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Marketing Budgets - How much should you spend on marketing?

Neal Lappe   by Neal Lappe October 18, 2014

Pie Chart with Dollar Signs

This is an update to a post written previously about marketing budgets, and includes an update about what companies are spending on marketing activities; including digital marketing, search marketing and social media. The two sources of data are Forester Research and the CMO Survey, an organization dedicated to marketing insights and supported by Duke University and McKinsey.

 

How much are companies spending on marketing activities?

CMO Survey asks thousands of marketers about their marketing budgets to compile this data. Their latest update was published in August. Below is a chart that shows what percent of revenue companies of various sizes in various sectors are investing to market their companies to generate sales:

These marketing investments include not just advertising expenditures but also staffing the marketing function in their organizations and all the other associated support activities.

who has the biggest marketing budgets?

 

How much are companies spending on digital marketing?

Forrester Research produced data that documents and predicts how much marketers will allocate to digital and where those digital marketing dollars will go.

Below is a chart that predicts the allocation of digital marketing dollars as a percent of total marketing spend, and predicts how those marketing investments will be allocated across various digital channels.

Digital Spend Trends

Combining these two surveys together, we can begin to develop appropriate budgets for marketing. An example...

A firm generating $30 million in annual revenue and selling services into the B2B space will likely spend about 7% of revenue on their marketing activities - about $2 million. This includes staffing, support, advertising investments and other items within the marketing function of the organization. The Forrester data suggests that the average firm will invest about 32% of their marketing budget on digital in 2015 - or about $672K.

"...the average firm will invest about 32% of their marketing budget on digital in 2015."

The 2015 State of Inbound report shows inbound marketing (primarily composed of digital marketing tactics) as the dominant marketing strategy for firms under 200 employees. The importance of inbound relative to outbound (primarily offline tactics) increases the smaller the business. This further supports the growing importance of digital marketing strategies as part of the overall digital marketing mix.

Inbound Versus Outbound Importance

The Forrester survey goes further on digital marketing budgets and predicts how those dollars will be invested among the various digital marketing channels. Search engine marketing along with online display advertising are expected to garner 80% of total digital spend.

Search and display advertising trends

Based on what we are seeing, we think actual digital dollars will shift a bit away from search and more into paid social advertising. Social platforms, specifically Facebook, have developed sophisticated advertising opportunities that can be very effective due to the level of customer segmentation.

7-7-2015 Marketing Budgets – How much should you spend on marketing- Blog Post Click to Tweet

In summary, these two organizations have provided the marketplace with some great data that provides guidance to marketing organizations about what people are spending on marketing, how marketing dollars are allocated to the digital side, and what we can expect in the next couple of years.

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 ...

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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: Internet Marketing, Inbound Marketing, Online Marketing, Digital Marketing

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