One question that every modern company has asked is how much should my company spend on digital marketing?
In this article we’ll answer that, showing the average marketing budget as a percentage(%) of revenue, what is included in this calculation and also highlight key considerations for your business.
Average Marketing Budget
The typical marketing budget across all industries is 9.5% of revenue¹.
For B2B Product companies the average is higher at 11.2%¹.
The averages do vary by industry, country and business maturity, but as a rule of thumb, growth-minded businesses should be budgeting at least 10% of revenue towards marketing.
What is Included In Marketing Spend Calculations?
There are four key areas that make up a marketing budget:
- Internal marketing team
- External agencies & services
- Paid media
- Marketing technology
This is known as the marketing resource mix and the allocation of budget is typically very even across all four elements¹.
What Should I Consider When Setting a Marketing Budget?
As much as these percentages of revenue are a good benchmark, every company is different. So in setting a marketing budget, make sure it’s reflective of the following:
- Capacity
There’s no point bringing in new business if you can’t service it - Pipeline
If your pipeline is light, you should be more aggressive. - Expiring/At Risk Contracts
If clients are going to leave, then you need to start work to replace them before the expiration date. - Cashflow
Marketing is a leading activity, it will take time for that investment to be returned by way of revenue. Consider your sales cycle. - Results
How have campaigns performed historically - Scalability
What is the ability to scale campaigns and activate new initiatives? - Long Term Strategy
Know that cutting back on marketing is a short-term move that will have a negative long-term impact on revenue.
Key Points
In summary, growth-minded businesses should be spending at least 10% of revenue on marketing, which covers internal and external teams, paid media and marketing technology.
How does your marketing budget and allocation compare?
