How Much Should a Small Business Spend on Marketing? The 2026 Australian Guide

Last updated: October 2026 · Written by 20 Minute Marketing · 9 min read

Quick answer: There is no single right figure. A widely quoted rule of thumb is 7 to 8% of revenue for small businesses, more for new businesses and crowded markets, less for established ones with strong referrals. The better method is to set a test budget per channel, track cost per lead monthly, and move money to what works each quarter.

It is one of the most common questions in marketing, and one of the least satisfactorily answered. Business owners ask it about their own business. Marketers are asked it by employers and clients, often in a job interview or a first meeting.

The answer from an agency is usually "more than you're spending now". The answer from an adviser is usually a percentage that ignores the industry, the growth stage and the competition.

This guide gives you a more useful answer for Australian small businesses, whether you are setting a budget for your own business, recommending one to an employer or pitching one to a client.

The Standard Rule of Thumb, and Its Limits

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The most widely quoted guideline is to put 7 to 8% of revenue into marketing for a small business, rising to 10% or more in a growth phase or a crowded market. Treat it as a starting point for a conversation, not a rule.

What Influences the Right Budget

Business Stage

A common starting framework, to adjust for the business in front of you:

Industry Competition

Agency vs In-House: The Decision Most Budget Guides Ignore

An example, using an illustrative agency quote:

How to Allocate a Marketing Budget by Channel

Here is a practical allocation framework for an example monthly budget of $2,000 for a small service business. Adjust the split to the business and its customers.

Doing It In-House: Reducing the Marketing Spend

On a limited budget, the most efficient marketing investment is often education. Someone in the business who understands digital marketing can do work that would otherwise be outsourced, and can judge any agency or freelancer the business does hire.

Examples of work that can be done in-house (agency and freelancer quotes vary widely, so get quotes for your own situation):

Instead of paying for work nobody in the business understands, you build the skills to run it in-house, or to brief and manage specialists with confidence. For checking whether the effort is paying off, see our guide to tracking marketing ROI.

What to Do When the Marketing Budget Is Essentially Zero

With very little budget, the worst move is to spread it thinly across several channels. Concentrate on the activities with the best return at zero or near-zero cost, in this order:

The Marketing Budget Review Cadence

Review the budget split quarterly, not annually. Channel performance can shift quickly: a channel that brought strong leads in one quarter may fall away in the next, while a channel you tested could become the best performer.

Frequently Asked Questions

How much should a small business spend on marketing in Australia?

There is no single right figure. A widely quoted rule of thumb is 7 to 8% of revenue, with more for new businesses and competitive markets and less for established businesses with strong referrals. A better method is to set a test budget per channel, track cost per lead monthly and move money to what works each quarter. If the owner does the marketing, count the value of that time too.

Is it better to hire a marketing agency or do it in-house?

It depends on whether the business has more time or more budget. As an example, an agency at $3,000 a month costs $36,000 a year, while training someone in-house with a $499 course costs $499 plus 4 to 6 hours a week of their time. Even partial in-house knowledge, enough to brief and judge an agency, is usually worth having whichever model the business chooses.

What is the most cost-effective digital marketing channel for a small business?

For local businesses, Google Business Profile is hard to beat because it is free and appears for high-intent local searches. Email to people who opted in is usually very cost-effective because each send costs little once the list exists. Organic SEO takes longer but keeps bringing traffic without paying for every click.

How do I know if the marketing spend is working?

Track cost per lead and return by channel every month. For example, $800 a month on Google Ads that brings 20 leads, of which 25% become customers, gives a customer acquisition cost of $160. Whether that is profitable depends on what a customer is worth. GA4, the ad platforms and a simple spreadsheet are enough to track it.

Why should a marketer or job seeker know how to set a budget?

Because employers and clients ask. Being able to recommend a budget, split it across channels and report on what it returned is a core part of most marketing roles and freelance work, and a common interview question.

Should marketing be seen as a cost or an investment?

Marketing that produces measurable returns, such as leads, sales and repeat customers, is an investment. Spend that cannot be traced to outcomes is a cost. The difference shapes budget decisions: investments are scaled when they work, and costs are cut. The aim is to make as much spend as possible trackable, through conversion tracking and a monthly review.

Marketing your own business? See our small business marketing course.