83% of consumers are more likely to do business with a brand after receiving a promotional product, and nearly 80% keep that item for more than a year, according to 2026 research from Showpony. Most companies still fund that impact out of whatever’s left in the marketing budget after ads, events, and content are paid for.
That gap, between what branded merchandise actually delivers and how casually merchandise financial planning gets treated, is getting harder to justify. Total marketing budgets have compressed to 7.7% of company revenue in 2026, the lowest level in a decade, according to Gartner’s 2026 CMO Spend Survey. When the whole pie shrinks, the slices that were never planned in the first place are the first ones to disappear.
For a company already running merchandise programs, that’s not a hypothetical risk. It’s the difference between a client gifting program that survives a budget review and one that gets quietly cut because nobody could point to a number defending it.
Most Companies Still Lack Merchandise Financial Planning
It gets pulled from whatever’s left after the bigger, more visible channels are funded.
Ads, events, and content typically get named line items with a set amount and a named owner. Branded merchandise often doesn’t. It gets requested case by case, approved informally, and paid for out of whatever’s left in a department budget that month. That approach works fine when budgets are generous. It falls apart the moment a company needs to cut spend, because a line item that was never planned has no defender when the cuts start.
USE CASE
SHARE OF AI-USING DISTRIBUTORS
Creative copy
45%
Proposals and RFPs
25%
Video creation
19%
Product recommendations
13%
How much of a marketing budget should actually go to merchandise?
There’s no single right number, but the benchmarks give a starting point.
B2B firms generally budget between 2% and 5% of revenue to marketing overall, with B2C companies running closer to 5% to 10%, according to Salesforce and HubSpot benchmarks cited by Showpony’s 2026 merch budget guide. Within that total, allocation should follow the goal, not a flat percentage. A B2B company with a small number of high-value clients may reasonably put 50% or more of its promotional products spend into client gifting alone, according to a 2026 budgeting framework from mfgmerch.com, while a consumer brand running large trade shows might put 60% or more into event giveaways instead.
The starting benchmark matters less than the decision to set one at all. A company that enters the year without any target, even a rough one, ends up making that decision order by order instead, which is exactly the pattern that turns merchandise into reactive spending instead of planned investment.
Shrinking marketing budgets make an unplanned merch line the first thing cut.
26% of marketing budgets are wasted overall, and unclear ROI is a major reason why.
Martech underutilization, mistargeted spend, and hidden costs erode marketing budgets across nearly every category, according to 2026 research from Improvado. A merchandise line with no defined amount, no tracked ROI, and no named owner looks exactly like the kind of spend that gets flagged when a finance team goes looking for waste, even when the underlying program is working. Planning the line ahead of time, with a defined amount and a way to measure it, is what keeps it out of that conversation.
Speed
A prospect goes from a name on a lead list to a full picture, brand identity included, in the time it takes to open a browser tab.
Relevance
The first conversation starts with the client's actual products, audience, and brand, not a generic pitch.
Rep time
The working hours that used to go into manual prospect research now go into preparing what to actually say.
What does a merchandise line actually protect against?
A single event or client request eating the entire year’s promotional budget.
Most companies have multiple merchandise needs across a year, not one. A reactive approach, where the budget gets spent on the first big trade show or the first VIP client gift request, routinely leaves nothing for the programs that come later in the year. A budgeting framework built around occasion and audience tier, set before the year starts, prevents that. It doesn’t require a bigger budget, just a plan for how the existing one gets split.
This is also where a lot of the frustration around merchandise programs actually starts. It’s rarely that branded merchandise doesn’t work. It’s that the third request of the year hits an empty budget because the first two weren’t planned against a total.
Trade shows already prove the model. Merchandise should follow the same logic.
B2B firms already invest 15% to 20% of their marketing budget in trade shows and industry events, because in-person relationships carry weight no digital channel replicates.
Branded merchandise works on the same principle at a lower cost per touch. A trade show line gets a dedicated budget because the value of a face-to-face moment is well understood. A merchandise line deserves the same treatment, since the mechanism, a physical item that keeps a brand in front of someone longer than a single interaction, is the same one that makes the trade show line worth funding in the first place.
The two lines also work together rather than competing. A trade show budget gets someone in front of a prospect for an afternoon. A well-chosen piece of merchandise, kept and used for a year or more, extends that same moment far past the event itself. Funding one and not the other leaves half of that value on the table.
Here’s the practical shift side by side:
No dedicated merch line
Dedicated merch budget line
Funded from whatever’s left after ads, events, and content
Funded with a set amount, planned before the year starts
First item cut when the budget tightens
Evaluated on its own ROI, not lumped into “overhead”
One event can absorb the entire year’s spend
Allocated by occasion and audience tier ahead of time
Tracked informally, if at all
Tracked on CPM, ROI, and brand lift like any other channel
Fun fact: 26% of marketing budgets are wasted across all categories in 2026, driven by martech underutilization, mistargeted spend, and hidden costs, according to Improvado’s research. An unplanned merchandise line is exactly the kind of spend that gets caught in that number, whether or not the program itself is actually working.
A Branded Merchandise Strategy Works Only When Tracked
Cost per impression, ROI, and brand lift, measured over months and years, not just the week after an event.
Planning the budget solves the funding half of the problem. Tracking it solves the credibility half. A merchandise line that gets a set amount but no measurement still looks like a soft cost when budgets tighten. The companies treating branded merchandise as a real media channel are the ones tracking it the same way they’d track a paid ad channel, with real numbers attached to the spend.
That tracking doesn’t need to be complicated to be useful. Cost per item, retention rate, and a simple before-and-after read on brand recall are enough to move merchandise out of the guesswork category and into the same reporting conversation as every other funded channel.
How should a company decide the split between event swag and client gifting?
By matching the item and the budget to the actual goal, not by splitting the total evenly.
- Brand awareness at scale: lower cost per unit, wider distribution, items chosen for portability and visibility.
- Client gifting and retention: fewer units, higher per-item budget, items chosen for how well they reflect the relationship.
- Trade show and event giveaways: budgeted alongside the event itself, not as an afterthought line added the week before.
- A reserve held back for mid-year requests, so one early program doesn’t spend the entire year’s allocation.
Setting that split before the year starts, the same way a trade show or ad spend line gets set, is what turns merchandise from a reactive expense into a planned part of the marketing budget. None of these four categories needs to be locked in stone. Revisiting the split at the mid-year mark, once actual demand is clearer than it was in January, keeps the plan realistic without going back to reactive spending.
Frequently Asked Questions
How much of my marketing budget should go to merchandise?
There’s no universal number. B2B companies typically spend 2% to 5% of revenue on marketing overall, and how much of that goes to merchandise depends on the goal, client gifting can reasonably take 50% or more of a promotional products budget for a company with a small number of high-value accounts.
Why does merchandise need its own line instead of being folded into events?
A line that’s never part of a merchandise financial planning process is the first one cut when budgets tighten, and it can’t be evaluated on its own ROI if it’s buried inside a bigger, less specific category.
What's the risk of not budgeting for merchandise ahead of time?
Reactive spending. Without a plan set before the year starts, the first big trade show or client request can absorb the entire year’s allocation, leaving nothing for the programs that come later, and no clear number to point to when the budget gets reviewed.
Sources: Showpony, “How to Set Your Merch Budget in 2026” (March 2026); Gartner 2026 CMO Spend Survey, cited via Digital Applied, “Marketing Budget Allocation Guide 2026: By Channel” (May 2026); Improvado, “Marketing Budget Allocation Guide 2026” (2026); mfgmerch.com, “How to Budget for a Promotional Products Campaign?” (2026); Boomcycle, “Average Marketing Budget as a Percentage of Revenue” (2026).