How Much Should You Budget for Marketing?
Not all industries are created equal when it comes to marketing budgets
I am often asked this question and share that it isn’t a one-size-fits-all process. Factors like company size, industry, goals, and market conditions all play a role. But how much should companies actually set aside for their marketing endeavors? To shed some light on this question, let’s dive into a recent CMO survey by Deloitte.
Budget as a Percentage of Company Revenue
The survey shows that companies with revenues of $5 million to $25 million spent 10% of their revenue on marketing. It’s important to note that the range could go from as low as 3.5% to as high as 50% based on various factors.
Smaller companies (<50 employees) and companies with smaller sales revenues (<$10 million) spend more on marketing budgets as a percent of company revenues than their larger counterparts and tend to spend an average of $15,000 per month on marketing. This is a significant number, and it highlights the importance of marketing even for smaller operations.
Factors Influencing Marketing Budgets
Not all industries are created equal when it comes to marketing budgets. Companies will allocate funds differently based on their niche, target audience, and business model. Here are a few of the most common factors:
- Company Size and Revenue: Larger companies with higher revenues generally tend to have bigger marketing budgets. The exact percentage of revenue dedicated to marketing can vary, but there’s a positive correlation between company size and marketing spend.
- Business Goals: Companies with aggressive growth goals might allocate a larger chunk of their budget towards marketing to attract new customers and expand their reach.
- Market Competitiveness: In highly competitive markets, businesses often find themselves spending more on marketing to stand out from the crowd and maintain market share.
- Marketing Channels: The choice of marketing channels can also influence the budget. For example, companies focusing on online advertising might have different budgeting needs than those investing heavily in offline, traditional marketing methods.
Evaluate Your Goals
- Research Your Industry: Stay informed about what competitors in your industry are spending. This can give you a ballpark figure to start with and then adjust based on your unique circumstances.
- Consider ROI: Remember, it’s not just about how much you spend, but the return you get on your investment. Regularly review and adjust your budget based on the effectiveness of your marketing strategies.
- Stay Flexible: The business environment is ever-evolving. Be ready to pivot and adjust your marketing budget based on current trends, opportunities, and challenges.
Deciding on a marketing budget is a process and by staying informed, evaluating your goals, and being prepared to adjust as needed, you can set a budget that drives growth and profitability for your business.
Contact us if you would like help in setting a budget and developing a growth marketing plan.
Creative and growth driven marketing professional with experience in integrated marketing strategies, brand development, digital marketing, CRM, social media, promotions and sales support programs.