E-commerce marketing
What to budget
for an online store.
There's no right percentage. Big companies spend about 7.8% of revenue on marketing, but that figure comes from large firms, not a store doing $40,000 a month. A better way: start from the sales you want, your average order, conversion rate, cost per click and margin, and work out what the ads would cost and whether that leaves a profit. If it doesn't, more budget just buys more of the same loss.
Written by Dan Picken, a marketer who checks the sources. Last checked 2 November 2026.Why percentage rules
mislead.
Gartner's 2026 survey put marketing budgets at 7.8% of company revenue. That's a survey of 401 marketing leaders, mostly at companies with more than US$1 billion in revenue. A small online store with a 40% margin and one with a 70% margin can afford very different amounts, and a store trying to grow fast will spend more than one trying to hold steady.
What matters is whether each dollar comes back with profit. That depends on margin, order value, how well the site converts and what clicks cost in your category.
Work backwards
from the goal.
Put in the sales you want from ads, and your own numbers from your ad account and store. It shows the clicks and spend needed, and whether there is profit left at the end.
Budget from your goal
Work backwards
from the sales.
Most stores pick a budget, then hope. Start from the sales you want and your own numbers instead. Use the conversion rate and cost per click from your ad account; the boxes start with an example.
Ad spend needed a month
$0
Profit after ads
Where the money
usually goes.
Australians spent a record $82.6 billion online in 2025, but basket sizes are shrinking: Australia Post found the average online order fell to $96, $10 less than in 2020. The Reserve Bank's surcharge ban from 1 October 2026 also means card fees now come out of your margin, so budget for them. That makes each order's margin matter more. For most small stores, Shopping ads come first, because they reach people already searching for the product. Google Ads for online stores covers how to set them up. Then social ads to find new customers, and email and SMS to bring them back, which costs little and usually makes the rest pay.
SEO costs time or fees rather than clicks, and pays off over months. Most stores need some of each, weighted to what the numbers show is working.
When to
spend more.
Step up while profit after ads holds. Watch for the point where each extra dollar brings back less: that's normal, as the cheapest clicks get used up first. Spend Curve is the method for finding where more budget stops paying.
And watch the seasons. Click Frenzy, Black Friday and Christmas bring more shoppers and more competition. Plan the extra spend before the peak. Google's seasonality adjustments let you tell automated bidding about a short sale of one to seven days, so it doesn't overreact.
What I see most often
How store budgets
go wrong.
- 1
A number picked from thin air
'We'll spend $3,000 a month' with no link to margin or goals. It's either too little to learn anything or too much to afford.
- 2
Judged on ROAS, not profit
A 4x ROAS looks great until product cost, shipping and returns come out.
- 3
Doubled in a week
Budget jumps because last week was good. The extra goes on more expensive clicks, and results fall back.
- 4
Nothing left for bringing customers back
Everything spent on finding new shoppers, nothing on email or remarketing to the ones already won.
The honest bit. Sometimes the honest answer is to spend less until the site converts better. Ads amplify what's there. A store that loses money at $2,000 a month loses more at $10,000.
Questions
people ask.
How much should an online store spend on marketing?
Work it out from your margin and goals rather than a percentage. Large companies average about 7.8% of revenue, but small stores vary widely. The calculator on this page works it backwards from the sales you want.
How much should I spend on Google Ads for my store?
Enough to get a fair read on what works, at a cost per sale your margin can carry. Start below your target, check profit after a month, and step up while it holds. The Google Ads cost guide has more on setting a starting budget.
What ROAS do I need to make a profit?
At least 1 divided by your margin, before shipping and returns. At a 50% margin that's 2.0. The calculator on this page shows your break-even next to the ROAS your plan needs.
When should I increase my ad budget?
When profit after ads holds at the current level, and step up gradually. Each extra dollar usually brings back a bit less than the last.
Related
Keep
going.
Get a free
Google Ads audit.
Takes a minute. Audits come back within 1 to 2 business days. For anything else, I'll get back to you as soon as possible.
What happens next
- 1I'll ask for read-only access, or just your website for a search audit.
- 2I go through it and write up the 3 biggest fixes.
- 3A 20-minute call to walk you through it. No pitch unless you ask.