Marketing Budget 101

• Teo

Hungry for more sales? Then it’s time to think about your marketing budget. But first, what is a marketing budget exactly? It is the total amount of money a company intends to spend on any marketing related projects (annually or quarterly, depending on how you look at it). A marketing budget consists of expenses for marketing staff, website expenses, paid advertising, link building, and last but not least social media ads.

Just like anything else in business quantity doesn’t always beat quality. Or in other words, a huge marketing budget could be detrimental to your annual budget if you don’t watch it. Looking at the different surveys, trends have been changing dramatically. Chief Marketing Officers from several industries were asked annually to predict changes in the marketing budgets.

This chart is a survey covering the last 10 years, the CMO survey shows relatively consistent growth in marketing budgets. Last year’s predictions show an increase of 8.7% which if realised will be an eight-year high!

Marketing Budget - The Big Question: How Much?  

Now, this is the tricky part! It is difficult to say you need to spend an X amount. This just doesn’t work equally well in terms of a marketing budget as companies vary immensely. Of course, you need to look at your total revenue and find the right balance. Technically speaking, according to research a marketing budget would be somewhere in the range of 6.5% to 10%.

This may seem like a big stretch, however, it is based on different types of companies. The 10% average marketing budget applies to B2C companies, while 6.5% is applicable to B2B. So again, you need to gain perspective of the bigger picture here. These numbers are not universal and they might vary from company to company, keep your eyes on the total revenue you are making and can’t go wrong. Here are some examples of marketing spending as a percent of revenue by industry:

If you like numbers and reports, it’s crucial to understand that companies are not consistent with what’s included in their marketing budget. This then leads to the conclusion that any report might be a little off compared to reality. Another key thing is that marketing budgets do not just include online expenses. Let that sink in. Yes, we clearly live in a time of technology but it’s not the only way to promote your business. Point being - don’t limit yourself.

So What’s Included In a Marketing Budget Then?

Now we know the total average you can afford to spend on a marketing budget. Let’s explore how can that be allocated across channels. According to reports from ​Forrester​, companies predicted that in 2020 they would allocate 45% of their marketing budget to online channels. This only goes to show that a company’s online presence is no longer an option, it is a must if you wish to succeed in the business world. Another CMO survey showed that for 2019 social media took 11-12% of the total marketing budget. We can safely say that investments in the area of social media marketing will continue to grow as there has been a 17% compound annual growth for the period between 2016 to 2021.

At the end of the day, it’s all about following the customers’ behaviours and seeing what works best for you. There is no universal formula to use. Let’s look at Facebook, for example, it’s still the most widely used social media for the U.S. for 2019 a study found. Therefore, if you’re looking for social advertising, Facebook and Instagram should be your best friends. Speaking of Insta - check out our ​page​, we have loads of useful tips to share!

One would think Youtube is not the place for social advertising, however, it is definitely worth considering as surveys show that 73% of adults use it and get this - for the youngsters 18 to 24 even more - 94%! It can turn out to be a very effective tool for social advertising used by someone capable. It might take some time to build up that fan base, but hey miracles don’t happen overnight!

The graph below shows what social channels are marketers currently investing in, however, specialists have said they are planning to invest more in Instagram for 2021, along with YouTube. You get the picture guys, but we know how overwhelming it can be making all these decisions and doing the research. Don’t worry we can offer you professional insights on all these topics and also do it in a cost-effective way. Just ​give us a shout ​and we can discuss your marketing strategy, needs, and a solution tailored to you.

Key Takeaways for a Marketing Budget?

• Companies are spending more and more on marketing
• Digital marketing spend has grown significantly and will continue to do so
• A marketing budget may vary between 6% - 10%
• Facebook and Insta social advertising is a must

Not everyone is a marketing specialist, but you need to understand it requires a huge amount of time and data analysis in order to create the right blend of channels. Over time you may notice that your company has to spend less on marketing as you can start investing smarter​ due to experience. Always learn from your mistakes and don’t let them define you. There is no right or wrong when it comes to allocating your marketing budget, just keep it all balanced and do your research.

Working out the marketing budget should be a top priority and we know how important it is to get it right. Our specialists at Yaseo know how to do just that - give you a reasonable cost that will cover off all the bases. Don’t make the rookie mistake of being too excited and overspend, quality is not always shiny and expensive. We can help you create a tailored service that works for your business and deliver the results you need. Tell us about your experiences, what channels do you prefer advertising on? Do you think online marketing will prevail and destroy all other forms of marketing?