What should a $5M business spend on marketing? Nobody can tell you

There was no funnel on that site and nothing on any page that asked a visitor to do anything. She knew that. What she wanted from me was a figure, and she asked for it the way almost everybody asks for it, as a percentage. What should a business like mine be spending. Four per cent? Five?

So I went looking for the number properly, because I wanted to be able to cite it.

The Australian figure I could not find

The claim is everywhere. Australian businesses spend two to three per cent of revenue on marketing. Or three to five per cent, according to the ABS. It sits on agency pages, in budget templates, in the posts that circulate every January when people set next year's figures, stated flatly, in the tone of a thing everybody already knows.

I could not get it back to anything. Not to an ABS publication, not to a named survey with a sample size and a field date, not to an industry body. Where the pages attribute it at all they attribute it to the ABS, and that is where the trail stops. I have not found the release, the table, or the series it is supposed to come from, and I have looked in the places it would have to be.

So there is no credible survey of what Australian small and medium businesses spend on marketing as a share of revenue. Not at $5 million, not at any turnover. Every Australian percentage you have been quoted is either an overseas figure with the label taken off, or somebody's assumption repeated until it hardened.

Real data does exist. It is about other people, and the geography matters far more than the decimal place.

Apply the US B2B Services figure to an Australian services business turning over $5,000,000 and you get $505,000 a year. Apply Gartner's, drawn from companies mostly above a billion US dollars, and you get $385,000. Almost nobody at $5 million in Australia is spending either, and the few who are did not get there by reading a benchmark.

That gap is not evidence of underspending. It is evidence that the survey describes a different population, with different margins, different sales models, and a much broader definition of what counts as marketing. A percentage taken from a group you are not in is a fact about them.

One figure in the Gartner data says more than the headline does.

A percentage is the receipt, not the plan

Suppose the Australian figure did exist. Suppose somebody published it tomorrow, properly sampled, field date and all. It still would not tell you what to spend.

A percentage of revenue is not a budget instruction. It is a division you can only perform afterwards. You spend money across a year, you earn money across a year, you divide one by the other, and out comes a percentage.

It is the receipt, not the plan.

Look at what is inside it. Nothing about what a client is worth to you. Nothing about what it costs to get one. Nothing about your margin, your sales cycle, your close rate, or how many new clients you need to hit the number you have promised yourself. Two businesses on the same revenue at the same percentage can be running completely different economics, and one of them is on fire.

Revenue is also the wrong thing to steer by. Set marketing spend as a share of last year's revenue and you have built a rule that hands you the most money in the year you need it least, and cuts you hardest in the year after a bad one, which is the year you most need to fix something. Next year's marketing now depends on last year's results, which is precisely backwards.

I think the question keeps arriving in this form because a percentage is a permission slip. If a survey says businesses like yours spend four per cent, then four per cent is not your decision, and if it does not work it was not your fault either. That is a comfortable thing to buy.

The designer with the beautiful portfolio was not really asking me for a benchmark. She was asking whether a number she could actually afford was allowed. Nobody had ever shown her how to work that out, so she had gone looking for somebody to give her permission instead.

What should a $5M business spend on marketing?

Build the number from what a client is worth. You can do this today, on your own, with figures you already have, and the answer will be defensible in a way a percentage never is.

Work out what one client is worth in gross margin, not revenue. Average revenue per client across the first twelve months, less the cost of actually delivering the work, labour included. Use your accounting system rather than your instinct. Founders overstate this almost every time.

Decide what proportion of that you can afford to spend acquiring one. This is the judgement call. I use a third of first-year gross margin as a starting position for services businesses with repeat clients, and that fraction is mine rather than a researched figure. Adjust it deliberately. If clients stay five years, first-year margin badly understates what you are buying and you can afford more. If you are paid ninety days after the work, you have a cash constraint that a healthy ratio will not rescue you from. Write down the fraction, and write down why.

Work out how many new clients your growth target needs. Additional revenue divided by average revenue per client.

Multiply, then add the two things that never attribute to a single client. Acceptable acquisition cost times clients needed is the demand budget, the money that buys enquiries. Sitting on top of it is the foundation, meaning the site, the positioning, the case studies, the photography and the tracking, and direction, meaning somebody senior enough to decide what to stop.

Run it on a $5,000,000 services business that wants another $1,000,000 next year.

Now notice what happened. You have a percentage. It arrived last, as the output of the working, and it is worth nothing at all to anybody else, because it is made of your margin, your client value and your growth target.

Here is what I expect for most people who run it. You will compare the answer to what you are already spending and find your current number is not far off. It is defensible. The gap between the two figures is not your problem.

Your problem is that you cannot say which part of the money is doing the work. That is not a budget question at all, and increasing the budget makes it worse, because you are adding to a total you already cannot read.

What the pieces cost in Australia

Every figure here is Australian, and every one comes from a vendor with an interest in the number, because no independent survey exists. Treat them as a spread rather than a price list.

For execution, WME Group, an Australian agency, publishes a realistic range for Australian SMBs of $3,500 to $10,000 per month, which annualises to $42,000 to $120,000. Lucky Boy Agency, a Melbourne agency, publishes a Melbourne entry bracket of $1,500 to $3,500 per month for freelance social and content.

For direction, Z10 Consulting, a competing Australian provider, publishes fractional marketing leadership at A$3,000 to A$18,000 per month, with most engagements between A$5,000 and A$12,000. Cemoh, an Australian fractional marketing marketplace, publishes roughly A$12,000 to A$14,500 per month for one day a week.

Those two disagree by about a factor of two at equivalent days, and it is worth understanding why rather than splitting the difference. Z10 is quoting what its own engagements sell for. Cemoh's piece is written to help consultants set their rates, which makes it aspirational by design, and it builds the monthly figure by annualising a day rate. A day rate multiplied out and a retainer priced against a scoped outcome are not the same product, even when they describe the same number of days. The market has no settled price, which is why the real cost of a fractional CMO in Australia has to be read as a range. Anybody who tells you it is a single number is quoting themselves.

For in-house, Hays puts a marketing manager in Melbourne at $125,000 typically in its FY26/27 guide, and a marketing coordinator at $75,000, both base and both excluding superannuation. Superannuation runs at 12%, so the manager costs $140,000.

Then there is the on-cost advice that is simply wrong for a large part of this market. Victorian payroll tax is 4.85%, but only on total Australian wages above $1,000,000. A business at $5 million turnover with a small team very often pays none of it. If that is you, your real multiplier is superannuation and nothing else, and the standard instruction to add thirty per cent to any salary overstates your cost by tens of thousands of dollars. Build the number from super and payroll tax explicitly, and do not accept a multiplier from somebody who has not asked what your wage bill is.

Since I have just told you that every vendor quotes themselves, here is me quoting myself. A rambert.co Strategy Sprint is {{SPRINT_PRICE}}, fixed, and ongoing fractional work is {{FCMO_PRICE}}. Both sit inside the spread above, which is the only thing that fact demonstrates.

Consultants and agencies are paid out of marketing budgets, so the version of this piece that serves me tells you that you are underspending against a benchmark and that the gap is why growth stalled. I would rather run your arithmetic and tell you the money is fine, because a client who cannot say which part of the spend is working eventually stops all of it, and I would rather have fixed the measurement than have been in the budget on the day it got cut.

The one-third fraction is mine. It is a starting position, drawn from watching which services businesses could sustain their acquisition cost and which quietly could not, and it is exactly the sort of thing a proper survey of Australian businesses ought to settle. Nobody has run one. If somebody does, and it puts the number somewhere else, take the survey.

The method also breaks at low volume, and the designer is the proof of it. A business winning a dozen projects a year, any one of which can be a tenth of the turnover, does not have an average client in any useful sense, and this arithmetic will hand it a confident figure built on a fiction. That business is running a relationship pipeline rather than a demand pipeline, and its budget question is a different one: what does it cost to stay in front of the forty people who could plausibly buy, repeatedly, for two years. Her first move was not a budget at all. It was giving the site she already had something to ask visitors for, which is cheap, and which you should exhaust before you go anywhere near this working.

If you run the arithmetic and get stuck, it will be on the second input. Everybody gets stuck there. Bring me what you have and I will tell you which figure you are guessing at.

*details changed to preserve identity