Unfortunately, when it comes to figuring out exactly how much you should be spending on marketing, there’s no easy answer. There are a whole host of factors that go into calculating this figure, so we can’t provide a number solely based on the size of your company, or the industry you’re in.
But there are a few strategies you can use to determine how much your marketing budget should be yourself – we’ve explored some of these below, so you can feel confident that you’re not under or over spending!
The sector you’re working in can make a huge difference to the percentage of revenue you spend on marketing. According to a recent Deloitte CMO Survey, which is a survey conducted twice a year that compares the marketing strategies across a range of industries, businesses working in consumer packaged goods spend almost a quarter of their total budget on marketing, while areas like transportation and manufacturing only spend around 8%.
Whether your company is a B2B or B2C also makes a difference, as does what you’re offering – be it physical products or more abstract services. For example, the Deloitte CMO Survey shows that B2Bs selling products rather than services spend almost twice as much as any other sector on marketing training.
A quick search on Google should be able to inform you of the top marketing statistics within your industry. While some of these facts and figures may not change too much from sector to sector, others may surprise you.
For instance, did you know that 84% of CEOs and VPs make their purchasing decisions using social media as a guideline? And in terms of content, approximately 80% of companies have between one and three content specialists on staff, and overall, organisations spend around 46% of their marketing budget on content creation.
When it comes to your return on investment, how long you’ve been operating will be a huge contributing factor. If you’re launching a new product or service, a lot of businesses will spend up to 50% of their revenue on marketing such things, in order to get them established in the market.
If you’re simply selling well established products or services, you may only need to spend a few percent of your budget on marketing them. The brand will already be out there, and people should be aware of the range that you’re offering.
You won’t need to use every marketing channel available. Some platforms simply won’t work for your business, and even if they show a small return, it’s better to focus your efforts on channels that reap a larger one. You can then reassess your strategy at a later date.
It’s also important to cast a wide net in terms of how people are accessing your site. While mobile traffic has now overtaken desktop traffic, this doesn’t mean you should disregard the latter entirely. Make sure your site is mobile friendly, but try to optimise the website for desktop too. And if you’re interested in the percentage split between the two, Google Analytics can let you know how much of your web traffic comes from mobile and how much comes from other devices.
if in doubt, use the 5% rule
There is a general rule of thumb that you should try and spend on average between 2% and 5% of the revenue you get from sales on your marketing budget. This figure is based on years of research and feedback from businesses who have run successful marketing campaigns.
You may think that 5% does not sound like a large percentage, but it should cover most of your ongoing marketing efforts, and will fluctuate slightly, depending on the stage your organisation is at. If you’re just starting out, for instance, you may need to spend significantly more than 5% on your marketing budget, to start getting your brand out there. And if you’ve been around for a few years, it may be time to update your software.
It should be noted that while around 5% of your revenue should be enough to maintain your current visibility and brand awareness, in order to grow your market share, you may need to spend around 10%.
So How much should you spend?
Overall, there are no hard and fast rules for a marketing budget. You’ll need to identify your most profitable channels, and allocate the largest percentage of your budget there, while experimenting with other platforms. Constantly analysing your data is key – you can’t afford to become complacent, instead looking at your statistics and making informed decisions about budget allocation and growth.
If you’d like to learn more about creating a marketing budget, we’d love to hear from you! Simply contact us on the details below, and we can discuss your overall marketing strategy.