How to set an effective marketing budget

We often talk to customers who are rethinking their marketing budget process. The main questions we hear are, how much should be budgeted in order to be effective, and where is my investment going to be most rewarded?

A CMO survey produced some interesting benchmark results:

  • For B2B firms, marketing budgets were 7-8% of revenue
  • For B2C companies, marketing budgets were 9% of revenue
  • For <$25M turnover businesses, budgets were upwards of 11% of revenue

Companies seeking to grow market share will likely be on the high side of these averages vs. businesses planning for modest growth, which may be on the lower side. It is important to note that these percentages represent the total marketing investment. Staff costs can be expected to be about half of the spend, while the remainder is invested in activities such as strategy support, content creation and advertising.

View marketing budget survey chart – Marketing Budgets

What marketing investment produces the best results?

The chart below shows analysis from 295 global business leaders. It reveals sharp increases in digital marketing investment. Traditional channels did not fare well. Print, radio, and television are expected to see a net decrease in total marketing investments into 2017. Marketing technologies and automation are proving effective at bringing together the most effective marketing strategies (email marketing, organic search, and content marketing). Businesses are shifting their marketing spend. What used to be spent on radio, television, and newspaper is now being dedicated to search, email and social.

This trend is expected to continue. eMarketer projects that in 2017, TV ad spending will total 35.8% of total media ad spending in the US. Meanwhile, total digital ad spending in 2017 will equal 38.4% of total ad spending. This is the first time in history digital spend surpassed TV ad spend in the US. And the gap will only widen – by 2020, digital spend will surpass television by 36%.

View marketing spend graph – Marketing-Spend

Bringing together the data from credible sources should help you determine how much to budget for marketing, and where to best apply your investment.

Do you need help working out where to get the most bang for your buck?

 

Source: MarketingCharts, eMarketer, CMO and Webstrategies