How much does your company spend annually on marketing? According to a 2017 survey of CMOs across multiple industries, 11 percent of total company budgets are spent on marketing-related expenses. The biannual CMO survey is sponsored by Deloitte.
Budget guidelines revealed by this survey, and others like it, help company leaders understand marketing spending levels, which can vary widely by industry.
Manufacturing companies, for instance, spend 8 percent of budgets on marketing, while the tech software and biotech sectors are nearly double at 15 percent. Consumer products companies lead in marketing spend at 24 percent.
What’s in Your Marketing Budget?
According to the survey, “Allocations within the marketing budget vary from company to company. For example, less than half (47.9 percent) of companies include expenses for marketing employees in their marketing budgets.
Other companies may put marketing employee expenses into general and administrative expenses, sales, or other areas.
Most companies (61.3 percent) include direct expenses for marketing—such as advertising, content marketing, trade promotions, and direct marketing—in their marketing budgets, but this varies by industry.”
Of course, if marketing is a significant revenue driver at your company, marketing budgets are going to be higher than companies where marketing isn’t as strategic (14.5 percent vs. 10.8 percent). Additionally, if your firm is using marketing analytics to help make critical decisions, your marketing budget is also higher.
Is Your Company an Old School Marketer?
In spite of the industry's renaissance in digital marketing, there are still some company leaders tethered to the tactics of the past. If you still think marketing is defined by the "four Ps" you learned from a textbook 25 years ago, it's time to up your game.
A more in-depth understanding of modern marketing strategy will influence how you create your annual marketing budget.
MarketingProfs, one of the industry’s finest resources for marketing education and learning says, “The best marketing budgets start with new ideas about what marketing is.” Citing research by Salesforce.com, “high-performing marketers use an average of 14 marketing tools, double that of under-performers.” Once more, high-performing companies plan to increase spending on tools and technology.
Executives who also embrace the ideal of modern marketing believe these four tenets, according to the research:
- Marketing is no longer a siloed department.
- The new customer is not like the old.
- Marketing has an enormously more significant role and scope.
- Technology is the only way to scale modern marketing efforts.
Marketing Budgets Must Be Flexible
Because customers, channels, and competitors change, marketing budgets must be flexible. If you were at CES 2018 in Las Vegas a few weeks ago, for instance, you could have seen two industry behemoths demonstrating the art of flexible marketing budgets.
For the first time in years, both Google and Amazon showed up at CES for the sole purpose of touting their voice-operated platforms, Google Assistant and Amazon’s Alexa. The nascent voice-operated market could lead to talking appliances, entertainment systems, and security systems. Billions of dollars are at stake.
Each company is trying to outshine the other to capture mindshare and market share for their respective gadgets. And you can bet that marketing budgets are changing daily.
In a brilliant example of one-upmanship, Google rented dozens of local billboards and plastered the city with its catchphrase "Hey Google." Each company also built massive trade show booths for the one-week show.
Google and Amazon are spending vast sums of money, but the point is, no matter the scale of your marketing challenges, it's smart to keep your marketing budgets flexible.
Every company has emerging competitive threats and changing customer needs to consider. And any of these elements could alter your marketing tactics and budget.
Be ready to pivot at a moment’s notice.