How Much Should a Business Spend on Marketing? Your Guide for Planning Your 2026 Budget.

If you’re a business owner, you’ve probably wondered at some point:

“What’s a reasonable amount to spend on marketing – and how do I know if it’s enough?”

With ad costs rising, AI tools changing how we work, and budgets under more scrutiny than ever, this question is actually getting more important – not less.

This guide breaks down realistic benchmarks, simple examples in dollar terms, and a practical way to decide what you should spend in 2026.

The Short Answer

Most small businesses will land in these ranges:

• Typical range for small businesses: 6–10% of annual revenue
• B2B businesses: usually 2–5% (sometimes up to 8% if growth-focused)
• B2C businesses: often 5–10%
• Startups or aggressive growth phase: 10–20% of revenue

These figures line up with multiple recent benchmarks:

• A 2024 CMO survey (via HubSpot) found the average company allocated around 7.7% of revenue to marketing in 2024.
• The CMO Survey (sponsored by Deloitte and Duke University) reported marketing budgets at around 10.1% of company revenues in early 2024, up from 9.2% in late 2023.
• Other global advisors suggest businesses need 5–10% of revenue to maintain performance, and 11–20% if they want to grow faster than the market.

So for most Australian small businesses, 6–10% of revenue is a solid starting point – then you adjust up or down based on your business model, growth targets, and competition.

Why the averages are creeping up

A few trends are pushing budgets (and expectations) higher:

• Digital now takes the majority share. Digital channels account for well over half of total marketing budgets in 2025, and continue to grow.
• AI and data tools are amplifying results and scrutiny. Leaders using data-driven marketing and AI see significantly higher sales and profit growth (15–25% improvements in some studies), but they’re also expected to prove ROI more clearly.
• Budget decisions are under tighter review. Surveys of marketing leaders show spending is being examined more closely than in previous years, meaning you need a clear rationale for whatever % you choose.

The takeaway: your budget can’t be random. It needs to align with where your business is now and where you want it to be in 12–24 months.

Turning Percentages into Real Numbers (Monthly Examples)

Percentages are helpful in theory, but most owners think in monthly dollars.

Here’s a simple guide for small and service-based SMEs:

Think of this as a starting point:

• If you’re brand new, launching, or urgently need to grow, lean towards (or above) the top end of the range.
• If you’re capacity constrained (e.g. can’t hire fast enough or already booked out), you might sit at the lower end or focus more on brand/retention than acquisition.

Does That 6–10% Include Marketing Employees or Outsourcing?

Short answer: yes, it should.

When you see advice like “spend 6–10% of revenue on marketing”, that’s intended to cover your entire marketing investment, including:

• People
  • In-house marketing employees (marketing coordinator, marketing manager, content specialist, etc.)
  • Freelancers (copywriter, designer, SEO consultant, etc.)
  • Agencies / outsourced marketing teams (like Method+Marketing)
• Media / ad spend
  • Google Ads, Meta/Instagram, LinkedIn, YouTube, TikTok, display, etc.
• Tools & platforms
  • CRM and email platforms
  • Social scheduling and reporting tools
  • Landing page or funnel software
• Production / creative
  • Design, photography, video, branding work

In reality, small businesses often treat wages and outsourcing separately from “marketing spend”, but it’s helpful to see them as one total investment.

A simple way to break it down:

• Total marketing investment: 6–10% of revenue
  • People (in-house or outsourced): around 40–60% of that
  • Media, tools & production: around 40–60%

Example: Including people in the budget

• Revenue: $1,000,000
• 8% total marketing investment = $80,000/year

You might split it like:

• $40–50k on people
  • e.g. a part-time marketing coordinator, or
  • an outsourced marketing retainer with an agency or consultant
• $30–40k on ads, content, tools & production

If you already employ a marketing coordinator or manager, count their salary as part of your 6–10%. If you don’t, that “people” slice might be an outsourced marketing retainer instead.

Hiring In-House vs Outsourcing , What Fits in the Budget?

Both options sit inside your marketing budget, they’re just different ways of filling the “people” slice.

Hire in-house when:

• You have enough marketing work for someone 3–5 days per week
• You want a person embedded in the business (internal comms, events, sales support, etc.)
• You’re comfortable taking on headcount (super, leave, management time)

A small in-house marketing team (2–3 people) can cost $180,000–$255,000 per year in Australia, including benefits and tech.

Outsource when:

• You need strategy + implementation, but not a full-time person
• You want access to specialist skills (SEO, ads, content, design, automation) in one place
• You prefer a fixed, predictable monthly fee over another wage on the books

Outsourcing or marketing agency solutions vary by scope, often ranging from $6,000 to $150,000 per year, depending on whether you use fractional, project-based, or fully managed services.

Many SMEs end up with a hybrid: a part-time internal person plus specialist external support to fill gaps (e.g. SEO, ads, strategy).

How to Choose the Right % for Your Business

Use the following four levers to decide whether you sit at 3%, 6%, 10%… or higher.

1. Your stage: startup, growth, or established

• Startup / early-stage
  Little brand recognition, no existing database, and you’re still proving your offer.
  → Budget: 10–20% of revenue (or a fixed dollar budget aligned to your growth goals if revenue is tiny).
• Established but wanting steady growth
  You have customers, some referrals, but want to grow predictably.
  → Budget: 6–10% of revenue
• Mature / stable business
  You’re focused on profit, retention and maintaining your position.
  → Budget: 3–6% of revenue

2. B2B vs B2C

• B2B often relies more on relationships, referrals, partnerships and outbound sales, so the percentage can be lower, but each lead is more valuable.
• B2C and eCommerce rely heavily on awareness, volume and repeat purchases, so they often need higher ongoing investment in brand, content and paid media.

3. How competitive your market is

If you’re in a space where competitors are:

• Running ongoing Google + Meta ads
• Producing content and SEO consistently
• Showing up everywhere your customers spend time

…then you’ll likely need to match or exceed their investment, at least for a period, to win attention and market share.

4. Your growth targets

Work backwards from your goals:

1. Set a revenue target (e.g. grow from $750k to $1m in the next 24 months).
2. Estimate how many new customers you need to hit that target.
3. Assign a target Customer Acquisition Cost (CAC) (e.g. CAC ≤ one-third of Customer Lifetime Value).
4. That gives you a minimum monthly marketing budget to test and scale.

This approach keeps your budget grounded in maths, not just “what feels comfortable this year”.

How to Allocate Your Marketing Budget in 2026

Once you’ve set the total media and production spend, the next question is: where does it go?

For many small businesses, a starting point might look like this:

• Search engine ads (Google / Bing): 30–35%
• Social media advertising (Meta, Instagram, LinkedIn, TikTok): 25–30%
• Content & SEO (blogs, landing pages, video, local SEO): 20–25%
• Email & SMS marketing (newsletters, nurture, cart/quote follow-ups): 15–20%

You’ll also want to leave room (even if it’s small) for:

• Website improvements & CRO (landing pages, UX fixes, speed)
• Creative production (design, photo/video, copy)
• Marketing tools (CRM, email platform, reporting, scheduling)

When Standard Budget Ranges Don’t Apply

There are times when the usual 6–10% rule goes out the window.

You may need to spend above the benchmark when:

• You’re launching a new brand, product or location
• You’re entering a highly competitive market and need to gain visibility fast
• You’ve relied solely on referrals for years and are basically starting from scratch with digital

On the other hand, you might spend less (temporarily) if:

• You’re capacity constrained (e.g. waitlists, staffing issues)
• You’re going through major internal changes (restructure, systems overhaul) and can’t handle a wave of new demand right now
• You’ve built a strong base and are focused on profit and retention, not growth

The key is to be intentional: don’t stay under-invested forever and expect growth, and don’t throw money at channels you can’t measure.

Spend Smarter, Not Just More

A bigger budget won’t fix a leaky funnel. Before you increase spend, check for these red flags:

• High ad spend, low-quality leads
• One-channel dependency (e.g. 90% of leads from Google Ads, nothing from organic/search or email)
• No tracking of what’s actually working(no dashboards, no clear view of ROI)

Data-driven marketers consistently outperform those who “wing it”: companies that lean into analytics and data-driven sales/marketing engines report significantly higher growth and profitability (often 15–25% uplifts).

At a minimum, aim to track:

• Cost per lead (CPL) by channel
• Customer acquisition cost (CAC)
• Conversion rate from enquiry → customer
• Revenue and profit per channel

Then follow a simple rhythm:

1. Start with a realistic budget aligned to your revenue and goals.
2. Test across a small number of channels where your audience actually spends time.
3. Review performance monthly, adjust allocation quarterly.
4. Double down on what works, cap or cut what doesn’t.

How Often Should You Review Your Marketing Budget?

For most SMEs, a good cadence is:

• Monthly: review performance, CPL, CAC, key campaigns
• Quarterly: adjust budget split across channels and, if needed, overall spend
• Annually: revisit your percentage of revenue, strategy and growth goals for the next 12–24 months

Where to From Here?

If you’re still unsure whether you should be closer to 3%, 6%, 10% or 20%, you’re not alone. Most owners only really know once they’ve seen consistent numbers and a clear strategy.

If you’d like clarity on:

• What’s a realistic marketing budget for your industry and stage
• Which channels are worth prioritising in 2026
• How to track ROI so you’re confident your spend is working

👉 Book a free strategy session with Method Marketing.

We’ll review where you are now, where you want to be, and help you map out a practical, numbers-backed marketing budget that supports sustainable growth.