Determining the right percentage of revenue to allocate to marketing is a common challenge for Australian small and medium enterprises. There’s no one-size-fits-all answer, but we can provide a practical framework to guide your decision. Forget arbitrary rules of thumb – the ideal investment hinges on your growth objectives, industry competitiveness, and business lifecycle.

Generally, we advise businesses to consider marketing investment within a range of 5% to 15% of gross revenue. However, this isn’t a rigid target. A business generating $200,000 annually will have very different marketing needs and capacity compared to one turning over $2 million.

• Start-ups & High-Growth Phase: Businesses focused on rapid market penetration should aim for the higher end – 10% to 15%. This aggressive investment fuels brand awareness and customer acquisition. Expect a longer payback period initially, prioritising market share over immediate profit.
• Mature Businesses & Maintenance Phase: Established businesses maintaining market position can often operate effectively with 5% to 8%. The focus shifts to customer retention, brand reinforcement, and defending against competitors.
• Highly Competitive Industries: Sectors like retail, hospitality, and tourism typically require higher marketing spend (8% to 12%+) due to intense competition and the need for constant visibility.
• Consider Customer Acquisition Cost (CAC): A crucial metric. If your CAC is high, a larger marketing budget might be necessary to optimise campaigns and improve efficiency. We recommend closely analysing CAC alongside Lifetime Value (LTV) to ensure profitability.

It’s also important to remember that marketing isn’t just about advertising. It encompasses everything from content creation and social media management to search engine optimisation and email marketing. A well-rounded strategy, even with a modest budget, can deliver significant returns. Don’t fall into the trap of thinking ‘more money equals more results’ – strategic allocation is key.

To determine your optimal marketing investment, we recommend conducting a thorough marketing audit. This involves analysing your current performance, identifying opportunities for improvement, and setting clear, measurable goals. From there, you can develop a budget aligned with your specific needs and growth aspirations. If you’d like to discuss a tailored marketing strategy for your business, reach out for a complimentary consultation.