- David Olsen
After last week’s Spring Statement from the Chancellor Rishi Sunak, it got us thinking… The new financial year is just around the corner. Therefore, many businesses will be looking at their budgets for the year ahead. Each department will be requesting their desired sums of money hoping the Finance Director agrees and signs it off. Unfortunately, one of the most scrutinised, and first to be cut, is the pot of money set aside for marketing!
So, here’s our guide to what size marketing budget you’ll need and how to split it. If you’re a B2B business with multiple departments, or a small business wishing to understand more then read on…
The pandemic took a huge hit on marketing budgets. But, the CMO Survey from August 2021 identified that marketing spend had returned to pre-pandemic levels. It even highlights optimistic growth projections for the next 12 months, even outpacing any year in the past decade.
It also identified how marketing professionals from B2B businesses allocate their marketing budget. So, in terms of B2B product businesses they allocated 9.6% of budget and 6.7% of total company revenue. With B2B services allocating 9% of budget and 7.5% of total revenue to their marketing budgets annually.
These have remained consistent over the past few years apart from during the pandemic. They have been in the 9-11% range for B2B businesses, and represent total annual marketing investment. This typically includes marketing staff, investments paid to agencies and outside suppliers, advertising costs, and media spend.
Smaller businesses looking to grow, and larger firms with an aggressive growth strategy who want more market share, will usually commit a larger % of total turnover to their marketing budgets. The competitive nature of your marketplace can also drive a higher budget.
Not every business allocates their budget in the same way. Your marketing budget allocation is purely down to the nature of your business, and how your targeted customers behave through the buying funnel.
According to the Gartner Survey, 72.2% of marketing budget investment is now going into digital marketing. The CMO Survey identified that owned digital channels (the ones you completely control) had the highest budget allocation, with 29.5% of the budget being spent. This includes websites, email, and mobile channels. Earned digital was the second highest representing spending on social media and SEO.
The CMO survey identified the marketing expenses most included in marketing budgets are:
The LinkedIn-Edelman study also found that executives are prioritising four key areas when it comes to marketing budget:
This is understandable as these will all help answer your target audience’s questions, help to build trust, and develop relationships. The result, improved conversions, and more leads for your business. High-quality, consistent content is key to this.
When looking at your businesses marketing budget it’s important to ensure you have a big enough budget to allow you to carry out all the necessary marketing activities for your business to grow and become more successful.
If, as a marketing department (or person responsible for marketing in your small business), you struggle to get the required budget each year, then here’s some key takeaways to help you get the budget you deserve:
Not sure of the best way to allocate your marketing spend for the best results? Not a problem, let us manage it all for you. We specialise in content marketing, social media, SEO, website design and development. Contact us today to discuss your requirements.