This was the state of digital marketing spends in 2019:
- The marketing executives of some of the most successful companies spend an average of more than 21% of their marketing budget on advertising.
- Strategic landing pages help 68% of B2B businesses acquire new leads.
- By 2021, global revenue from offline commerce channels will decrease by almost 20%.
- The global digital ad spending increased from $283.35 billion to $333.96 billion, but the per cent change from previous year decreased from 21.4% to 17.6%.
The first three stats cement in the fact that digital marketing is as valuable and strong as ever. But take a close look at the last fact. It indicates that more companies are using digital marketing to reach their audiences, but, more importantly, it shows that executives are aiming to make their digital marketing spending more efficient.
If you own a company or work for one, you may have realized how difficult it is to set a budget for your marketing efforts. If you want your company to spend less on marketing and make more out of every dollar, here are a few steps to help you get there.
Raw Numbers and Ballpark Figures
Every company is a snowflake, meaning it’s impossible to decide on a marketing budget by directly taking a percentage of your total budget. But, depending on a company’s total budget, size, or age, there are some ballpark figures that can be given to at least make the process easier.
Here are some takeaways from the CMO survey in 2018 where many different types of firms responded:
- While B2B firms set their marketing budgets 6-7% of their firm revenues, B2C firms landed between 9-12%.
- While B2B firms set their marketing budgets close to 9% of their firm budgets, B2C firms landed between 14.9-16%.
- For B2B firms, marketing budgets as a percentage of overall firm budgets have been fairly consistent in the past few years. For B2C companies, however, the percentage is expected to increase over time.
You should note that these percentages don’t just include advertising or media spend; they also take into consideration factors like advertising costs, outside suppliers, and more.
The percentage of your revenue you spend on marketing also depends on the age and status of your company to a great extent. Newer startups need to reach out to new audiences and build a loyal customer base, but established firms need to focus less energy to do the same.
Thus, the percentage of the revenue that needs to go towards marketing changes with the age of the company. Most experts suggest that new businesses should pledge 12-20% of their gross revenue to marketing, while older enterprises that have been in operation for five or more years can spend only 6-12% of their gross revenue towards marketing.
A Lens on the Market
You may have established some round marketing budget percentages for your company by now. One way to find a more accurate marketing budget range is by analyzing the market and making comparisons.
Look at how you’re competitors’ approach towards marketing, not just for marketing ideas, but for marketing budget as well. Try to grasp where they’re spending and how they’re spending. You may not be able to match them immediately, but with each campaign, you can try to scale to their level.
Tap into Marketing Channels Effectively
You may have already come across the advice that you should only use those marketing channels which have a better chance of getting you to your consumers. However, even among those channels, you can find ways to do things in inexpensive ways. By using these options, you can significantly reduce your budget.
For example, you can get your branding done from small websites like 99designs in a few hundred dollars instead of spending thousands of dollars on a large agency. You can go the DIY route and create Wix, WordPress, and Nektan sites to make your website yourself at a minimal cost rather than handing out thousands of dollars more to a website design agency. Similarly, you can cut costs in content production, event organization, and social media to reduce your marketing budget and get a bigger bank for your buck.