How Much Should I Spend on Marketing?

Every business owner asks this question at some point, and the honest answer is “it depends”. Marketing is one of the most important investments you will make in your business, but it is also one of the easiest to underspend on or waste. Spend too little and you stall. Spend without a plan and you burn cash with nothing to show for it. So how much should you spend on marketing? According to recent 2026 research from Vanguard 86, the average Australian and New Zealand SME spends just 2% to 3% of total revenue on marketing. That is well below the global benchmark of 7.7% reported in the Gartner CMO Spend Survey. That gap is a big part of why so many Australian businesses feel like they are working hard and still struggling to grow. In this article we break down exactly how much you should spend on marketing based on your business stage, your industry, and your goals. You will walk away with a clear percentage range to aim for, a way to split that budget across channels, and the numbers you need to track to know it is working.

The Short Answer: 5% to 10% of Revenue (for Most Businesses)

The rule of thumb most marketing strategists work with is that established small-to-mid sized businesses should spend between 5% and 10% of revenue on marketing. Think of that as a starting point, not a fixed number. It is a sensible range that keeps you visible, funds ongoing acquisition, and leaves room to test new channels. That percentage covers everything you do to win and keep customers: advertising, content, SEO, web, social, email, tools, and whether you pay an agency, employ a marketer, or do it yourself. When business owners compare “what they spend on marketing”, they often only count paid ads. The full picture is much broader. For context, the US Small Business Administration recommends 7% to 8% of gross revenue for businesses turning over less than $5 million a year. That sits right in the middle of our range. The Australian picture lines up, but as we will see below, most local businesses are spending a fair bit less than that.

What Australian Businesses Actually Spend

The theory says 5% to 10%. The reality is very different. Vanguard 86’s 2026 report found that Australian and New Zealand SMEs spend an average of 2% to 3% of revenue on marketing. That tracks with Australian Bureau of Statistics data cited by industry analysts showing the median Australian small business invests 3% to 5% of revenue. That gap matters. When your competitors are investing at global benchmark levels of around 7.7% and you are sitting at 2%, they have roughly three times the budget to show up in search results, social feeds, and inboxes. Over time, that compounds. The brand doing more marketing becomes the obvious choice, and the quiet one slowly disappears from consideration. The takeaway here is not “panic and triple your spend tomorrow”. It is to recognise that if you are averaging 2% to 3%, you are almost certainly below what is needed to grow market share in any competitive category. Building up toward 5% to 10% over 12 to 24 months is a far more productive goal than chasing the lowest possible number.

How Much Should You Spend at Each Business Stage

The single biggest factor that changes the right answer is your business stage. A startup and a 20-year-old business do not need the same percentage, and treating them the same is how budgets end up either starving growth or burning cash.

Startups and Pre-Revenue Businesses (10% to 20%)

If you are just getting going, you need to build awareness fast. There is no existing customer base sending referrals, and no search demand for your brand name yet. The higher percentage is justified because the dollar base is small and every sale counts. Focus on channels where you can test quickly and learn what works: paid ads, short-form video content, and direct outreach.

Growing Businesses (7% to 10%)

You have validated your product or service. People are buying, referrals are starting, and you know roughly who your customer is. Now you need repeatable, predictable acquisition. This is the sweet spot for investing in SEO, paid search, content marketing, and email nurture. You are building assets that keep working after you stop paying.

Established Businesses (4% to 7%)

Mature businesses with steady demand can sit at a lower percentage, but the absolute dollar amount is often still significant. The focus shifts from “win new customers at any cost” to retention, brand, and efficiency. Your existing database, SEO presence, and word of mouth are doing more of the heavy lifting. That is a privilege earned through years of investment.

Businesses in Decline or Stagnation (10% or More)

Here is the counterintuitive one. If revenue is flat or dropping, your instinct will be to cut marketing to protect profit. That is usually the wrong move. Cutting marketing when sales are already soft accelerates the decline because you lose visibility at exactly the moment you need it most. Spending more, and spending it smarter, is typically the better answer.

Factors That Change How Much You Should Spend

Stage is the biggest lever, but it is not the only one. A few other factors push your number up or down inside the range.

• Industry competition. High-volume B2C categories like retail, hospitality, and beauty typically need higher spend because they are crowded. Niche B2B categories can often spend less because the audience is smaller and easier to reach.
• Sales cycle length. Long, considered purchases (commercial fit-outs, professional services, high-ticket products) need more nurture content and retargeting, which adds to budget.
• Customer lifetime value. The higher your LTV, the more you can afford to pay to acquire a customer, and the higher your budget as a percentage of revenue can justifiably be.
• Geographic spread. A business targeting the whole of Australia will spend more than a local-area-only business, because you are buying visibility across many more markets.
• Digital maturity. If you already have a strong SEO presence and a warm email list, you can rely less on paid ads. If you are starting from zero, paid will make up a bigger share of the early budget.
• Businesses with sharp seasonal peaks (florists, tax agents, tourism) concentrate more of the annual spend around peak periods rather than spreading it evenly.
• Growth goals. If you want to double revenue in 12 months, you cannot do that on a maintenance budget. Aggressive growth targets require aggressive investment.

How to Split Your Marketing Budget Across Channels

Once you know the total percentage, the next question is where it goes. The allocation below is a starting framework for a typical Australian small-to-mid business. Your mix will shift based on your model, but these ranges give you a sensible starting point.

• Website and SEO: 25% to 35%. Your digital storefront and the organic foundation that compounds over years. Underinvest here and every other channel works harder for less return.
• Paid advertising (Google, Meta): 30% to 40%. Predictable, measurable lead generation. The channel you can scale up and down quickly when you need to.
• Content and email: 10% to 20%. Long-form articles, lead magnets, and nurture sequences. Compounds over time and lowers your overall cost per lead as it matures.
• Social media organic: 10% to 15%. Brand building, community, and the visual proof that you are a real and active business. Rarely drives sales on its own, but reinforces everything else.
• Tools, analytics and tracking: 5% to 10%. Often overlooked, but this is what lets you actually know what is working. If you cannot measure it, you cannot improve it.

These percentages shift based on the kind of business you run. Ecommerce brands typically lean heavier on paid advertising because their funnel is short and tightly measurable. Service businesses lean harder on SEO and content because buyers research extensively before making contact.

Agency vs DIY vs In-House: Where Your Money Goes

Your budget does not just pay for ads. A big chunk of it pays for the people doing the work. There are three common ways businesses resource marketing, and each has a very different cost shape.

• Low cash cost, high time cost. Fine for very early stage businesses or founders who genuinely enjoy the marketing side. The value of your time is almost always the biggest overlooked cost. If you are spending 10 hours a week on marketing instead of selling, that is a real expense.
• You pay a monthly retainer or project fee, and you get expertise across multiple channels without having to hire, train, or manage specialists. Good fit for businesses that want consistent results but do not have enough work to fill a full-time hire.
• In-house hire. Expect $70,000 to $120,000 or more for one skilled marketer in Australia, before super, tools, and the paid media budget they will still need. Makes sense when you have enough ongoing work to keep a full role busy and you want marketing ownership inside the business.

For most small Australian businesses, an agency retainer delivers better return on investment than a single junior hire. You access a team of specialists (SEO, ads, content, design, strategy) for less than the loaded cost of one experienced marketer. The trade-off is that you are sharing that team with other clients, so pace of work is agreed inside the scope.

What Happens When You Underinvest in Marketing

The cost of underspending is invisible until it is not. You do not see the customers you did not get. You only see the revenue line going sideways and assume the market is soft. Vanguard 86 analysed business performance across the Australian and New Zealand slowdown between December 2025 and February 2026. The findings are blunt. Businesses that maintained their marketing investment through the downturn saw only a 9.52% decline in deals created. Businesses that paused marketing to “save money” saw a 62.10% decline in deals created over the same period. Said plainly: cutting marketing during a tough trading period accelerates the very decline you are trying to avoid. The businesses that kept showing up won the work. The ones that went quiet did not.

How to Know If Your Marketing Spend Is Working

A budget without measurement is just hope. These are the numbers that tell you whether your spend is actually earning its keep.

• Customer acquisition cost (CAC). Total marketing and sales spend, divided by new customers won in the same period. Your real per-customer cost.
• Return on ad spend (ROAS). Revenue generated, divided by ad spend. Most useful for direct-response channels like Google Ads and Meta.
• Customer lifetime value (LTV). Average revenue from a customer across their whole relationship with you. Sets the ceiling for what you can afford to spend to acquire them.
• LTV to CAC ratio. Aim for 3:1 or better. Below that, you are spending too much to acquire. Above 5:1 and you may actually be underinvesting.
• Leads generated vs leads converted. Tells you whether the issue is at the top of the funnel (need more leads) or in sales follow-up (need better conversion).
• Cost per lead. Useful benchmark for comparing channels against each other.

If you cannot track these numbers today, the first investment is not more ad spend. It is proper tracking and reporting.

How to Get More From What You Already Spend

Before you talk about increasing the budget, make sure the current one is pulling its weight. These are the highest-leverage moves for most businesses.

• Audit your current channels. Pause anything that cannot demonstrate a return after a fair test window. Reallocate that money to what is working.
• Improve conversion rates. Doubling your landing page conversion rate is the same as doubling your ad budget, but you only pay for it once. Fix forms, headlines, load speed, and offer clarity first.
• Build email and SEO assets. These compound. A good SEO page or email list keeps earning for years after you build it.
• Focus on retention, not just acquisition. It costs a fraction of new-customer marketing to keep an existing one. Email and lifecycle communication often sit underfunded.
• Fix your tracking. Properly set up GA4, conversion tracking, and attribution. Make the data trustworthy so decisions are based on facts, not assumptions.

“A good starting point is crunching the numbers to figure out what your business can comfortably and sustainably invest each month, while also factoring in things like tax deductibility. From there, it’s important to benchmark against your growth goals and be prepared to scale spend as returns come through. Because at the end of the day, marketing is an investment in growing your business, not just another cost.”

— Jes Cochrane, Google Ads Maestro, Marketing Movement

frequently asked questions.

What Percentage of Revenue Should I Spend on Marketing in Australia?

For most established Australian small businesses, 5% to 10% of revenue is the right range. Startups and businesses chasing aggressive growth should allocate 10% to 20%. Mature, stable businesses can operate closer to 4% to 7%. The current Australian average of 2% to 3%, per Vanguard 86’s 2026 research, is generally below what is needed to grow market share.

How Much Should a Small Business Spend on Marketing Per Month?

It depends on revenue, not a flat number. A business turning over $500,000 a year spending 8% would budget around $3,300 a month. A business at $2 million spending the same percentage would budget about $13,300 a month. Always set the percentage first, then convert to a monthly figure based on your own revenue.

Is 10% Too Much to Spend on Marketing?

Not necessarily. For a startup, a growing business, or one targeting aggressive growth, 10% is often not enough. For a mature business in a stable market, 10% may be more than needed. The right answer depends on your stage, your goals, and your competition, not a fixed percentage.

Should I Cut Marketing When Business Is Slow?

Generally no. Research from Vanguard 86 analysing Australian and New Zealand businesses through the late 2025 to early 2026 downturn found that businesses who paused marketing investment saw a 62.10% decline in deals created. Businesses that maintained investment saw only a 9.52% decline. Cutting marketing in tough times accelerates the decline you are trying to prevent.

How Do I Know If I’m Spending Too Much on Marketing?

Track your customer acquisition cost against your customer lifetime value. A healthy LTV to CAC ratio is 3:1 or better. If you are spending more to acquire a customer than you will ever earn from them, you are spending too much. If your ratio is 5:1 or higher, you may actually be underinvesting and leaving growth on the table.

Is It Better to Hire an Agency or Build an In-House Marketing Team?

For most small Australian businesses, an agency retainer delivers better return on investment than hiring a single in-house marketer. You get specialists across SEO, ads, content, design, and strategy for less than the cost of one experienced hire. In-house makes sense once you have enough consistent work to fill a full team and want marketing ownership sitting inside the business.

What Happens If I Only Spend 1% on Marketing?

At 1% of revenue, you are likely to see your brand lose visibility, your pipeline thin out, and your growth stall. That said, a well-executed 1% can outperform a poorly executed 10%. If your budget is genuinely tight, invest first in tracking, then in one or two channels you can execute well, rather than spreading thin across many channels and doing none of them justice.

Ready to Make Your Marketing Spend Work Harder?

The right marketing budget is the one aligned to your goals, your stage, and your ability to execute. There is no magic number. There is only the number that, when invested deliberately, moves your business forward month after month. If you want a second set of eyes on your current marketing spend, or help building a plan that actually matches your growth goals, we would love to talk.