How Much Should a Company Spend On Digital Marketing?

One question that every modern company has asked is how much should my company spend on digital marketing? 

In this article we’ll answer that, showing the average marketing budget as a percentage(%) of revenue, what is included in this calculation and also highlight key considerations for your business when you want to grow through generating qualified leads.

Average Marketing Budget

The typical marketing budget across all industries is 9.5% of revenue¹. 

For B2B Product companies the average is higher at 11.2%¹.

The averages do vary by industry, country and business maturity, but as a rule of thumb, growth-minded businesses should be budgeting at least 10% of revenue towards marketing.

What is Included In Marketing Spend Calculations?

There are four key areas that make up a marketing budget:

• Internal marketing team
• External agencies & services
• Paid media
• Marketing technology

This is known as the marketing resource mix and the allocation of budget is typically very even across all four elements¹.

What Should I Consider When Setting a Marketing Budget?

As much as these percentages of revenue are a good benchmark, every company is different. So in setting a marketing budget, make sure it’s reflective of the following:

• Capacity
  There’s no point bringing in new business if you can’t service it
• Pipeline
  If your pipeline is light, you should be more aggressive.
• Expiring/At Risk Contracts
  If clients are going to leave, then you need to start work to replace them before the expiration date.
• Cashflow
  Marketing is a leading activity, it will take time for that investment to be returned by way of revenue. Consider your sales cycle.
• Results
  How have campaigns performed historically
• Scalability
  What is the ability to scale campaigns and activate new initiatives?
• Long Term Strategy
  Know that cutting back on marketing is a short-term move that will have a negative long-term impact on revenue.

Key Points

In summary, growth-minded businesses should be spending at least 10% of revenue on marketing, which covers internal and external teams, paid media and marketing technology.

How does your marketing budget and allocation compare?

References

¹  LinkedIn Article