We regularly update this article with the latest information pertaining to marketing budgets for manufacturers.
Last update: September 2020 (note: this information has been updated to include adjustments resulting from the COVID-19 pandemic, but further changes could be made as the long-term impact become more clear.)
We continue to provide advice about online marketing budgets in a variety of industries, and over the last several years we have been partnering with more manufacturing companies to help them generate leads and sales.
Based on industry-provided research and our own experience, we’ve identified a realistic marketing budget calculation for manufacturing companies who are ready to more fully leverage the internet to generate business.
An Industry In Transition
U.S. manufacturing companies have had their ups and downs the last ten years, and many were comfortable using traditional marketing methods, specifically trade shows and print media. Their sales teams followed suit, traveling in their assigned territories to meet with prospects and customers, and following up by phone or email.
We had noticed a slow shift in thinking in the past few years as we spoke to more manufacturers, and an awakening to the role that digital marketing can play in the success of a manufacturing company.
2020 has changed everything, and as trade shows and in-person visits were canceled, many manufacturers accelerated their investment in digital marketing in an effort to replace those previously valuable sources of leads and sales.
While this acceleration into digital may have been born out of necessity, manufacturers are learning just how effective online channels can be and are unlikely to revert back to such a heavy reliance on offline tactics.
Those traditional B2B lead generation processes are sometimes less effective, more costly and time consuming. With limited electronic media to share, and websites that were outdated and generated zero leads, salespeople are looking for more support from digital channels, particularly in the current climate of virtual selling.
Given these recent changes, manufacturers are wondering how much should be budgeted for marketing and how to allocate a portion of their budget to digital marketing. And, which marketing channels are most appropriate for marketing a manufacturing company?
Use Historical Data As A Basis For Manufacturer Marketing Budgets
If you’re currently evaluating your marketing budget the coming year, first take a look at last year's budget and results. Based on your marketing performance, determine what areas performed well, and cut the areas that did not deliver the results you expected. Talk to both your sales and marketing teams to get input.
Of course results from 2020 must be looked at through a different lens given the dramatic changes that took place. But you should be able to look back at what worked for your company, particularly if you experimented with different tactics to adapt to the current circumstances. What gave you the best return on your investment? What tactics generated the most qualified leads? What can you realistically do in the year ahead given the continuing restrictions on gatherings?
Should your 2021 Manufacturing Marketing Budget be Higher, Lower or Different than 2020?
If so, by how much?
Many manufacturers are playing it conservatively with their budgets right now, and that's understandable. But it might not be the best move for your business, especially in the long term. Manufacturers who have continued to use their marketing budgets in creative ways in 2020, and have not pressed paused on spending, have been rewarded with often impressive results.
A Harvard Business Review article, "Don't Cut Your Marketing Budget in a Recession," states that companies that have bounced back well from recessions of the past did not cut their marketing spending, or even increased it.
What becomes even more essential now is spending marketing budgets very strategically, maximizing marketing dollars where they would have the biggest impact.
Compare Your Budget Against What Other Manufacturing Companies Are Spending
Evaluating what other manufacturing companies are doing can be helpful, though there may be variations from one company to another when considering the size, location, competition, goals, customer mix, and machines or equipment offered.
Manufacturers on the whole tend to lag behind many industries in marketing spending. They consistently fall in the bottom 3 industry sectors for marketing budget as a percentage of firms' revenues and of firms' overall budgets, according to the CMO Survey.
In data collected in February 2020, companies overall averaged marketing spending of 8.7% of firm revenue and 11.3% of firm budget. Manufacturers came in at 5% of revenue, and 4.1% of overall firm budget.
Data published in a special COVID-19 edition CMO Survey from June 2020 showed manufacturer marketing budgets up to 8.49% of overall firm budget, and 6.91% of firm revenue.
The majority of our manufacturing clients spend between $3,000/month and $5,000/month on digital marketing. This includes marketing services - strategy, fresh website content and blog updates, case studies, running Google, Facebook and/or LinkedIn ad campaigns, analytics reporting and analysis, and email marketing. It also includes money for digital advertising - paying Google, Facebook or LinkedIn for clicks on digital ads. Some companies may need to replace their prehistoric websites first prior to starting any digital marketing efforts.
We continue to see a shift in where marketing dollars are being spent. In a February 2019 survey by eMarketer, the average company planned to allocate 62.3% of its total media ad budget to digital in 2021, with that rate increasing to 66.8% by 2023.
We expect that manufacturers will fall short of those numbers, but nonetheless are expected to shift increasing amounts towards online efforts. Manufacturers who sell their products online would inherently tend to spend more on digital efforts, but even those who do not sell online are starting to move towards a larger digital presence.
Which Digital Marketing Activities Are Most Effective?
This is a common question we receive, and the answer is "Well, it depends".
In a survey of 2,500 digital marketers, respondents reported on what marketing activities generated the best ROI. The results are shown below. This survey is from 2017, but channels have continued to show similar trends since then.
Email marketing still leads the way with the highest percentage of Excellent and Good ROI results reported, with social media marketing following closely behind.
Marketing technologies (MarTech) and marketing automation are proving effective at bringing together the most successful marketing tactics (email marketing, organic search, social media marketing and content marketing) to achieve better results.
For our manufacturing clients, SEO, Content Marketing, and Google pay-per-click ads generate the most website traffic and leads early on.
We have seen excellent results from digital advertising for our manufacturing clients, and often at low costs due to a lack of competition. For manufacturers selling into niche markets, digital ad platforms are the perfect fit, allowing for precise targeting and generating highly qualified leads who are often ready to buy.
A study from eMarketer released in August 2020 shows this investment in digital advertising as a larger B2B trend. While many budgets have been reduced due to the economy, and ad revenues have fallen overall, this chart shows growth in digital ad spending among B2B companies for 2020 and into 2021. While the trend in growth slows considerably, showing growth in overall spending of 10.9% for 2021 shows the importance of this channel to the B2B segment as a whole.
2021 Manufacturing Marketing Budgets
If you haven't taken a look at your website analytics, marketing, and lead generation results, now is a great time to start. Check out our tips on developing robust dashboard reporting.
You can also start focusing more heavily on identifying your target market—just one or two at a time, and invest in developing buyer personas so your marketing spend can attract the right buyers who need your equipment and products.
We have seen a digital marketing awakening with manufacturers. They are starting to become proactive in adopting a more online oriented marketing approach.
Check our your competition - I bet they are improving their online presence and using their website to generate more leads.
Calculate the ideal 2021 marketing budget for your manufacturing company with our exclusive calculator:
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