When any young marketer starts their career at a company, they often come up with great and creative campaign ideas.
It is usually thought that the company's financial management will accept any campaign idea if it is backed by an exhaustive study that ensures the return on investment. Until the management asks us: And this, how much is it going to cost us? So we realize that ROI may be the most important concern, but by no means the only one to take into account.
Companies need professionals who, beyond their creativity and their ability to think strategically, are capable of sticking to the available budget and achieving the best results by choosing the best options for the company.
In this article, in addition to comparing different marketing budgets from different sectors so that you can see how much your competition is investing, we are going to try to establish what percentage of your business profits you should reinvest for a solid long-term strategy.
What is the percentage to invest in a typical marketing budget?
In February 2021, a Deloitte study conducted among marketing and communication managers established that marketing spending represents 11.7% of total company spending, the highest percentage in the last four years (excluding the period of March to June 2020, which due to the pandemic reached 12.6%).
On the other hand, a Gartner study among CMOs in 2020 confirmed that the percentage of spending represented by marketing activities is around 11% on average.
How much budget should we ask for marketing?
While we could stick with this 11% figure, we also need to consider various factors such as industry, sales performance, and business needs, before deciding how much to allocate to your marketing team.
We must also take into account the type of strategy and the channels that we will use based on our objectives. For example, in 2020, 73% of companies invested in improving their online presence and the web, compared to 20% who acknowledge having invested in machine learning and/or automation.
The optimization of the web, digital media, search engine advertising and emailings were priority aspects that determined the 2021 budgets, and it is not expected that it will be different in the medium term.
However, the data we have talked about so far refers to the percentage of the marketing budget over the company's total, but what percentage should it be in relation to revenue?
Marketing budget based on profits
The revenue that companies allocate to their marketing strategy has been increasing in recent years, with an average share of marketing revenue of around 13% in 2021, compared to just 8% in 2011.
B2B product companies allocate on average approximately 10% of their revenue to marketing, a similar proportion to B2C services (10.1%). On the other hand, B2B services and B2C products assign higher figures of 15% and 18%, respectively.
In the United States, the main association of SMEs (The US Small Business Administration) recommends that companies with profits between 10% and 12% and less than 5,000,000 dollars in turnover, invest between 7% and 8%
The Marketing budget according to the sector
Of course, marketing budget allocation decisions remain largely industry-specific. To be more precise, let's look at marketing budgets by industry.
For example, marketing expenses are highest in the education sector at 19.4% of the total budget, and lowest in the energy sector at approximately 4%.
If your company moves in the field of health, the marketing budget can be close to 7% of the total budget. On the other hand, consulting services usually attribute 13%. Finally, technology/software platforms attribute 12% of the total company budget to marketing.
Contact PGR Marketing & Tecnología if you need us to shed light on how to prepare your marketing budget for 2022. Trust the advice of our experts in the B2B technology market to take a leap forward and allow your team to focus on the tasks in which they add the most value to the business.
