Every budget season, the same scene. Someone asks what the business should spend on eCommerce next year, and the room reaches for a number that is really last year’s number wearing a coat. Plus five per cent for ambition, minus whatever the CFO clawed back in the second meeting. Nobody defends it from first principles, because nobody set it from first principles. It arrived by inheritance.
The benchmarks don’t rescue you. Established brands spend somewhere between 7 and 12 per cent of revenue on marketing; brands in growth mode run at 15 to 20; fashion runs hotter than furniture; subscale brands spend a frightening share of revenue just to be seen. All true, all sourced, all useless in isolation, because each benchmark is the average of businesses answering a different question from yours. An average of other people’s intentions is not a strategy.
Three questions wearing one line on a spreadsheet
The spend question is really an intent question. Are we buying growth, defending a position, or harvesting one? Each intent produces a different defensible number from the same P&L. A business in land-grab mode spending 8 per cent of revenue is quietly surrendering while congratulating itself on discipline. A business in harvest mode spending 20 is burning the crop it is supposed to be bringing in. Neither number is wrong. Each is wrong for the other intent, and most budget rows never say which intent they serve.
I’ve sat on both sides of this table, as the operator asking for the money and the adviser asked to bless the number. The tell is always the same. Scrutiny goes where the discomfort is smallest. I have watched a board interrogate a six-figure platform line for half an hour, then nod through ten times that in media spend on the strength of a blended return figure nobody in the room could decompose. The platform line felt like cost. The media line felt like revenue. Neither feeling was evidence.
What the number is actually for
In fairness to the benchmarks, they do have a job. They are a sanity check, an outlier detector. If your spend sits far outside the range for your stage and category, that is a prompt for an explanation, and sometimes the explanation is excellent. What a benchmark can never tell you is what your number should be, because it doesn’t know what you are trying to do. Neither, in my experience, do most of the businesses quoting it. That is the real finding hiding inside the budget debate: the argument about the number is a proxy for the argument nobody has scheduled, which is about intent.
Most businesses don’t have a number problem. They have an intent problem, and the number is where it shows.
So the honest answer to “what should we spend on eCommerce” is: whatever your intent can defend, line by line, in front of someone unsympathetic. Decide whether next year is grow, hold or harvest, per channel if the business is big enough for the distinction to matter. Then build the number from that decision and let the benchmark check your working, rather than do it for you.
Next year’s budget will get built either way. The only question is whether it is built from a decision or inherited from a compromise. If nobody in the room can say which, that is itself the answer.