You’ve decided the business needs more leads. You open Google Ads, it asks for a daily budget, and you type a number that feels safe. Fifty dollars, maybe eighty. No working behind it, just a figure that won’t hurt too much if it fails.
We see this constantly, and it’s why “how much should a Brisbane business spend on ads” is the wrong question. The number you can afford to spend and the number you should spend are different things, and neither one starts with a budget. Both start with what a customer is worth to you.
Why the ad budget question can’t be answered on its own
There is no correct ad budget for a Brisbane business, because the right spend depends on what a new customer is worth in gross margin, not on your revenue, your industry, or what the business down the road spends. A plumber whose average job returns $600 in margin and an accounting firm whose average client returns $8,000 over three years should not be using the same rule of thumb. Yet both will find the same “spend 5 to 10 percent of revenue” advice on page one of Google.
Percentage benchmarks describe averages across thousands of businesses. They tell you nothing about whether your next $1,000 of ad spend will come back as $3,000 of margin or evaporate.
So flip the question. Stop asking what you should spend. Ask what you can afford to pay for a customer and still make money.
What should you work out before setting an ad budget?
Before setting any ad budget, work out three numbers: your gross margin per customer, the share of that margin you’re willing to give up to win the customer, and how many new customers you can actually service each month. Those three numbers produce a budget. Nothing else does.
Gross margin per customer means what’s left after the direct cost of delivering the work, not revenue. Owners get this wrong more than anything else. A $2,000 sale with $1,200 of materials and labour is an $800 customer for advertising purposes, not a $2,000 one.
The second number is a judgement call. Some owners will happily give up 30 percent of first-sale margin to win a customer who’ll come back for years. Others need each job to stand on its own.
The third number is capacity, and it gets ignored completely. Ads that generate leads you can’t answer for two days are money burnt in a slightly different way.
The maths: turning customer value into a monthly budget
A sensible ad budget is built from the bottom up, line by line. Here’s the working with conservative round numbers:
- Average sale: $2,000
- Gross margin at 50 percent: $1,000 per customer
- You’ll give up 30 percent of margin to win a customer: $300 target cost per customer
- You close 1 in 4 qualified leads: $75 target cost per lead
- You can take on 10 new customers a month: 40 leads needed
- Budget: 40 leads at $75 = $3,000 per month
That’s it. Not a percentage of revenue, not a number that feels safe. A budget derived from your own margins and your own capacity.
It also gives you a kill switch. If leads are costing $140 instead of $75 after a fair testing period, the campaign is failing against a standard you set in advance. No agency can talk you out of that with impressions and click-through rates.
Percentage-of-revenue rules vs unit economics
| Percentage of revenue | Unit economics | |
|---|---|---|
| How the budget is set | Fixed slice of turnover, often 5 to 10 percent | Built up from margin per customer and capacity |
| What it tells you | What similar businesses spend on average | What you can afford to pay per customer |
| When it’s useful | Sanity check, board reporting, mature brands | Any business buying leads through paid channels |
| Main risk | Overspending on a broken funnel, or capping a profitable one | Requires honest margin numbers, which many owners don’t have |
| Who it suits | Larger businesses with brand budgets | Most Brisbane small and mid-size businesses |
The percentage rule isn’t useless. It’s a decent cross-check once your unit economics say the ads work. It just can’t be the starting point.
What we keep finding when we review ad accounts
Most of the ad accounts we review have a budget nobody can explain and no reliable conversion tracking behind it. That combination shows up again and again: an owner spending a round number each month, a dashboard full of clicks, and no way to say what a customer actually cost.
A pattern we keep seeing in trades and professional services around Brisbane is the reverse problem too. A campaign is quietly profitable, producing customers well under the target cost, and it’s been capped at the same daily budget for two years because that’s the number that felt safe in the beginning. The owner is rationing the cheapest growth available to them.
The other common one: judging ads on revenue instead of margin. A campaign selling low-margin work can look brilliant on a revenue report and be losing money on every sale. That’s an operations question as much as a marketing one, which is why our growth and operations people often end up in the same review.
When the right ad spend is zero, for now
Sometimes the honest answer is to spend nothing on ads yet. Three situations in particular:
You can’t measure conversions. If a lead from an ad and a lead from a referral look identical in your systems, fix tracking first. Ads without measurement are a donation to Google.
Your margins are broken. Advertising a business with thin or negative margins scales the problem. Fix pricing and waste first, then advertise. This is exactly what our Profit Reset program exists for.
You’re already at capacity. If your team can’t take more work, the money is better spent on the constraint, whether that’s hiring, workflow or pricing up.
Common questions about ad budgets
How much should a small business spend on ads?
There’s no universal figure. Common benchmarks suggest 5 to 10 percent of revenue, but a better approach is to work out your gross margin per customer, decide what share of it you’ll pay to acquire a customer, and multiply by the number of new customers you can service.
What is the 70/20/10 rule for marketing budget?
The 70/20/10 rule allocates 70 percent of the marketing budget to channels already proven to work, 20 percent to promising channels being tested, and 10 percent to experiments. It’s a reasonable way to split a budget once you have one, but it doesn’t tell you how big the budget should be.
What is the 70/30 rule in marketing?
The 70/30 rule usually refers to splitting spend between long-term brand building (70 percent) and short-term sales activation (30 percent). For most small businesses buying leads through Google Ads, nearly all spend is activation, so the split matters less until the business is larger.
What is the 60/40 rule in advertising?
The 60/40 rule comes from long-run advertising effectiveness research and suggests 60 percent of spend on brand building and 40 percent on short-term activation. It was developed from data on large advertisers, so treat it as background rather than a rule for a Brisbane trades or services business.
How do I know if my ads are actually profitable?
Ads are profitable when the cost of acquiring a customer is comfortably below the gross margin that customer generates. Track cost per customer against margin, not against revenue, and not against clicks or impressions.
How long before Google Ads shows a return?
Expect two to three months before you have enough conversion data to judge a campaign fairly. Killing a campaign after two weeks, or persisting for a year without hitting your target cost per lead, are both common and both expensive.
Should I cut ad spend when cash flow is tight?
If the campaign is genuinely profitable against your target cost per customer, cutting it trades a short-term cash saving for a longer-term revenue hole. If you can’t tell whether it’s profitable, that’s the real problem, and cutting is the safer default until you can measure it.
If you’re setting an ad budget by feel, or you’re spending every month and can’t say what a customer costs you, that’s worth an hour of someone’s time before it’s worth another dollar of Google’s. Get in touch and we’ll walk through your numbers with you, margins first, ads second. The first conversation costs nothing and you’ll leave with your target cost per customer either way.