How Much Should You Actually Be Spending on Digital Marketing in NZ?

I talk to business owners every day who ask me the same question: “Jason, how much should I really be spending on digital marketing?”

It’s a fair question, but here’s the truth – there’s no one-size-fits-all answer. What works for a Wellington café won’t necessarily work for an Auckland law firm. That said, after working with dozens of Kiwi businesses, I’ve noticed some patterns worth sharing.

The Reality of Digital Marketing Budgets in New Zealand

If you’ve been running a business in New Zealand for any length of time, you know that our market has its own unique characteristics. While global benchmarks suggest companies should spend 7-12% of their revenue on marketing, I’ve found that many successful NZ small businesses actually operate best in the 5-8% range – but with a crucial caveat.

It’s not just how much you spend, but how effectively you spend it.

I remember meeting with Sarah, who runs a boutique homeware store in Christchurch. She was spending nearly 10% of her revenue on various digital marketing efforts but seeing minimal returns. Meanwhile, Mike’s plumbing business in Hamilton was investing just 4% but generating a steady stream of qualified leads.

The difference? Mike’s approach was targeted, measured, and optimised. Sarah was spreading her budget too thin across too many channels.

Breaking Down Your Digital Marketing Investment

Here’s what I typically recommend to our clients:

1. Website Investment

Your website is your digital shop front. For most small to medium NZ businesses, expect to invest between $3,500-$10,000 for a custom-designed, conversion-focused website that actually performs. Why such a range? Because your needs will vary based on:

• Complexity (simple brochure site vs. e-commerce)
• Functionality requirements
• Content volume

Remember: a pretty website that doesn’t convert visitors is just an expensive online brochure. At Lucid Media, we focus on websites that drive business results, not just ones that look nice.

2. Ongoing SEO Investment

For most local businesses in New Zealand, a realistic monthly SEO investment ranges from $750-$2,000 depending on:

• Competitiveness of your industry
• Geographic scope (local suburb vs. nationwide)
• Current website performance

If you’re a tradie focusing on a specific Auckland suburb, you might be on the lower end. If you’re a nationwide e-commerce store competing across all of NZ, you’ll likely need the higher end or beyond.

3. Conversion Rate Optimisation

This is the most overlooked area of digital marketing spending, but often delivers the highest ROI. Why? Because it’s about making your existing traffic work harder.

I recently worked with a client who was spending $3,000 per month on Google Ads but converting less than 1% of their traffic. By investing just $1,500 in conversion rate optimisation, we increased their conversion rate to 3.2%, effectively tripling their business without increasing their ad spend.

The Performance-Based Approach

Here’s my honest take after years in this industry: fixed-fee retainers often don’t align agency incentives with client outcomes. That’s why at Lucid Media, we’ve moved toward a performance-based approach for many of our services.

What does this mean? Simply that we tie our success to your success. When your business grows, we grow too.

This approach has transformed how we work with clients. Instead of the traditional “pay us regardless of results” model, we become true partners in your business growth. It’s riskier for us, but it creates the right incentives for everyone.

Are You Overspending or Underspending?

The most common issue I see isn’t necessarily that businesses are spending too little or too much – it’s that they’re spending ineffectively. Common signs include:

• Spreading budget too thin across too many channels
• No clear tracking of return on investment
• Continuing to invest in channels that don’t perform
• Not running regular conversion optimisation tests

Real story: One of our clients, a small manufacturing business in Tauranga, came to us frustrated after spending $25,000 on digital marketing with another agency and seeing minimal returns. After our audit, we discovered they were investing heavily in channels their target audience rarely used, while neglecting the ones where their prospects actually spent time.

Within three months of realignment, they were generating 4x the leads on half the monthly spend.

Let’s Find Your Optimal Marketing Budget

Every business is unique, and so is every marketing budget. The right approach depends on your:

• Current growth stage
• Competitive landscape
• Profit margins
• Sales cycle
• Customer lifetime value

I’d love to help you figure out what makes sense for your specific situation.

Book a Free Performance Marketing Audit

If you’re wondering whether your current digital marketing spend is working hard enough, let’s talk. During our complimentary audit, I’ll:

1. Analyse your current digital marketing efforts
2. Review your competitive landscape
3. Evaluate your conversion funnels
4. Provide specific recommendations based on our Lucid Launch System™

There’s no obligation, just actionable insights you can use right away.

Book Your Free Performance Marketing Audit Today →

Is your digital marketing investment generating the returns it should? Let’s find out together.