Most Australian business owners are being fed a lie by their accountants, their peers, and unfortunately, a lot of mediocre agencies. You’ve heard it before: “You should be spending 5% to 10% of your gross revenue on marketing.”
I’ve sat in boardrooms from Eagle Farm to the Gold Coast, and I can tell you exactly what happens when a business follows that advice blindly: they either starve their growth or set fire to their cash.
As we move through 2026, the old benchmarks aren't just outdated; they’re dangerous. The digital landscape in Australia has become hyper-competitive. Renting space on Google and Meta is more expensive than ever, and the 'average' SME is getting squeezed because they’re playing by an old rulebook.
At Local Marketing Group, we’ve seen the '10% rule' fail companies that needed to be aggressive, and we’ve seen it bankrupt companies that had no business spending that much. It’s time to stop chasing ghosts and start looking at the cold, hard reality of what marketing actually costs in the current Australian market.
Myth #1: The "Percentage of Revenue" Rule is Safe
Let’s kill this one first. The idea that a fixed percentage of revenue is a safe benchmark is a lazy accounting shortcut. It ignores the most important variable in your business: Your Stage of Growth.
If you are a mature business in a suburb like Chermside with a loyal customer base and high brand awareness, 5% might be plenty to maintain your position. However, if you’re a scale-up trying to disrupt a category, 5% won't even get you out of the driveway.
The Growth Reality Check
- Maintenance Mode: 2-5% of revenue. This is for businesses that are happy with their current size and just want to replace natural churn. - Steady Growth: 10-15% of revenue. This is where most healthy SMEs should be if they want to see year-on-year gains. - Aggressive Scaling: 20%+. If you’re launching a new product or entering a new territory (say, expanding from Brisbane into the interstate market), you have to pay the 'entry tax' of brand awareness.Following a generic benchmark is like trying to buy a house in New Farm using price data from a rural town in 2012. The context is everything. If your agency isn't asking about your growth targets before talking about your budget, they aren't marketers—they're order takers.
Myth #2: Digital Marketing is 'Cheaper' than Traditional
This is a relic from 2015. Back then, you could throw a few hundred dollars at Facebook ads and get a decent return. Today? The 'Digital Tax' is real. Between privacy changes, increased competition, and the sheer volume of noise, the cost-per-acquisition (CPA) for most Australian SMEs has tripled in the last four years.
I recently spoke with a business owner in Fortitude Valley who was frustrated that his $2,000/month Google Ads spend wasn't 'moving the needle' like it used to. I had to be blunt: in his industry, the average click cost is $12. After accounting for a 3% conversion rate, he was paying $400 per lead. His budget allowed for exactly five leads a month.
He wasn't failing at marketing; he was failing at math. He was trying to fight a war with a water pistol.
The Real Cost of 'Table Stakes' in 2026
If you want to be visible in any competitive Australian metro area, here is the reality of what 'entry-level' looks like: 1. SEO: Anything under $2,000/month is likely just 'maintenance' (or worse, automated junk that will get you penalised). Real SEO that moves rankings requires high-quality content and genuine authority building. 2. Paid Search/Social: Unless you have at least $3,000 - $5,000 in pure ad spend (excluding management fees), it’s hard to generate enough data for the algorithms to actually learn and optimise. 3. Content Production: If you’re still relying on cheap AI-generated blog posts with no strategy, you’re wasting your time. People can smell 'un-human' content a mile away, and Google is getting better at burying it.Myth #3: Your Data is Giving You the Full Picture
Many SMEs think they know their benchmarks because they look at their Google Analytics every month. Here’s a hard truth: GA4 is lying to you because the default setup is almost always misconfigured for Australian business needs.
We often see businesses making massive budget decisions based on 'Last Click' attribution. They see that an organic search led to a sale, so they cut their social media budget. What they don't see is that the customer saw three Instagram ads and read two blog posts before finally searching for the brand name on Google.
When you cut the top of the funnel because the 'benchmarks' look bad, the bottom of the funnel eventually dries up. It’s a slow-motion car crash we see far too often.
The Hidden Costs Nobody Talks About
When calculating your marketing budget, most people just think about ad spend and agency fees. That’s a mistake. To get a real sense of your marketing investment, you need to account for:
1. The Tech Stack
Between your CRM (HubSpot, Salesforce, etc.), email automation, and tracking tools, the 'software tax' can easily eat up $500 - $2,000 a month. Side note: this is where most agencies completely miss the mark—they suggest tools you don't need, which inflates your overhead without adding a cent to your bottom line.2. Creative Refreshment
In 2026, 'Creative Fatigue' happens faster than ever. You cannot run the same ad for six months and expect it to work. You need a budget for photography, video production, and graphic design. If your creative is stale, your ad costs go up. It’s a direct correlation.3. The Cost of Bad Data
I’ve seen businesses spend $10k a month on ads while sending that traffic to a website that hasn't been updated since the Brisbane floods. That is a 100% waste of capital. Before you increase your spend, you need to ensure your conversion infrastructure is solid. Stop building dashboards nobody uses and start focusing on the data points that actually indicate a sale is coming.How to Actually Set a Budget (The Local Marketing Group Way)
Forget the percentages for a second. If you want to build a budget that actually works for an Australian SME, follow this three-step framework:
Step 1: Calculate Your Allowable CAC
What can you actually afford to pay to acquire a customer? - Take your Average Order Value (AOV). - Subtract your Cost of Goods Sold (COGS) and overheads. - What’s left is your profit. How much of that profit are you willing to 'sacrifice' to get a new customer?If your customer has a high Lifetime Value (LTV)—meaning they come back every month—you can afford to spend more to get them through the door. If you’re a one-off service provider (like an emergency plumber), your CAC needs to be much lower.
Step 2: Work Backwards from Your Goal
If you want to make $1M in new revenue this year, and your average sale is $10,000, you need 100 new customers. - If your sales team closes 20% of leads, you need 500 leads. - If your website converts 5% of traffic into leads, you need 10,000 visitors. - What does it cost to get 10,000 targeted visitors in your industry?That is your budget. It might be 5% of revenue, or it might be 25%. But at least it's based on math, not a guess.
Step 3: Factor in the 'Testing Tax'
Marketing is never 100% efficient. I tell our clients to expect about 20% of their budget to be 'learning money.' This is the money spent on testing new channels, new creative, or new audiences. If you aren't testing, you're stagnating. And in a market as volatile as ours, stagnation is the first step toward irrelevance.The Industry's Dirty Little Secret
Here’s what the big agencies won't tell you: they love 'percentage of spend' models because it incentivises them to make you spend more, regardless of your return.
We’ve seen businesses stop overpaying by simply cutting out the 'fluff'—the vanity metrics, the over-engineered reports, and the platforms that don't fit their specific niche. You don't need to be everywhere. You need to be where your customers are, with a message that actually resonates.
For example, if you're a B2B firm in Milton, you probably don't need a heavy TikTok presence. But you do need a LinkedIn strategy that doesn't look like a robot wrote it. Most 'benchmarks' suggest a multi-channel approach, but for an SME, 'omnichannel' is often just a fancy word for 'spreading your budget too thin.'
Why Brisbane Businesses Are Different
Marketing in Australia, and specifically in South East Queensland, has its own quirks. We are a relationship-driven market. Whether you're in manufacturing, professional services, or retail, the 'local' factor still carries huge weight.
Your marketing budget shouldn't just be about digital ads; it should be about building local authority. This might mean sponsoring a local Brisbane event or investing in high-quality video content that shows your team on the ground. These 'untrackable' investments often have the highest ROI, yet they never show up in standard marketing benchmarks.
Conclusion: Stop Measuring, Start Predicting
If you are still looking at last month's PDF report from your agency and wondering why the numbers don't feel like they match your bank account, you’re looking the wrong way. Benchmarks are hindsight. Success in 2026 requires foresight.
You need to move away from 'what did it cost' to 'what will it generate.' If your marketing is an expense on your P&L, you’re doing it wrong. It should be an investment with a predictable yield.
Stop settling for 'average' benchmarks. Your business isn't average, so why should your marketing strategy be? If you’re tired of the vague answers and the shifting goalposts, it might be time for a different conversation.
Ready to build a marketing budget based on reality instead of myths?
At Local Marketing Group, we help Brisbane SMEs cut through the noise and focus on the data that actually drives growth. No fluff, no vanity metrics—just results.
Contact us today to audit your current spend and see where you’re actually leaving money on the table.