Much like Bigfoot, the Easter Bunny and Santa Claus, a clear-cut formula to determining the magic marketing number doesn’t really exist. However, there are standards, best practices and averages, and you owe it to yourself – and your organization – to know what they are.
Shocking Revelation #1:
The percentage of annual revenue that should be invested in marketing varies depending on several (many) factors… how big your organization is (small, medium, enterprise), what stage it’s in (start-up versus established), what industry you’re in, how many competitors you have and how much they’re spending on marketing, your growth goals… and there’s more.
Shocking Revelation #2:
Despite these variables, there are guidelines. For example, for most businesses the average annual marketing spend is 5-20% of annual revenue. Across all industries, the average is 9%. For consumer organizations, the percentage is typically double that of business organizations. And the bigger the business, the larger the percentage.
Shocking Revelation #3:
Every industry is unique. Established tech and software firms might allocate 20% of revenue to marketing, while start-up firms are about half that. And CPG companies typically outspend tech businesses, averaging about 25% of annual revenue. On the other end of the spectrum, transportation companies average less than 2% and educational institutions are at about 4%.
Shocking Revelation #4:
What’s covered in marketing budgets is different from organization to organization. Generally speaking, the categories of spend are the same, but the percentage breakdown varies widely. For some businesses, staff and training is only 10% of the total annual marketing spend, while traditional and digital marketing budgets can be 50-80% of the annual marketing spend. Then there is content marketing, branding, creative and design, PR and events, analytics and new tech.
But Here Is the Biggest Revelation of All…
Marketing expenses – whether 1% or 25% of annual revenue – are now considered essential costs associated with promoting and selling products and services. Marketing expenses directly affect a company’s bottom line and are crucial for generating profitable revenue. In other words, a substantive budget is not only warranted, it is essential.
Marketing coalesces the brand, creates visibility, connects constituencies, engages audiences, generates actions and supports growth.
At Sweeney, our priority mission is to help companies understand their values, plan strategies, build a strong digital presence, create and leverage content, establishing thought leadership, document success stories, develop strategic partnerships and engage in targeted outreach with traditional and social media.
Call or email us today for a no-cost introductory/discovery meeting with our business development team to learn how we can supercharge your marketing efforts.
