Your FY27 Marketing Budget Is Last Year's Budget Wearing a New Hat

It is the first Monday of the new financial year. Somewhere in Australia right now, a marketing budget for the next twelve months is being signed off, and I would bet good money on how the number was reached. Someone opened last year's spend, added a few percent, or took a few off if the year was tough, and called it FY27. Done. Filed. Defended until next June.

I have sat on both sides of that table. I have built these budgets inside businesses, and I have watched agencies happily bill against them for a year without anyone asking whether the number still made sense. So let me be blunt. The annual set-and-forget marketing budget is the laziest capital allocation decision most Australian businesses make, and this week, while the ink is barely dry, is the window to fix it.

Here is the thesis. A budget is not an artefact you set once and protect. It is a throttle you adjust on evidence through the year. Set your FY27 number by copying FY26 and you have made a guess and called it a plan.

The tell is that this year's budget references last year's budget, which referenced the year before. It is a closed loop feeding itself. Nobody stops to ask if the world outside the loop has changed.

It has. The price of doing business in every channel keeps climbing while the pie stays the same size.

Look at the numbers. Gartner's 2026 CMO Spend Survey has marketing budgets sitting at 7.8% of company revenue, up a whisker from 7.7% the year before, and roughly 18% below where they were four years ago (Gartner, 11 May 2026). The year prior they had flatlined at that same 7.7% (Gartner, 12 May 2025). The Deloitte and Duke CMO Survey put budgets around 9.4% of revenue overall in its Spring 2025 read, with B2B product companies down at 6.4% (The CMO Survey). Its March 2026 report is titled "Marketing Contracts Under Economic Pressure". So the direction is contraction, or at best a flat line.

Now put that next to the local market. Australian internet advertising spend grew 11.5% to hit $18.4 billion for calendar 2025, and video alone is now 29% of the total (IAB Australia). Q1 2026 was the strongest first quarter on record (IAB Australia).

Read those two facts together. Budgets flat. Ad prices up double digits. The same-sized pie is being carved by more advertisers paying more for every slice.

Global marketing budgets sit at 7.8% of revenue in 2026, barely up from 7.7% the year before and about 18% below where they sat four years ago, while Australian internet advertising spend grew 11.5% to $18.4 billion.

This is the part where I get to use our own data, because we have measured this market rather than theorised about it.

Across the Australian businesses we have scored, a pattern shows up every time. The ones that treat budget as a fixed annual artefact cluster at the bottom of the data and tracking dimension. The businesses that move money mid-year, that shift spend from a channel that stopped working into one that started, are almost always the ones that can see what each channel returns.

That is not a coincidence. Measurement maturity and budget agility travel together. You cannot rightsize a channel you cannot see. If you are flying blind, the safest-feeling move is to leave the number where it was and hope. So that is what most businesses do. They slide blind because they do not want to move.

The businesses that can see do the opposite. They ask a simple question through the year. Is this going well? If the answer is yes, why wouldn't you put more behind it? If it is going nowhere, why is it still funded?

Every channel is a chess piece. It moves in a certain way, it has constraints and you learn how it behaves by playing it, not by staring at it once a year. Treat your budget as fixed and you have frozen every piece on the board for twelve months while the game keeps going.

The better model is a throttle. Scale when you know. Scale back when you don't. You do not allocate a hundred percent of the year on day one, because that is a bit silly. You keep a bit in the back pocket, because most of what you are running will work at ninety percent and be flying, and the reserve buys you the option to press harder on whatever proves itself in the first quarter.

The reserve is not slack. It is optionality. It is the difference between reacting to a winning channel in July and finding out in May that you had nothing left to feed it.

Scale when you know. Scale back when you don't. A budget you cannot move is not a plan, it is a monument to what you believed last June.

The number is locked. Good. That does not mean it is finished. Here is what I would do while it is fresh.

First, write down the assumptions behind the number, not just the number. What did you assume about each channel to land here? What return, what cost, what conversion rate? A budget without stated assumptions cannot be tested, and a number you cannot test is just a feeling with a dollar sign on it.

Second, hold a bit back. If you signed off the full amount on day one, carve out a reserve now. Ten percent in the back pocket, ready to back whatever the first quarter proves. Do not treat the whole budget as a land grab you have to spend because it is there.

Third, set the review rhythm before you need it. Australian businesses already run on a quarterly BAS cadence, so bolt the budget review to it. Every quarter, one question per channel. Volume, margin or nothing. If a channel is not making volume or making margin, it is on notice.

Fourth, if you cannot answer whether a channel is working, that is the real finding. That gap is where the money bleeds out. Fix the seeing before you argue about the spending, because you cannot rightsize what you cannot see.

None of this needs a bigger budget. It needs you to stop treating the number as settled and start treating it as a position you hold until the evidence says otherwise.

The businesses that will win FY27 are not the ones that guessed the best number in July. They are the ones that keep looking, keep moving money toward what works and keep pulling it from what doesn't. The more decisions you make, the more you learn. The faster you look, the faster you get clever.

There is one more line in the Gartner data worth sitting with. CMOs are now putting 15.3% of budgets toward AI, but only 30% say they are ready to scale it (Gartner). That is a lot of money committed to something two thirds of the people spending it cannot yet use properly. Which is the whole problem in one statistic. Money moving ahead of the ability to see whether it works.

Do not spend FY27 the way you spent FY26 because it was easier. Set the number, hold a reserve, book the reviews and let the year tell you where the money should go. Everything is risk anyway. You might as well try to win.

If you want to know whether your own FY27 number is evidence-based or just last year's guess, run a Lens scorecard.

What percentage of revenue should a marketing budget be?

There's no single right answer. Global averages sit around 7.7 to 7.8% of revenue, but the number that matters more is whether your last dollar of spend earned its place, not what percentage it represents.

Why is copying last year's marketing budget risky?

Because channel costs move even when budgets don't. Ad prices have climbed double digits while global budgets stayed roughly flat, so an unchanged number is a real-terms cut.

How often should a marketing budget be reviewed?

At least quarterly, tied to a rhythm you already run like BAS reporting. Ask one question per channel each time: is it making volume, making margin or is it on notice?