Solving the mystery of your marketing budget 

by | Apr 9, 2018 | Fierce Strategy + Creative, From the CEO, Marketing budgets

Solving the mystery of your marketing budget 
Curious how much you should invest in marketing? In this blog post, we share some great information to help you make a good financial decision. We love this article from Deloitte and the Wall Street Journal on how to plan budgets that are right for both your brand and your industry:

Here’s a short excerpt:
Marketing budgets now comprise 11 percent of total company budgets on average, up slightly from 10.4 percent in February 2012, when the CMO Survey first asked this question. Consumer packaged goods companies allocate by far the largest percent of total company budget to marketing (nearly one quarter), followed by consumer services, tech software/biotech, communications/media, and mining/construction. Companies that spend the smallest portion of their budgets on marketing include transportation, manufacturing, and energy.

B2C brands typically spend more than B2B brands
A good rule of thumb for marketing investments is 3-10% of overall revenue. A 2017 CMO survey published by the American Marketing Association and Duke University reported that across all industries businesses spend 11.4% of budget on marketing and only 6.9% of revenue on marketing.

Percent of revenue by industry:
Education: 18.5%
Consumer services: 17.4%
Transportation: 11.2%
Consumer Packaged Goods: 11%
Service Consulting: 9.4%
Tech/Software/Biotech: 8.5%
Communications/Media: 6.6%
Healthcare: 6.2%
Banking/Finance/Insurance: 3.9%
Retail/Wholesale: 3.8%
Energy: 2.2%
Mining/Construction: 2%

Why invest in marketing?
Marketing is responsible for leading revenue growth at 38.4 percent of companies, according to the CMO Survey. “These companies have larger marketing budgets as a percentage of the overall company budget (14.5 percent) than companies that do not assign primary responsibility for revenue growth to marketing,” reported the Wall Street Journal. “At such companies, the marketing budget represents only 10.8 percent of the total budget. This is a significant difference, and it illustrates marketing’s ability to influence corporate strategy and potentially lead to larger marketing budgets.”

According to HBR, “The key is to remember that while marketing expenditures hit the P&L immediately, every dollar you spend today is building your brand as an asset for the future, Avery explains. So, ideally your marketing program is not only affecting sales and profits this year but also strengthening your brand equity and customer relationships over time.”

Are you ready to begin a marketing plan?
We invite you to brand fiercely with us. Reach out to today.

Here’s a few more great resource articles: