performance Metrics found that R&D expenditure among smaller SaaS businesses had declined compared with previous years. While the research doesn't establish AI as the direct cause, it identifies AI-powered development tools as a possible contributing factor.

We're seeing similar developments across the wider digital industry, with AI-assisted coding, automated workflows and increasingly capable development platforms helping businesses move from idea to execution faster.

The implications extend beyond technology businesses. As the cost and complexity of launching digital products, services and experiences decreases, more organisations can compete in markets that previously required significant capital or specialist expertise. Of course, technology and product quality will always matter. But increasingly, having a good product alone may not be enough to establish a lasting competitive advantage.

As Andreessen Horowitz explores in its article In Consumer AI, Momentum Is the Moat, when businesses have access to similar underlying technologies, distribution and the ability to establish an early market position become increasingly important.

This aligns closely with what we're seeing in our own work. Businesses still need to move quickly, but the importance of launching with a compelling proposition, a distinctive brand and an effective go-to-market strategy has arguably never been greater.

Why brand and positioning are becoming more valuable

When markets become crowded, differentiation becomes harder. Competitors can replicate product features, adopt similar technologies and increasingly produce comparable digital experiences in relatively short periods of time.

What is considerably more difficult to replicate is a genuinely distinctive market position, an established reputation, meaningful customer relationships and a brand that people recognise and trust.

This is where we believe businesses need to think differently about investment.

Rather than treating brand development as something that happens once the product has been built, we would encourage business leaders to consider brand strategy and positioning much earlier in the growth journey. Understanding exactly who you're targeting, what makes your proposition different and why customers should choose you needs to inform the product, the customer experience and the wider marketing strategy.

For investment-backed businesses in particular, getting this right early can have a considerable impact. A clearly defined proposition can support faster market entry, more effective customer acquisition and a stronger platform for scaling into new sectors or geographies.

Charlie Hartley, Managing Director at Show + Tell, explains:

"Working with private equity and venture capital-backed businesses, we understand that speed to market is absolutely critical. That's not changing. What is changing is how quickly competitors can now develop and launch similar products. Our view is that businesses need to put much greater emphasis on brand, positioning and marketing from the outset. It's no longer just about getting to market first, it's about being the business customers remember, trust and choose. That's where we believe some of the biggest opportunities for creating long-term value now sit."

For us, this isn't about choosing between investing in technology or marketing. Both remain essential. It's about recognising that as technology becomes more accessible, the balance of investment required to achieve sustainable growth may need to evolve.

How much should a growing business invest in marketing?

This brings us to an important question for business owners, CEOs and marketing leaders. If brand, differentiation and customer acquisition are becoming increasingly important, how much should businesses actually be investing in marketing?

The research provides some interesting benchmarks.

According to Gartner's 2026 CMO Spend Survey, the average marketing budget represents approximately 7.8% of company revenue, compared with 7.7% in 2025. This suggests that overall marketing budgets have remained relatively stable, despite the increasing competition businesses face.

However, when we look specifically at B2B businesses and those pursuing more ambitious growth, the numbers become more interesting.

Benchmarkit's 2025 B2B Marketing Benchmarks found that median marketing investment increased from 9% of revenue in 2024 to 10% in 2025. Among businesses in the top quartile for marketing investment, budgets increased from 16% to 20% of revenue.

The research also identified a relationship between marketing investment and business growth, with faster-growing companies generally allocating a greater proportion of revenue towards marketing.

It's important to recognise that correlation doesn't necessarily mean causation. Simply increasing marketing expenditure won't automatically generate faster growth, and the appropriate budget will depend on factors including industry, margins, growth stage, existing brand awareness and commercial objectives.

Nevertheless, the findings raise an important question for leadership teams: does your marketing investment genuinely reflect your growth ambitions?

For a business looking to maintain its current market position, an investment of 5% of revenue might be appropriate. For another business targeting substantial year-on-year growth, entering new markets or competing against established brands, an investment closer to 10%, 15% or even 20% may be more realistic.

These figures are benchmarks rather than universal recommendations, but they provide a useful starting point for commercial planning.

For example, a £10 million revenue business investing 5% in marketing has an annual budget of £500,000. At 10%, that increases to £1 million, while a 20% investment represents £2 million.

Those are materially different levels of commitment, with very different opportunities to build awareness, develop demand and accelerate customer acquisition.

The important consideration isn't simply how much you're spending, but what level of growth you're expecting that investment to support.

What can we learn from private equity and venture capital-backed businesses?

The relationship between growth ambition and marketing investment becomes particularly apparent in the software and technology sectors.

Benchmarkit's 2025 SaaS research found that sales and marketing expenditure represented approximately 47% of revenue among VC-backed SaaS businesses and 33% among PE-backed SaaS businesses.

These figures combine sales and marketing costs, so they shouldn't be compared directly with marketing-only budgets. They also reflect the particular economics of subscription software businesses, where significant upfront customer acquisition investment can be justified by recurring revenue over time.

However, they demonstrate the level of commercial investment businesses are prepared to make when growth, market share and enterprise value are priorities.

The same research found that the median cost of acquiring $1 of new annual recurring revenue had increased by 14%, reaching approximately $2 of sales and marketing expenditure for every $1 of new ARR acquired.

Customer acquisition is becoming increasingly expensive, and that makes the effectiveness of brand, positioning and marketing strategy even more important.

From our perspective, this is particularly relevant for PE and VC-backed portfolio companies. Investors are understandably focused on efficient growth, margin improvement and the creation of long-term enterprise value. Marketing therefore needs to be viewed as a measurable commercial investment rather than simply an operational expense.

That means connecting brand strategy, marketing activity and customer acquisition directly to business outcomes. Whether the objective is entering a new market, accelerating revenue, improving conversion rates or strengthening the business ahead of an exit, marketing needs to play a clear role in the value creation plan.

AI is also changing the economics of marketing itself

There's another important consideration in all of this. AI isn't just making products and software easier to develop. It's also making marketing content and execution faster and cheaper.

Businesses can now produce significant volumes of content, advertising creative, imagery, video and personalised communications using tools that were unimaginable just a few years ago.

McKinsey's research into generative AI adoption found that marketing and sales was the business function with the highest reported regular use of generative AI, at 42% across the industries surveyed.

Meanwhile, Gartner's 2026 CMO Spend Survey found that marketing leaders are allocating an average of 15.3% of their marketing budgets towards AI initiatives.

This presents an interesting challenge. While AI creates opportunities to improve marketing productivity and reduce execution costs, it also makes it easier for every competitor to produce more content and launch more campaigns.

The result is potentially an even more crowded marketing environment, where simply producing more content or running more advertising isn't enough to stand out.

In our view, this reinforces the importance of having a distinctive brand, a compelling proposition and a marketing strategy built around genuine customer insight.

AI can help businesses execute their marketing more efficiently, but it doesn't automatically give them something meaningful to say or a compelling reason for customers to choose them.

Our advice: invest in differentiation, then invest in growth

At Show + Tell and Next Chapter, we're seeing growing recognition among ambitious businesses that brand and marketing need to work much more closely together.

A strong brand creates the foundations for differentiation, while an effective marketing strategy builds awareness, generates demand and turns that positioning into measurable commercial results.

Our recommendation is that businesses review their marketing investment in the context of their growth objectives, rather than simply using last year's budget as the starting point.

That means considering the size of the opportunity, the competitive landscape, the value of acquiring a new customer and the speed at which the business needs to grow.

It also means being deliberate about where investment is allocated. Spending more on paid media, for example, may generate additional traffic, but if the underlying proposition is weak or the digital experience fails to convert, that investment may not deliver the expected return.

Equally, investing in a strong brand without the marketing infrastructure, channels and activity required to take it to market can limit its commercial impact.

The most effective approach brings these elements together, connecting brand strategy, positioning, digital experience, demand generation and performance measurement around a common set of growth objectives.

Daniel Swepson, Marketing Director at Show + Tell and Next Chapter, comments:

"When we're talking to businesses about marketing budgets, the starting point shouldn't just be a percentage of turnover. It should be what growth they're trying to achieve and what acquiring a new customer is worth to the business. The benchmarks are useful, but the real opportunity is to build a marketing strategy that connects investment to commercial outcomes. As competition increases, businesses need to be smarter about where they spend, but they also need to recognise that meaningful growth requires meaningful investment."

For us, this is an important distinction. We're not suggesting that every business should automatically double its marketing budget. We're suggesting that leadership teams need to consider whether their existing investment is sufficient to achieve their ambitions in a market where competition is becoming more intense.

And as AI creates efficiencies across technology, development and marketing operations, there may be an opportunity to redirect some of those savings towards the activities that create a more sustainable competitive advantage.

The next chapter of growth will be won by businesses that stand out.

AI is creating extraordinary opportunities for businesses to move faster, operate more efficiently and bring new ideas to market. For ambitious founders, business owners and investment-backed organisations, the potential is significant.

But greater accessibility also means greater competition. The same technologies helping your business innovate are available to your competitors, and the barriers that once protected established market positions are becoming easier to overcome.

We believe this makes brand, positioning and marketing increasingly important components of a successful growth strategy.

Speed to market will always matter, particularly for businesses operating within demanding investment and growth cycles. But speed alone is unlikely to guarantee success in a marketplace where customers have more choice than ever before.

The businesses that succeed will be those that combine the ability to move quickly with a clear proposition, a distinctive brand, an exceptional customer experience and the marketing investment needed to build meaningful market presence.

For business leaders planning their next stage of growth, our advice is simple: make sure your investment in brand and marketing is aligned with the scale of your ambition.

Because in a world where almost anyone can build something, the real competitive advantage increasingly lies in making sure customers choose you.