How to Create a Digital Marketing Budget for SMEs

Do you want to grow your small or medium-sized business (SME) with digital marketing but are unsure how much to spend? Here’s a quick guide to help you decide on the best course of action to determine the digital marketing budget.

• Allocate Budget Based on Revenue: Spend 2-5% of annual revenue for B2B (business-to-business) and 5-10% for B2C (business-to-consumer). For example, a $150,000 yearly revenue suggests a $3,000-$7,500 marketing budget.
• Focus on High-Impact Channels: Invest in SEO for long-term growth, PPC for quick visibility, social media for engagement, and email/SMS marketing for retention.
• Track ROI (Return on Investment)I: Use tools like Google Analytics, SEMrush, and HubSpot to monitor performance and adjust your strategy.
• Plan and Review Regularly: Set an annual budget, review quarterly, and adjust based on performance and trends.

Quick Digital Marketing Budget Breakdown:

Channel	Budget %	Timeframe for Results
Social Media Ads	25-30%	3-6 months
Search Engine Ads	30-35%	1-3 months
Content Marketing	20-25%	6-12 months
Email/SMS Marketing	15-20%	1-2 months

Pro Tip: Start small, track your results, and scale up what works. Keep your goals SMART: (Specific, Measurable, Achievable, Relevant, Time-bound).

1: Set Your Marketing Objectives

Define Clear and Measurable Goals

Use the SMART framework – Specific, Measurable, Achievable, Relevant, and Time-bound – to create actionable goals that align with your business goals.

This handy guide recommends effective budgets based on revenue levels:

Revenue Level	Suggested Monthly Budget	Example Goal
Under $100K	$500-$1,000	Increase website traffic by 15%
$100K-$500K	$1,000-$2,500	Generate 50 qualified leads
$500K+	$2,500-$5,000+	Boost online sales by 25%

Understand Your Target Audience

Once you set your goals, dive into understanding your audience. Online tools like Google Analytics can provide interesting information about customer behaviour, helping you figure out where to focus your efforts. This ensures your budget is spent on channels that connect with the right customers.

“Start with the most effective option to solve your biggest problems. Often, for many, that’s looking for leads.” – Michele Potts, Sales Director for Zoe Marketing & Communications

Focus on High-ROI (Return on Investment) Marketing Channels

Small and medium-sized businesses are leaning into channels that deliver strong returns. For instance, 56% are increasing social media ad budgets, while 41% are investing more in search and retargeting campaigns.

SEO is a long-term play that builds momentum over time, while PPC offers faster results with steady funding. By tracking performance with analytics tools, you can make data-driven decisions to ensure your marketing dollars work toward your business goals.

With your objectives and channels defined, the next step is to allocate your budget wisely for maximum impact.

Setting a Digital Marketing Budget

2: Distribute Your Marketing Budget

Recent data reveals that small and medium-sized enterprises (SMEs) in Australia allocate between 45% and 78% of their total marketing budget to digital channels The key is to align your spending with your business goals and audience preferences, ensuring every dollar spent drives measurable results.

SEO: Building Long-Term Growth

SEO is a long-term strategy that demands consistent investment, work and patience. SMEs in Australia typically spend between $1,500 AUD and $5,000 AUD per month on comprehensive SEO services.

This investment supports areas like:

SEO Component	Typical Monthly Investment	What It Delivers
Technical SEO	30% of SEO budget	Better site performance
Content Creation	40% of SEO budget	Higher organic rankings
Link Building	30% of SEO budget	Boosted domain authority

While the costs may seem high, SEO is essential for driving sustainable organic traffic over time.

PPC: Quick Wins for Visibility

If you’re looking for immediate results, PPC (pay-per-click) advertising is the way to go. SMEs often allocate 40-60% of their PPC budget to platforms like Google Ads and Facebook Ads. With an average cost per click of $2.00-$4.00 AUD for small businesses, a well-planned PPC strategy can deliver quick visibility.

“Start with proven platforms where your audience already exists. For a $10,000 monthly PPC budget, allocate $4,000 to Google Ads and $3,000 to Facebook Ads. Use the remaining $3,000 to test newer platforms like TikTok Ads or LinkedIn Ads, depending on your audience.”

This approach balances proven methods with room for experimentation.

Social Media and Content Marketing

In 2025, Australian SMEs are recommended to dedicate 15% of their digital budgets to social media and 45% to content marketing and email combined. Use these funds to create engaging content, run targeted paid ads, and actively manage your online community.

This multi-faceted approach will help you connect with your audience on platforms they already use.

Email and SMS Marketing: Retain and Engage

Email and SMS marketing are budget-friendly channels with a strong ROI (Return on Investment). The cost of email marketing can range anywhere from $9.00-$1,000 AUD per month, depending on the email design, software and automation used and the frequency of your email campaigns. In comparison, the cost of SMS marketing is even more budget-friendly, with prices beginning at 0.07 per text message. These tools allow you to maintain customer relationships effectively.

Marketing Channel	Monthly Investment	Benefits
Email Marketing	$50-$200	Nurtures customers, automates follow-ups
SMS Marketing	$100-$300	Instant engagement, high open rates

Combining email and SMS efforts ensures consistent communication and customer retention across multiple touchpoints.

3: Monitor ROI (Return on Investment) with Tools and Benchmarks

Once you have set your budget, the next step is making sure every dollar counts. Tracking ROI (Return on Investment) ensures your marketing efforts align with your business goals and deliver measurable results.

Tools for Tracking Performance

The right analytics tools can give you a clear view of how your marketing is performing. Here’s a breakdown of some key tools and what they measure:

Tool	Primary Function	Key Metrics Tracked
Google Analytics	Tracks website performance	Traffic, user behaviour, conversions
SEMrush	Analyses SEO and PPC campaigns	Rankings, keywords, competitor insights
Cyfe	Combines data into one dashboard	Multi-channel performance

Each tool plays a specific role. Google Analytics focuses on how users interact with your site, SEMrush helps you understand your SEO and paid search efforts, and Cyfe ties everything together by showing your overall marketing performance in one place.

“To find out if your marketing is contributing revenue, you need a solution that can capture all interactions throughout an individual customer journey and automatically attribute closed revenue to your influencing marketing channels, campaigns, keywords and more.” – Ruler Analytics

Set Benchmarks for Success

To measure progress effectively, establish clear benchmarks. Focus on these key metrics:

Metric	What to Measure	Industry Average
Click-Through Rate (CTR)	How often users engage with ads	2-5% for search ads
Conversion Rate	Number of completed goals on your site	2.35% for e-commerce
Cost to Acquire Customers	Expense per new customer	Varies by industry

A/B testing can help you identify which campaigns and channels perform best. By using data to guide decisions, you’ll better understand which strategies maximise ROI (Return on Investment) for your business.

Tracking ROI isn’t just about evaluating current efforts – it’s also a way to refine your approach and improve future outcomes.

4: Review and Adjust Your Budget

Keeping your marketing budget in check with regular reviews and updates ensures you stay on top of the latest marketing trends and get the most out of your spending. This is especially important for small and medium-sized businesses (SMEs) with limited resources who are aiming to stay competitive.

Plan Your Budget Annually

Start by outlining an annual marketing budget that matches your business goals. A recent study shows that 47% of small businesses allocate $10,000 or less annually to digital marketing. According to the Australian Marketing Institute, companies should allocate 10-12% of their yearly revenue to marketing.

Here’s a breakdown to guide your planning:

Marketing Channel	Budget Allocation	Expected Results Timeline
Social Media Advertising	25-30%	3-6 months for building awareness
Search Engine Marketing	30-35%	1-3 months for generating leads
Content Marketing	20-25%	6-12 months for organic traffic growth
Email Marketing	15-20%	1-2 months for improving customer loyalty

While an annual plan sets the foundation, it’s crucial to remain flexible and adjust as market conditions shift. That’s where quarterly updates come in.

Make Quarterly Adjustments

Quarterly reviews are your chance to analyse and fine-tune your budget. Use these reviews to evaluate channel performance, adjust for seasonal changes, respond to competitor activity, and ensure your spending aligns with your business goals.

This approach helps you react quickly to opportunities without losing focus.

Monitor Performance Continuously

Quarterly reviews are important, but keeping a close eye on performance year-round is just as critical. Online analytics tools can help you track key metrics and notice any issues early on. Here’s what to monitor:

Metric	Monitoring Frequency	Action Trigger
Conversion Rates	Daily	20% drop compared to your baseline
Ad Spend	Weekly	Budget pacing off by more than 10%
Engagement Metrics	Bi-weekly	Engagement drops by over 15%

In Australia, there is an annual growth rate of 8.35% for social media marketing, with 56% of small businesses increasing their social media ad budgets and 41% investing more in online advertising. Staying flexible and alert lets you take advantage of new trends and opportunities.

“Focus on tracking campaign performance in real-time and making immediate corrections. This helps in maximising ROI and ensuring that the marketing budget is effectively utilised to meet business needs”.

Case Study: E-Web Marketing’s Support for SMEs

Let’s take a closer look at how E-Web Marketing helps small and medium-sized enterprises (SMEs) make the most of their digital marketing budgets.

Overview of E-Web Marketing Services

E-Web Marketing is a Sydney-based digital marketing agency with over 25 years of digital marketing experience focusing on helping SMEs achieve growth through data-driven strategies. Their services cover many areas, including SEO, PPC advertising, social media marketing, and content marketing. Monthly plans are designed to suit different business sizes and needs, starting at $1,250 AUD for startups and going up to $5,000 AUD for more established businesses.

Service Category	Focus Area
SEO Services	Organic Growth
PPC Management	Lead Generation
Social Media	Brand Awareness
Content Marketing	Authority Building

E-Web Marketing’s Pricing for SMEs

To accommodate businesses at different growth stages, E-Web Marketing offers flexible pricing options:

Service Level	Monthly Cost	Ideal For
Basic Retainer	$1,250	Startups and small local firms
Standard Package	$2,500-3,500	Expanding SMEs
Comprehensive	$3,500-5,000	Established businesses

For businesses wanting to test the waters, project-based services are available, starting at $1,000 AUD and going up to $3,500 AUD. This allows companies to trial specific marketing strategies without committing to a full plan.

E-Web Marketing’s Approach to Budget Optimisation

E-Web Marketing adapts its strategies to help SMEs get the most out of their marketing budgets. Their approach includes:

• Custom dashboards for real-time ROI tracking
• Industry-specific performance analysis tailored to each client’s goals
• Strategic channel allocation to align with business objectives

“Our focus is on helping SMEs achieve measurable results through strategic budget allocation. By analysing performance data across channels, we can identify opportunities for optimisation and ensure marketing spend generates maximum returns.” – E-Web Marketing’s approach to SME digital marketing

This method has been incredibly effective in a landscape where 56% of small businesses are increasing their social media advertising budgets. By offering tailored solutions, E-Web Marketing ensures that even SMEs with limited resources can stay competitive, all while keeping their marketing expenses under control.

Conclusion: Key Points for Effective Digital Marketing Budgeting

Once your budget is planned, allocated, and monitored, the next step is to pull everything together for continued success.

An effective digital marketing budget is built on a clear, data-focused strategy. Key steps include:

1. Setting SMART objectives that align with your business goals
2. Distributing resources based on ROI insights
3. Regularly reviewing and fine-tuning your strategies

For small and medium-sized businesses (SMEs) just starting out, it’s best to focus on cost-effective, impactful channels. For example, email marketing tools can cost as little as $9.00 AUD per month. As your business grows, you can explore other channels while keeping your focus on measurable results.

Here are some practical tips to keep in mind:

• Regularly track performance metrics
• Adjust your budget based on what’s working
• Stay adaptable to shifts in the market
• Gradually increase spending as you see strong returns

Success in digital marketing comes from ongoing analysis and improvement. With these practices and a data-driven mindset, SMEs can create a sustainable marketing strategy that fuels business growth.