A strategic marketing budget is key to sustainable growth, but how much should your business invest? Let’s break down the numbers and best practices for Australian SMEs, using the latest industry data and research.
How Much Should You Allocate to Marketing?
A common benchmark is allocating 5-10% of annual revenue to marketing. For instance:
- A business with $2 million in revenue should budget $100,000 to $200,000 for marketing.
- A high-growth company or one in a competitive industry may need to invest more.
According to Deloitte’s CMO Survey, businesses’ marketing budgets were approximately 10% of total company revenue, but it did vary by industry:
- B2B product companies had a relatively low marketing spend as a percentage of their overall revenue at 9.4%.
- B2C product companies had the highest at 14.1%.
- B2B Service companies were investing a low 6.3% of their revenue into marketing.
- B2C Service companies were investing 12.7% of their revenue into marketing.
- Consumer packaged goods (CPG) brands have the highest spend at 18.5%, due to their heavy reliance on brand recognition and advertising.
Breaking Down Your Marketing Budget
To maximise ROI, your budget should cover these core areas:
- Paid Advertising – Google Ads, Meta Ads, LinkedIn campaigns.
- Content & SEO – Blog writing, website optimisation, video production.
- Marketing Technology – CRM tools, email automation, analytics platforms.
- In-House or Agency Support – Hiring marketing specialists or outsourcing marketing to experts.
Many businesses make the mistake of one-off campaigns, expecting long-term results. Sustainable growth requires a mix of always-on marketing (SEO, content, social media) and burst campaigns (seasonal promotions, product launches).
When Standard Budgeting Ranges Don’t Apply
While the 5-10% benchmark is useful, some businesses need to allocate more. Consider increasing your marketing budget if:
- You’re in a high-growth phase: Fast-growing businesses often spend above industry averages to drive customer acquisition.
- You’re in a competitive industry: If competitors invest heavily in marketing, you may need to match or exceed their spend.
- You’re launching a new product/service: Market entry requires additional investment to build awareness.
- You’re a startup: With little brand recognition, startups often allocate a higher percentage of revenue to marketing.
How to Spend Smarter, Not More
Overspending without tracking ROI can drain resources. In fact, McKinsey & Company research indicates that organisations utilising data-driven marketing strategies achieve a 15% increase in ROI on average. Signs of misallocated budgets include:
- High ad spend but low-quality leads.
- Heavy reliance on one channel (e.g., only Google Ads with no organic strategy).
- No clear tracking of conversions or ROI.
Pro Tip: Use marketing analytics tools like Google Analytics 4 and HubSpot to refine your budget allocation based on performance data.
Where to From Here?
Looking for expert guidance? Book a free strategy session with Method Marketing.
By investing wisely and consistently in marketing, businesses can achieve sustainable growth and a strong competitive advantage.
