“How much should I spend on marketing?” is a fair question, and most answers you’ll find online are pretty unhelpful.
You’ll see rules like “spend a percentage of revenue”. They’re a starting point, but they don’t tell you whether that money is working. Here’s a more practical way to think about it.
What’s the best way to set a marketing budget?
Start with what a customer is worth to you, then work out what you can afford to pay to win one. Your budget follows from there.
If a new customer is worth $2,000 over a year and you can comfortably spend $200 to win one, you know exactly how to measure whether your marketing is working.
Work out what a customer is worth. The budget follows from there.The Digi playbook
What should the budget cover?
Usually three things: ad spend (paid to Meta or Google), content (photos, video, design) and management (the people running it).
Skimping on any one of these tends to hurt the others. Great ads with poor content struggle. Great content with nobody running the ads goes nowhere.
- Ad spendWhat you pay the platforms to show your ads.
- ContentThe photos, videos and designs your ads use.
- ManagementPlanning, running, testing and reporting.
When does it make sense to spend more?
When the numbers show it’s working: you’re winning customers at a cost that makes sense and your team can handle more.
If every dollar in is bringing back more than a dollar, scaling up is a good problem to have. Just make sure your team can keep up with the extra enquiries.
When should we pull back?
When you can’t see what it’s turning into. If you don’t know your cost per customer, fix the tracking before spending more.
Spending blind is the biggest waste in small business marketing. Clear reporting turns a guess into a decision.
Budgets that paid their way.
Across service and fitness businesses.
Let’s run the numbers.
We’ll help you work out what to spend and show you exactly what it’s turning into. See our service business marketing page.
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