Marketing costs cover advertising, listings, website, signage, printed material, content and anything else spent to make the phone ring.
Why it is treated differently from other overhead
Because it is the only overhead line that is supposed to produce revenue.
Rent does not bring work in. Advertising is meant to, which makes "is it working" a real question with a real answer — and makes cutting it a different kind of decision from cutting anything else.
Judging it
Not by cost, and not by volume of leads. By what the resulting customers were worth.
A channel producing forty leads at a low cost each can be worth less than one producing eight expensive ones, and the figure that settles it is revenue per lead — see marketing performance.
Read it against customer lifetime value rather than the first job, or every channel will look too expensive.
What cannot be measured
Word of mouth, the van in the driveway, the customer who remembered you from three years ago. These are frequently the largest source of work in a service business and they leave no trace — see marketing attribution.
Cutting the marketing you cannot measure because you cannot measure it is a common and expensive move.
How much
There is no correct percentage. What decides it is whether the spend returns more than it costs, measured over a period long enough for the work to actually land — which in trades with long consideration cycles is longer than most owners allow before judging.
Where it sits
Marketing and advertising in your accounts, as overhead, and it belongs in break-even like any other fixed cost.