For many Australian small business owners, setting a marketing budget feels like picking a number out of thin air. However, if your budget isn't directly tied to your desired business outcomes, you aren't investing—you're gambling. By aligning your spend with specific revenue targets, you transform marketing from an 'expense' on your profit and loss statement into a predictable engine for growth.
Prerequisites
Before you start, ensure you have the following ready:- Your total revenue target for the next financial year (FY).
- Average Sales Value (ASV) – how much a customer spends on average per transaction.
- Historical conversion rates (if available) from lead to sale.
- Access to your accounting software (Xero, MYOB, etc.) to review past spend.
---
Step 1: Define Your North Star Revenue Goal
Start with the end in mind. How much total revenue does your business need to generate over the next 12 months? Be specific. Instead of saying "I want to grow," say "I want to reach $1.2 million in annual revenue." What you should see: A clear, documented figure that represents your total gross income goal for the year.Step 2: Calculate the Revenue Gap
Subtract your 'run-rate' revenue (money from existing contracts or returning customers) from your total goal. The remaining amount is your 'New Business Goal'. This is what your marketing budget is responsible for generating. Example: Goal is $1M. Existing clients bring in $600k. Your marketing must bridge the $400k gap.Step 3: Determine Your Average Sale Value (ASV)
Divide your total revenue from last year by the number of sales made. If you are a service-based business in Brisbane, like a plumber or accountant, your ASV might be $500 or $5,000 respectively. Knowing this allows you to calculate exactly how many new customers you need.Step 4: Work Backwards to Find Your Lead Target
To get a customer, you first need a lead (an enquiry). Look at your historical data: if you close 1 out of every 4 enquiries, your conversion rate is 25%. The Formula: (New Revenue Goal / ASV) / Conversion Rate = Required Number of Leads.Step 5: Audit Your Current Cost Per Lead (CPL)
Review your previous marketing efforts. If you spent $1,000 on Google Ads and received 20 enquiries, your CPL is $50. If you don't have this data yet, use Australian industry benchmarks (typically $40–$150 depending on the niche).Step 6: Set Your Initial Budget Allocation
Multiply your Required Number of Leads (from Step 4) by your Cost Per Lead (from Step 5). This provides a data-backed 'Total Marketing Investment' figure. Pro Tip: If this number looks surprisingly high, it usually means your conversion rates are too low or your ASV is too small. It's better to know this now than halfway through the year!Step 7: Categorise Spend into 'Keep the Lights On' vs. 'Growth'
Divide your budget into two buckets:- Retention/Brand (30%): Keeping existing customers happy (email marketing, social media management).
- Acquisition (70%): Finding new customers (SEO, PPC, Local Area Marketing).
Step 8: Allocate by Channel Based on Intent
In the Australian market, high-intent channels like Google Search are great for immediate sales, while Facebook or Instagram are better for brand awareness. Allocate more budget to high-intent channels if you need revenue quickly. What you should see: A spreadsheet listing channels (SEO, Meta Ads, Google Ads) with a dollar figure next to each.Step 9: Factor in 'Agency and Creative' Costs
Your budget isn't just 'ad spend'. It must include the cost of people to run the ads, graphic designers to create the assets, and software (like your CRM). In Australia, professional management fees are a critical part of the investment to ensure your ABN is protected by high-quality, compliant advertising.Step 10: Build a Contingency Buffer
Marketing landscapes change. Google might update an algorithm or a new competitor might enter the Brisbane market. Set aside 10% of your budget as a 'Testing and Contingency' fund to react to these changes without blowing your main budget.Step 11: Establish Your Tracking Framework
Before spending a cent, ensure your 'Analytics' are set up. You must be able to track a lead from the first click to the final invoice. Warning: If you can't track where a lead came from, you cannot tie your budget to outcomes. Ensure GA4 (Google Analytics 4) is correctly installed on your site.Step 12: Review and Optimise Monthly
A budget is a living document. Every 30 days, compare your 'Actual Spend' against 'Leads Generated'. If Google Ads is delivering leads at $30 and Facebook is at $90, move some of the Facebook budget to Google for the following month.---
Common Mistakes to Avoid
- The 'Percentage of Revenue' Trap: Many books suggest spending 5% of revenue on marketing. This is flawed because it doesn't account for your specific growth goals. If you want to double your business, 5% won't be enough.
- Underestimating the 'Lag': Marketing (especially SEO) takes time. Don't pull the plug on a budget after two weeks because the phone hasn't rung yet.
- Ignoring Lifetime Value (LTV): A lead might cost $100 to acquire for a $200 sale, which looks bad. But if that customer returns every month for three years, that $100 investment is a bargain.
Troubleshooting
- "My CPL is too high": Check your website's landing page. Often the ads are fine, but the website is hard to use, which drives up the cost of every lead.
- "I don't have historical data": Start with a 'Discovery' budget for 3 months. Spend a set amount across 2-3 channels to gather data, then use that data to build your permanent budget.
- "The leads are poor quality": This usually means your targeting is too broad. Tighten your keyword list or adjust your audience demographics to focus on higher-value suburbs or specific industries.
Next Steps
Now that you have a budget tied to outcomes, the next step is implementation. You'll need a high-converting landing page and a robust tracking setup to ensure every dollar is accounted for.Need help crunching the numbers or setting up your tracking? Contact the Local Marketing Group team for a strategy session to align your marketing spend with your Brisbane business goals.