How to work out your marketing budget (without the guesswork)

One of the questions we get asked most is "How much should we be spending on marketing?".

It usually comes after a year where the budget was set by gut feel, by last year's number, or by whatever was left once everything else got paid. There's some science to it. There's also some trying things, failing fast and working out what good looks like for your business.

This guide covers the whole picture at a high level: what to include, how much to spend, how to split it and how to tell if it's working.

Key takeaways

• Most Australian and New Zealand SMEs spend 2% to 3% of revenue on marketing, well below the 7.7% global average. Businesses in growth mode usually need to spend more.
• Base your budget on forecast revenue, not last year's.You're budgeting for where the business is heading.
• Work backwards from your sales goals: how many salesyou need, how many enquiries that takes, and what an enquiry costs.
• Split your budget 70-20-10: 70% on what works, 20% onwhat's promising, 10% on experiments.
• Budget for creative as deliberately as media. A bigmedia spend behind weak creative just burns money faster.
• Review monthly, reallocate quarterly, and judge resultsagainst the length of your sales cycle.

What should your marketing budget include?

A comprehensive marketing budget should cover everything you spend to attract and win customers: the media you pay for, the creative that runs in it, the tools behind it and the people who do the work (both in-house and externally). Leave any of these out and marketing looks cheaper than it is, and your return becomes impossible to measure honestly.

What to consider in your marketing budget:

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• Paid media spend: Online and traditional advertising on platforms like Google Ads, Meta, LinkedIn, Youtube, programmatic, radio, newspaper, television, and billboards.
• Creative and content: Blog articles, photographyand video shoots, podcasts, graphic design, and ad creative.
• Owned channels: Website development andmaintenance, SEO, AEO, GEO and email marketing.
• Tools and software: CRM, email platform, analytics, scheduling tools and any subscriptions.
• People: In-house staff time, plus agency andfreelancer fees.
• Relationships: PR, sponsorships, collaborations,events and referral programmes.

The most common blind spot is internal time. If someone onyour team spends two days a week on marketing, that's part of the cost, whether it shows up on an invoice or not.

How much should a business spend on marketing?

Most Australian and New Zealand SMEs spend just 2% to 3% of revenue on marketing, that's well below the 7.7% global average. Where your business should sit depends mostly on its stage of growth.

B2C businesses usually sit at the higher end of each range, and B2B businesses at the lower end. Within your range, a few factors will push you up or down. Crowded markets cost more to stand out in. Longer sales cycles need a sustained presence, not a one-off burst. National or international audiences cost more to reach than local ones.

Typical marketing spend by stage of business:

• Startup or pre-revenue: 15% to 30% of projected revenue; Building awareness from scratch
• Early growth: 10% to 20% - Winning first customers and proving channels
• Scaling: 8% to 15% - Expanding what works into new audiences or markets
• Established: 4% to 10% - Holding position and growing steadily
• Enterprise: 5% to 8% - Large budgets spread across many channels

How to set your marketing budget

Knowing where you are in your business stage is helpful to benchmark against, but to get closer to your actual number, there are four common methods. Most businesses get the best result by combining the first two.

1. A percentage of forecast revenue

‍Find your stage in the table above and apply that percentage to projected revenue, not last year's. Last year tells you where you've been; your budget should fund where you're going. Aim for the bottom of the range to hold steady and the top of it to grow. If the top feels like a stretch, start lower and build towards it.

2. Work backwards from your goals

This method is best for businesses with known marketing results. Start with the result you want, then cost the path to it. Say you want 10 new clients a month and you close 10% of enquiries. You need 100 enquiries. If an enquiry historically costs you $80 in media, that's $8,000 a month before creative and management.

3. Match your industry

‍Benchmarks can also tellyou whether you're in the right range. Most published figures are from the USor Australia, so treat them as a sense-check rather than a rule.

4. What you can afford

‍This is an honest starting point for a young business. The risk is that marketing becomes the first thing cut when things get tight, which is often exactly when you need it. Over the Christmas break from December 2025 to February 2026, businesses that paused marketing saw new deals fall 62%, compared with about 10% for those that kept going.

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Whichever method you start with, check it against the others. If your goals need $150,000 but your percentage says $60,000, either the goal or the budget needs rethinking. Then commit to a real number that's tied to where the business is going.

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The 70-20-10 Rule

Once you have a budget, the next question is how to divide it.

The 70-20-10 rule was developed in the 1980s as a model for learning and development. Business strategy later borrowed it. Former CEO of Google, Eric Schmidt, used it to split resources between the core business, emerging products and new ideas. At Coca-Cola, Jonathan Mildenhall, then Vice President of Global Advertising Strategy, made it the investment model behind the company's Content 2020 strategy.

The idea is simple. A business can't keep growing by only doing what it's always done, but it can't put everything into chasing new ideas either. For marketing, that means three buckets: 70% on tactics you know work, 20% on promising ones you're building on, and 10% on experiments.

Core - 70%

• Proven channels with a track record of results
• Example: Google Search campaigns that reliably bring in enquiries; email to your existing database

Adjacent - 20%

• Tactics showing early promise but not yet proven at scale
• Example: Expanding LinkedIn after a good test; reaching a new audience on Meta

Experimental - 10%

• New ideas with no track record
• Example: A new ad format, platform or messaging angle

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For a business owner or marketing team, it's a cure for Shiny Object Syndrome. You get permission to try the hot new thing, with the riskcapped at 10%. If it works, it moves up a bucket.

Creative vs media spend

Budget for creative as deliberately as you budget for media. Media decides how many people see your message, creative decides whether they care and stay invested in the story you’re trying to tell. A great ad with no budget goes unseen. A big budget behind a weak ad just burns money faster.

Your audience moves between channels all day. NZ On Air's 2026 Where Are The Audiences? study found radio leads in the morning, music streaming through the working day, and TV, YouTube and streaming at night. It’s estimated that people are exposed to about 360 ads a day, notice around 150 and are left with an impression by only 12. That’s known as ad blindness – people subconsciously filter out anything familiar or generic as a cognitive coping mechanism.

This is where we often see the most money wasted. One average ad, resized and pushed everywhere, with the media budget expected to dothe heavy lifting.

Creative assets and content should be made for each platform, tailored to each audience segment and refreshed before it goes stale. Good creative speaks to what your audience is trying to achieve at that stage of their buying journey.

Done well, it gives people something worth their time, and makes every dollar of your media work harder.

How do you know it's working?

Track return on ad spend (ROAS) for individual campaigns and return on investment (ROI) for your marketing overall. ROAS is revenue from adsdivided by ad spend. ROI is revenue from marketing, minus total marketing cost, divided by total marketing cost.

Three numbers worth knowing:

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• ROAS = revenue from ads ÷ ad spend. $20,000 insales from $4,000 of ads is a ROAS of 5, or 5:1.
• ‍ROI = (revenue from marketing − total marketingcost) ÷ total marketing cost. This includes creative, tools and people, notjust media.‍
• Cost per customer = marketing spend ÷ newcustomers won. Compare it to what a customer is worth to you over time.

Decide upfront whether you're counting external costs only or including in-house time and subscriptions too. Either can work, but stick to one method for like for like comparisons.

Then set a rhythm. Review campaigns monthly, reallocate between channels quarterly and reset the total annually. Match your expectations to your sales cycle: if it takes six months to go from enquiry tosigned contract, a campaign can't be judged after four weeks.

Putting it together: a worked example

Here's how it might look for a hypothetical New Zealand B2B services business forecasting $2 million in revenue next year and aiming to grow.

1. Set the total

At 8% of forecast revenue, thelower end of the scaling range for a B2B business, the annual marketing budgetis $160,000.

2. Allocate by type

3. Split the paid media with 70-20-10

$42,000 on proven Google Search and LinkedIn campaigns. $12,000 building out Meta retargeting after a promising test. $6,000 trialling short-form video.

4. Sense-check against the goal

The averageclient is worth $25,000 a year and the business closes 20% of enquiries.Fifteen new clients means 75 enquiries. The total marketing cost per new clientis about $10,700, against $25,000 in first-year revenue. The numbers stack up.

This example is illustrative only. Your numbers will dependon your margins, sales cycle and market.

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Frequently asked questions

What percentage of revenue should a small business spend on marketing?

Most Australian and New Zealand SMEs spend 2% to 3% of revenue on marketing. Stage benchmarks run from 4% to 10% for established businesses up to 10% to 20% for those in early growth, so businesses focused on growth should expect to spend more.

Should I base my marketing budget on last year's revenue?

No. Base it on forecast revenue for the year ahead. Use last year's results to learn what worked, not to set the number.

What is the 70-20-10 rule in marketing?

It's a way to split your budget: 70% on proven channels, 20% on promising ones you're scaling, and 10% on experiments.

What's the difference between ROI and ROAS?

ROAS measures revenue against ad spend for a campaign. ROI measures profit against your total marketing cost, including creative, toolsand people.

How often should I review my marketing budget?

Review campaign performance monthly, move money between channels quarterly and reset the total budget annually.

Should staff time count as marketing spend?

If you want an honest picture of return, yes. Whatever you decide, apply it consistently.