As Australian small and medium enterprises (SMEs) plan for continued growth, understanding a marketing budget is absolutely fundamental. Simply put, a marketing budget is a plan for how much money you’ll spend to promote your business and generate leads. It’s not just about ‘spending’ money, though; it’s about strategically investing in activities designed to deliver a return. Many businesses, especially when starting out, treat marketing as an expense. We encourage you to shift that mindset – it’s an investment in your future revenue.

A well-constructed marketing budget isn’t a fixed number plucked from thin air. It’s directly linked to your overall business goals. Are you aiming to increase brand awareness, drive more website traffic, or boost sales of a specific product? The answer to these questions will dictate where your money is best spent. We often see SMEs underestimate the investment needed to achieve meaningful results, particularly in competitive markets.

Here are a few key things to consider when building your budget:

• Percentage of Revenue: A common starting point is allocating a percentage of your gross revenue to marketing. Industry benchmarks vary, but 5-10% is a reasonable range for many SMEs.
• Competitive Spend: Analyse what your competitors are doing. Tools exist to estimate their advertising spend, giving you a sense of the investment level in your sector.
• Cost Per Acquisition (CPA): This is a crucial metric. How much does it cost you to acquire a new customer through each marketing channel? Knowing this helps you optimise spending and focus on the most profitable avenues.
• Channel Allocation: Decide where to invest. Will you focus on digital marketing (search engine optimisation, social media advertising, email marketing), traditional advertising (print, radio), or a combination?

Don’t forget to factor in costs beyond advertising spend. This includes things like content creation (website copy, blog posts, videos), software subscriptions (email marketing platforms, analytics tools), and potentially, agency fees if you’re outsourcing any marketing activities. Regularly reviewing and adjusting your budget is also vital. What worked well this quarter might not be as effective next quarter, so continuous analysis is key.

Ultimately, a marketing budget isn’t about restricting spending; it’s about maximising your return on investment. By carefully planning and tracking your marketing activities, you can ensure your budget is working hard to drive growth and profitability for your business. If you’re unsure where to start, consider a marketing audit to identify opportunities and develop a tailored budget that aligns with your business objectives.