As 2025 draws to a close, many business leaders and marketing directors will be faced with the usual task of setting their marketing budget for 2026. Except, this year hasn’t quite felt like business as usual. Startups and small and medium sized enterprises (SMEs) in the UK have been buffeted by the winds of unpredictability in the market. Inflation, increasing taxation, geopolitical uncertainty, cybersecurity risks and rapid technological changes have put even the most robust businesses to the test. The old approach of setting a fixed annual budget based on the previous year’s activities and hoping for the best may no longer be an adequate strategy.
In 2026, strategically-minded leaders will know that staying ahead of the curve requires flexibility, agility and a sharper focus on technology and data. In the age of AI, modern marketing budgets are no longer static but rather dynamic portfolios of investment that can be continually assessed and adapted to changing conditions and opportunities. In this article, we’ll explore the best way to create a dynamic marketing budget for 2026 that positions your business for growth and protects it from volatility in the market.
Historically, businesses would review the previous year’s marketing spend, apply a modest increase to achieve their annual growth targets, and call it a day. But in today’s world, sticking to that approach puts your business at risk of being caught out by changes in the market. Not only is consumer behaviour changing more rapidly than ever before and new technologies emerging overnight, but competitors can now disrupt the market in a matter of weeks. A rigid budget that’s set in stone leaves your business vulnerable to missed opportunities and wasted spend.
Instead, leading businesses are now adopting a new data-driven model for marketing investment called demand-led budgeting (or demand-driven budgeting). In essence, this means allocating your resources based on proven return on investment (ROI), rather than arbitrary percentages or historical patterns. If every £1 invested in a particular channel consistently delivers £5 back, why cap that spend? The principle is simple: keep investing as long as the returns justify it.
The demand-led approach requires real-time monitoring and agility. AI-powered “budget reallocation engines” are already helping brands optimise their marketing spend dynamically, with Google’s internal research showing that AI could achieve up to 20% more conversions through real-time adjustments. However, only 17% of UK businesses are currently equipped for this level of marketing budget flexibility.
It’s also worth noting that although AI can be a powerful tool, it’s by no means a silver bullet. It’s essential to have human expertise playing an oversight role to make sure that all AI-influenced decisions are taken in line with overall business goals and brand values.
What the data tells us about marketing in 2026
Industry research paints a picture of increasing competitiveness in 2026, making proactive planning and flexible budgets increasingly essential for companies of all sizes.
Forrester’s recent budget planning guide reveals that a significant 83% of B2B marketing decision-makers expect their budgets to rise over the next 12 months, indicating a strong focus on achieving growth despite economic uncertainty. This optimism extends beyond marketing alone; 39% of organisations plan to increase their customer experience investments at a rate that outpaces inflation. This is a sign that businesses are prioritising initiatives that strengthen relationships and improve long-term value.
Further insights from 6sense tell a similar tale. Its Science of B2B: 2025 Marketing Spend Report shows that while the median increase in marketing budgets is projected at 5%, the average rise is a much more substantial 22%, reflecting the influence of ambitious growth strategies. At the same time, the data shows a lingering impact from previous years: 55% of businesses delayed or cancelled projects in 2024, meaning many will still be playing catch-up in 2026. This combination of renewed marketing investment and pent-up demand suggests that the coming year will be a critical period for businesses to reassert their presence and capitalise on new opportunities.
One of the smartest ways to ensure your marketing budget is not derailed by unexpected events is through scenario planning. Rather than relying solely on historical data of what worked in the past, scenario planning allows you to build more flexible strategies that anticipate possible differences in market conditions. For example:
By planning in this way, you can be ready to respond quickly without derailing your entire budget. It also helps secure buy-in from finance if decisions are grounded in clear, predefined logic rather than reactive spending.
In 2026 and beyond, marketing success will be judged by business outcomes, not vanity metrics. Click-through rates, leads and impressions have their place, but they don’t tell the full story. Instead, focus on the core metrics that directly impact revenue, such as:
Identifying the patterns in your data more closely can also give you hints about customer habits that should be shaping your advertising activities. For example, if your paid ads usually run out of budget by 6pm, but you can see that conversions tend to peak during the evening, you’re likely leaving money on the table. Doing the sums and actually quantifying that in terms of revenue lost makes increasing advertising spend a far stronger, data-driven prospect that is more likely to yield results.
Performance marketing can deliver quick wins, but an over-reliance on last-click attribution, which gives all credit for the conversion to the last-clicked ad and corresponding keyword, is short-sighted. Investing in brand awareness helps to reduce acquisition costs, shorten sales cycles and increase loyalty in the long term, thereby improving profitability over time. Experts differ on the right split between performance and brand marketing investment, but it hovers between 60/40 either way.
While it is true that measuring the impact of brand awareness campaigns can be challenging, tools like Marketing Mix Modelling (MMM) and incrementality testing (such as Conversion Lift and Brand Lift studies) can help reveal the true value of brand building activities beyond what last-click metrics show.
AI tools can help make marketing more affordable by automating certain tasks, such as:
However, the use of AI comes with risks. Over-use or reliance can lead to generic content, brand dilution, compliance issues, or tone-deaf messaging. Use AI as an assistant, not a replacement for strategic thinking. It remains essential to have a senior marketing expert navigating and overseeing complex decisions about brand positioning and customer experience.
To remain competitive, your marketing budget should allow enough room for innovation and adjustment. A proven framework for testing new ideas without jeopardising core performance is the 70/20/10 rule:
It is also a good idea to create a structure for your budget based on the various types of spend categories. The actual percentage mix might vary by industry, business stage, and risk appetite, but the following example serves as a useful guideline:
It’s often true that even the best-intentioned plans may falter, so let’s take a look at some of the common pitfalls you might encounter when setting up your marketing budget for 2026:
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Challenges: |
Counteract with: |
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Changing market demands |
Keep a close watch on customer insights and be ready to pivot when the need arises. |
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Over-reliance on AI |
Automation is helpful, but unchecked AI usage can damage your brand. Always keep a human in the loop for expert oversight. |
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Short-term thinking |
Decisions based solely on short-term data can backfire in volatile markets. Try to keep one eye on the past and one on the horizon. |
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Organisational silos |
Marketing, sales and finance must work together to avoid resource conflicts and wasted ad spend. |
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Creative stagnation |
Refresh your campaigns regularly to avoid diminishing returns |
Your 2026 marketing budget has to be the best it can be if you want to achieve sustainable growth, stay competitive and weather the storms that seem likely given the UK’s battered economic outlook. You’ll need to embrace flexibility, prioritise ROI and balance short-term performance with long-term brand growth. But navigating this complexity alone can be risky. A fractional CMO brings all the benefits of C-suite level marketing leadership, without the cost of a full-time CMO.
At The Marketing Centre, our team of over 100 proven marketing directors can help steer your business through the uncertainty, ensuring every pound spent on marketing works harder. We specialise in helping UK businesses build marketing strategies that deliver measurable results without the overhead of a full-time hire.
Ready to build a smarter marketing budget for 2026? Get in touch with us today.