Paid media budgeting has by no means been easy, however heading into 2026, it’s changing into probably the most strategically advanced selections CMOs need to make.
Rising media prices, elevated platform automation, AI-driven artistic, longer shopping for cycles and renewed strain on model funding are all reshaping how budgets ought to be set and defended. On the similar time, CFO scrutiny hasn’t eased. If something, expectations round accountability and effectivity are greater than ever.
The outdated “final yr plus 10%” budgeting mannequin now not works. CMOs who depend on it danger underfunding progress channels, over-investing in short-term efficiency, or failing to adapt to how platforms are literally behaving.
This information breaks down how to consider paid media budgeting in 2026, what’s altering, and the way CMOs can construct budgets which are each commercially credible and future-proof.
Why Paid Media Budgeting Wants a Rethink in 2026
Media inflation isn’t going away
Regardless of occasional dips, CPMs and CPCs throughout Google, Meta and LinkedIn have trended upwards during the last 5 years. In response to IAB UK, digital advert spend continues to develop year-on-year, growing competitors for consideration and advert stock.
Key takeaway: paying extra for a similar outcomes is now the baseline, not the exception.
Budgeting purely round historic effectivity metrics ignores the truth that:
- Public sale strain is structural, not non permanent
- Incremental positive factors more and more require incremental spend
- “Effectivity” typically declines earlier than scale improves
- Platform automation and AI evolution in advertisements adjustments how spend performs
Google’s transfer in the direction of broad match, Efficiency/AI Max and automatic bidding isn’t only a tactical shift, it basically adjustments funds dynamics.
Automation tends to:
- Require bigger, extra steady budgets to be taught successfully
- Carry out worse when budgets are constrained or steadily modified
- Blur the road between prospecting and remarketing
CMOs budgeting too tightly typically see volatility that will get misdiagnosed as a method downside, when it’s truly a funds sufficiency downside.
The Largest Paid Media Budgeting Errors We See CMOs Make
Over-indexing on last-click ROI
Attribution fashions haven’t saved tempo with media complexity. But many budgets are nonetheless allotted primarily based on whichever channel “wins” in GA4 or the CRM.
From our consumer work, this usually results in:
- Underinvestment in upper-funnel channels & model constructing exercise
- Over-reliance on branded search and remarketing (i.e. fast wins)
- Artificially inflated efficiency expectations
In case your paid media funds is constructed solely round last-click ROI, you’re not budgeting for progress, you’re budgeting for harvest.
Key takeaway: channels that create demand hardly ever look environment friendly in isolation.
Treating model and efficiency as separate line gadgets
In 2026, the excellence between “model” and “efficiency” media is more and more synthetic.
Meta, YouTube, TikTok and LinkedIn can all sit someplace in the midst of the funnel relying on:
- Artistic high quality
- Viewers technique
- Measurement method
The best budgets we see are designed round outcomes, not labels, for instance:
- Demand creation
- Demand seize
- Demand conversion
How A lot Ought to You Price range for Paid Media in 2026?
You’ll hate me for this, however: there’s no common benchmark.
However, there are helpful frameworks that can assist you set the appropriate budgets for what you are promoting wants.
Budgeting as a proportion of income
For a lot of B2B and DTC manufacturers, paid media budgets usually fall between:
- 5–10% of income for established manufacturers targeted on effectivity
- 10–20% of income for growth-stage manufacturers prioritising scale
What issues greater than the share is how flexibly the funds is deployed throughout the funnel.
Budgeting primarily based on progress ambition
A extra strong method we advocate to CMOs is working backwards from progress targets:
- Outline income progress targets for 2026
- Mannequin required pipeline or demand quantity
- Assess natural contribution realistically
- Fund paid media to shut the hole
This avoids the widespread lure of setting a funds first and retrofitting expectations later.
Key takeaway: formidable progress targets require budgets designed to assist them, not restrict them.
Allocating Price range Throughout the Funnel
Higher-funnel: shopping for future demand
In unsure markets, upper-funnel spend is usually the primary to be lower… and the most costly to rebuild later.
Channels usually funded right here embody:
- Paid social (Meta, TikTok, LinkedIn)
- YouTube
- Show and native
From our expertise, CMOs who shield 20–40% of paid media funds for demand creation are inclined to see:
- Decrease long-term CPAs
- Stronger branded search efficiency
- Extra steady efficiency in downturns
This displays Hallam’s thinking on full-funnel paid media, the place strategic funding in consciousness and upper-funnel exercise helps drive stronger efficiency additional down the funnel and helps long run progress.
Mid- and lower-funnel: capturing present demand
Decrease-funnel channels matter, however they’re more and more constrained by:
- Finite search demand
- Cookie loss
- Platform sign degradation
Over-allocating funds right here typically leads to diminishing returns slightly than incremental progress.
A more healthy method is to:
- Fund lower-funnel channels to saturation
- Redirect incremental funds upstream
- Measure success at blended, not channel, stage
You may discover this additional in Hallam’s guide to measuring paid media performance beyond last click.
Accounting for AI, Artistic and Manufacturing Prices
One of the vital widespread blind spots in paid media budgeting is all the pieces that sits exterior media spend.
In 2026, aggressive benefit more and more comes from:
- Artistic quantity and testing velocity (the significance of this highlighted additional by Meta’s latest Andromeda update)
- AI-assisted manufacturing
- Ongoing experimentation
But many paid media budgets nonetheless don’t account for creative development.
We advocate CMOs explicitly allocating:
- 10–20% of paid media funds to artistic manufacturing and testing
- Extra useful resource for AI instruments, feeds and knowledge infrastructure
Key takeaway: skimping on artistic means even a well-funded media funds received’t ship its full potential.
Forecasting, Flexibility and In-12 months Reallocation
Why inflexible annual budgets fail
Markets shift quicker than annual planning cycles. Platforms change algorithms typically. Shopper behaviour can change in a single day.
The best paid media budgets we see are:
- Set yearly, however reviewed quarterly (generally extra steadily)
- Held centrally, not locked to channels
- Reallocated primarily based on marginal returns
This method additionally makes funds conversations with finance groups simpler. Efficiency turns into a steady optimisation train, not a one-off justification.
Planning for experimentation
Each paid media plan ought to embody a test-and-learn funds.
Usually:
- 5–10% of whole spend
- Clearly outlined hypotheses
- Time-bound testing home windows
This creates area to discover:
- New channels
- New codecs
- New viewers methods
With out it, innovation will get deprioritised in favour of short-term certainty.
What CMOs Ought to Do Now to Put together for 2026
When you’re planning budgets now, concentrate on these actions:
- Stress-test efficiency assumptions in opposition to rising media prices
- Mannequin blended ROI, not channel-level effectivity
- Ring-fence funds for demand creation and artistic
- Construct flexibility into how funds could be reallocated
- Align finance stakeholders early round life like expectations
Key takeaway: the strongest budgets are defensible, adaptable and aligned to progress not simply short-term effectivity.
Closing Ideas: Budgeting as a Strategic Benefit
Paid media budgeting in 2026 isn’t about discovering the “proper quantity”. It’s about making a system that permits your advertising and marketing group to reply intelligently to vary.
CMOs who deal with budgeting as a strategic lever, slightly than an annual admin activity, are higher positioned to:
- Defend long-term progress
- Navigate platform volatility
- Display industrial management internally
At Hallam, we work closely with CMOs to build paid media budgets that stability ambition with accountability and efficiency with model.
In case your 2026 funds nonetheless appears to be like like 2025 with inflation added, it’s in all probability time to rethink it.
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