Blog

Inbound Marketing & Sales Development Inspiration

How Much Should You Budget For Marketing In 2016?

Neal Lappe   by Neal Lappe October 15, 2015

An Update From Our Popular 2014 & 2015 Articles

As the end of 2015 nears, we begin to think about that question again and how our businesses are going to grow and compete in 2016. This article provides information that can guide you about how to budget for marketing and where to invest your marketing dollars. Included in this article are:

  • How much are companies spending on marketing?
  • Where are marketing dollars invested offline and online?
  • What marketing strategies and tactics are getting results?

The answers to these questions come from a few reliable sources, 1) an annual survey of Chief Marketing Officers (CMOs) from a variety of industry sectors and firm sizes, 2) a leading research group report about interactive (digital/online) marketing trends and predictions and 3) other leading digital marketing research firms.

So, how much should your firm budget for marketing expense?

The CMO survey offers some answers. In the charts below you’ll see how marketing professionals from all types of firms responded to this question in 2012-2013 and then in 2015. Here are some important data points to remember from our last post:

Marketing spending in 2012-2013:

Marketing Budgets 2014

 

  • For B2B firms, marketing budgets as a % of firm revenue fell within the 5-6% range
  • For B2C firms, marketing budgets as a % of firm revenue fell within the 11-13% range
  • Across both economic sectors (B2B & B2C), marketing budgets have decreased from last year
  • Marketing budgets for firms selling products to the consumer marketplace (B2C) increased from last year

How does that compare to marketing spending in 2015:

who has the biggest marketing budgets?

  • B2B budgets have increased to the 7-9% range
  • B2C budgets are hovering around the 9% mark

Based on these results, we see that B2B marketing spending has increased over the past couple years, whereas B2C marketing spending has actually dropped a bit.

[RELATED: The Top B2B Digital Marketing Strategies]

 

It is important to note that these percentages represent the total marketing investment, not just advertising or media spend. They include things like marketing staffs, customer relationship management, investments paid to agencies and other outside suppliers, advertising costs, media spend, etc.

Firms seeking to grow market share will likely be on the high side of these averages vs. firms planning for modest growth, which may be on the lower side. Additionally, the competitive nature of a certain marketplace will influence where a particular firm falls among these average figures.

Whatever overall investment you make in marketing, the next question is where to allocate that budget. The chart below provides some guidance.

How to allocate marketing budgets across channels

The next question to answer is how to allocate marketing budgets across channels – offline and online, and how to spread the online investment across the various online/digital channels. A report from Forrester Research shows the estimated allocation of marketing funds offline vs. online and across the digital channels. Here are some conclusions from the 2014 report:

Conclusions from the 2014 report:

  • 29% of your total marketing budget allocated to online/digital channels 
  • Search engine marketing (SEO & SEM) will continue to capture the largest share of online spend at 47% or about 14% of the firm’s total marketing budget
  • Online display advertising (banner ads, re-marketing & re-targeting) will capture the next biggest share of the online spend at about 34% of total online spend and about 10% of the total marketing budget
  • Social media investments are estimated at 6% of total online spend and a bit less than 2% of the total marketing budget
  • Mobile, the fastest growing digital marketing channel, will garner about 10% of the total digital marketing budget and slightly less than 3% of the total marketing budget.

How does that compare to the more recent forecast?

Conclusions from the updated 2015 report for 2016 and beyond:

  • In 2016, the average firm will allocate 30% of their marketing budget to online, this rate is expected to grow to 35% by 2019
  • Search engine marketing (SEO & SEM) will capture the largest share of online spend with online display (banner ads, online video, etc.) taking the second largest share
  • Social media investments will continue to grow as an overall share of online spend, but will only represent about 15% of the total online spend
  • Mobile marketing has grown to a point that it’s no longer tracked in the forecast and it’s presumed to be considered across all channels

Once again, these are averages. How marketing funds are ultimately allocated is driven by the nature of the business, the competitive marketplace, and how target customers behave through the buying funnel.

Finally, let’s take a look at what marketing strategies and tactics are getting the best results. In these recent surveys by leading digital marketing research firms, respondents reported on what marketing activities generated the best ROI. The charts below provide some answers to this question. This survey was conducted in 2014:

How do you rate the following channels in terms of return on investment?

Marketing technologies and automation are proving effective at bringing together the most effective marketing tactics (email marketing, organic search, and content marketing) to achieve better results. The chart below, from 2015, provides insight about the emerging use of marketing automation and content marketing.

Marketing Tactics that US B2B Marketers Expect To Deliver ROI 2015

Bringing together the data from these credible sources in the marketing community should help you determine how much to spend on marketing, and where to apply those investments.

At WebStrategies, Inc, we know your marketing investments should result in profitable sales. Learn more about how online/digital marketing methods such as inbound marketing, Google Analytics, display advertising, and web design and development can help you achieve your sales goals.

Where do you get the most bang for you buck when it comes to your marketing budget? Let us know in the comments section below.

You may also be interested in ...

Web Analytics – Don’t Spend Money Without It

Five Of The Biggest Challenges Facing Online Marketing

3 Reasons Why Digital Marketing Doesn’t Work – What???

 


 

Neal Lappe leads the WebStrategies team of digital marketing experts. Under his direction, the company has flourished, growing more than 400% since its inception in 2004.

 

Topics: Advertising, Internet Marketing, Inbound Marketing, Online Marketing, Marketing Automation, Social Media, Display Advertising, Digital Marketing

Agree, disagree, or just have something to add?

Leave a comment below.

 

Ideas that inspire; delivered to your inbox.

Ready to Talk?

804-200-4545 OR Fill Out a Form

Contact Us