Marketing can sometimes feel a little like gambling.
Possibly not what you’d expect to hear from a marketing company, but bear with us!
Think of it this way: your marketing budget is your stake, the tables and slot machines are your marketing channels, and the new customers you hope to win are the prize.
It’s tempting to get distracted by the flashing lights, impressive numbers and promises of big returns. But experienced decision-makers know that success isn’t about taking chances and hoping for the best. It’s about understanding the numbers and making informed decisions.
Professional marketing works in much the same way.
While marketing results can never be predicted with complete certainty, there is an enormous amount of data available to help businesses understand what’s working, what’s costing too much and where the best opportunities lie.
For South African businesses, particularly those balancing growth ambitions with tight budgets, knowing which numbers matter can make all the difference.
There are plenty of marketing metrics worth tracking, but two provide an especially useful starting point:
- Marketing spend as a percentage of revenue
- Customer Acquisition Cost (CAC)
Together, they help answer two important questions: How much are we investing in marketing, and what does it cost to win a new customer?
1. Marketing spend as a percentage of revenue
The first metric to consider is marketing spend as a percentage of revenue.
Quite simply, how much of your business’s revenue are you investing in marketing?
The calculation is straightforward:
Marketing spend ÷ Total revenue × 100 = Marketing spend as a percentage of revenue
For example, if your business generates R10 million in annual revenue and spends R500,000 on marketing, your marketing investment represents 5% of revenue.
But that leads to the next question: how much should you be spending?
How much is enough?
There isn’t one correct percentage for every business.
Your marketing budget will depend on your industry, growth objectives, business model, profitability and how established your brand is.
A business entering a new market or launching a product may need to invest considerably more than an established company with strong customer relationships and a steady flow of repeat business.
Similarly, a B2B company selling high-value industrial equipment may have very different marketing requirements from an online retailer selling directly to consumers.
According to Gartner’s 2025 CMO Spend Survey, marketing budgets averaged 7.7% of company revenue among the organisations surveyed.
While that provides a useful international reference point, it’s important to remember that the research was largely based on major organisations, not South African small and medium-sized businesses.
The right marketing budget is the one your business can afford, that supports its objectives and has a realistic prospect of delivering profitable growth.
Don’t forget the hidden costs
When calculating marketing spend, it’s important to consider more than your advertising invoices.
For example, your business might spend R20,000 on exhibition space at an industry event. But what about the cost of designing the stand, producing promotional materials, transporting equipment and having employees away from their usual work for several days?
The real cost of participating could be considerably higher.
The same applies to digital marketing. Paid advertising is only one part of the investment. Content creation, website maintenance, software subscriptions, marketing personnel and external specialists all contribute to the cost.
Understanding the full investment gives you a much more accurate picture of what your marketing is costing the business.
It also helps when planning ahead.
Rather than automatically increasing or cutting the marketing budget by a fixed percentage each year, consider what your business needs to achieve and what level of investment is required to support those goals.
This is where our second metric becomes particularly valuable.
2. Customer Acquisition Cost (CAC)
Customer Acquisition Cost, or CAC, tells you how much your business spends to acquire a new customer.
It’s one of the most useful metrics for understanding whether your sales and marketing efforts are commercially sustainable.
The basic calculation is:
Total sales and marketing acquisition costs ÷ Number of new customers acquired = Customer Acquisition Cost
For example, suppose your business spends R120,000 over three months on the sales and marketing activities involved in winning new customers.
During that period, you acquire 12 new customers.
Your average Customer Acquisition Cost is R10,000.
Is that good or bad?
The answer depends on what those customers are worth to your business.
If each new customer generates only R5,000 in revenue from a once-off purchase, spending R10,000 to acquire them is clearly a concern.
But if the average customer generates R100,000 in revenue over several years, the investment may be entirely reasonable, depending on the profit margins and costs of servicing that customer.
This is why acquisition costs should never be viewed in isolation.
Understanding acquisition costs by marketing channel
Looking at your overall CAC is useful, but breaking down performance by channel can provide even more valuable insights.
Let’s say a South African B2B business uses LinkedIn campaigns, Google Ads and industry events to generate new customers.
Over a particular reporting period, it identifies the following results:
| Marketing channel | Acquisition cost | New customers | Cost per customer |
|---|---|---|---|
| LinkedIn campaigns | R30,000 | 3 | R10,000 |
| Google Ads | R24,000 | 4 | R6,000 |
| Industry events | R40,000 | 2 | R20,000 |
These are illustrative figures, using direct campaign costs rather than the full sales and marketing costs included in overall CAC.
At first glance, Google Ads appears to be delivering customers at the lowest cost.
But that doesn’t automatically mean the business should stop investing in LinkedIn or events.
What if the customers acquired through industry events place significantly larger orders? Or those coming through LinkedIn stay with the business for longer?
The cheapest customer isn’t always the most profitable customer.
Good marketing decisions consider both the cost of acquiring customers and the value those customers bring to the business.
It’s also worth remembering that customers often interact with several marketing channels before making a purchase. A buyer might discover your business through LinkedIn, visit your website through Google and eventually make contact after meeting your team at an event.
Channel-level acquisition figures are useful, but they don’t always tell the full story.
Think beyond the first sale
For many B2B businesses, particularly those selling professional services, manufacturing solutions or ongoing contracts, a customer relationship can last several years.
This is where Customer Lifetime Value (CLV) becomes important.
Let’s consider a South African company that wins a five-year service contract worth R500,000 per year.
That represents R2.5 million in potential contract revenue.
If the business spends R100,000 to acquire that customer, the investment may look attractive.
However, the full R2.5 million isn’t profit.
The company still has to deliver the service, pay employees, cover operating expenses and manage the costs associated with retaining the customer.
If the contract generates a gross margin of 40%, it would contribute approximately R1 million in gross profit over five years, before other applicable costs.
Against that potential contribution, a R100,000 acquisition cost may be commercially sensible.
The important point is that customer value should be considered in terms of profitability, not revenue alone.
This gives businesses a better foundation for deciding how much they’re prepared to spend to win customers.
What about marketing ROI?
Marketing spend as a percentage of revenue and Customer Acquisition Cost are excellent starting points, but neither tells you the complete return on your marketing investment.
Marketing ROI goes a step further by examining the financial return generated relative to the investment made.
A simplified calculation is:
Marketing ROI = (Incremental profit attributable to marketing − Marketing investment) ÷ Marketing investment × 100
For example, if a business invests R50,000 in a campaign and can reasonably attribute R100,000 in incremental profit before marketing costs to that campaign, its calculated marketing ROI would be 100%.
In practice, determining exactly how much profit can be attributed to a particular campaign isn’t always straightforward.
Marketing often influences buyers over time, and different channels contribute at different stages of the decision-making process.
That’s why businesses should use these metrics together rather than relying on one number to tell the whole story.
A good marketing dashboard should help business leaders understand how much they’re investing, what they’re achieving and whether performance is improving.
Measure what matters
Just as a professional gambler relies on mathematics rather than flashing lights, experienced marketers use data to make better decisions about where to invest.
But measuring marketing performance isn’t about collecting endless reports or filling dashboards with impressive-looking numbers.
It’s about understanding the relationship between what goes into your marketing and what comes out of it.
Marketing spend as a percentage of revenue helps you understand the scale of your investment.
Customer Acquisition Cost helps you understand what it takes to win new business.
And when those figures are considered alongside customer lifetime value, profitability and marketing ROI, you begin to see whether your marketing is contributing to sustainable growth.
For South African businesses, this is particularly important when every rand needs to work harder.
Professional marketing shouldn’t be a gamble. It should be a carefully managed investment in your business’s future.
Make Your Marketing Investment Work Harder
At The Marketing Centre South Africa, we help businesses understand where their marketing investment is going, which activities are delivering value and where improvements can be made.
Through our Supercharged Fractional Marketing approach, businesses gain access to experienced Marketing Directors who connect marketing strategy, performance and commercial objectives.
Not sure whether your marketing budget is working as hard as it should?
Start with our Marketing Budget Check-up or book a discovery call to explore how we can help your business grow.
