Leverage the research data to set a budget that keeps you competitive.
When determining a marketing budget for the coming year, there is no reason to go at it alone. There’s plenty of great research at your disposal to identify what an appropriate number would be, based on a variety of survey data from other marketers.
At a general level, the Gartner Research Group provides some simple stats from their CMO Spend Survey 2015.
- Marketing budget was 10.2% of revenue on average for the previous year
- 50% all marketers surveyed planned an increase for the coming year
Although Gartner focuses mostly on organizations doing more than $500 million per year with a large information technology infrastructure I found some of their key findings to be accurate for organizations of all sizes.
- Digital and mobile marketing are projected to be the largest increase for the coming year.
- 18% of the marketing expense budget was spent to support the customer experience
- Customer Experience is the top innovation project for the coming year with the highest marketing technology investment
Forrester Research is another data source that provides useful insight on marketing budgets. They focus more on technology companies and the role of digital technology in marketing. They reference my preferred source for detailed stats The CMO Survey from CMOsurvey.org.
The CMO Survey from CMOsurvey.org provides data broken out by economic sector, revenue size, and industry sector.
|Marketing spend by economic sector||B2B Products||B2B Services||B2C Product||B2C Services|
|Marketing spend – % of firm revenue||6.2%||5.9%||10.4%||5.3%|
|Marketing spend – % of firm budget||10.1%||10.0%||17.5%||11.3%|
|Marketing spend by revenue sector||< $25M||$26-99M||$100-499M||$500-999M||$1-9.9B||$10+B|
|Marketing spend – % of firm revenue||7.3%||9.1%||5.4%||4.9%||4.2%||9.3%|
|Marketing spend – % of firm budget||13.5%||12.2%||11.1%||7.3%||9.0%||13.0%|
|Marketing spend by industry sector||Banking, Finance, Insurance||Service Consulting||Consumer Packaged Goods||Consumer Services||Education||Energy||Tech, Software, Biotech|
|Marketing spend – % of firm revenue||5.1%||4.8%||9.4%||6.0%||7.4%||6.2%||9.6%|
|Marketing spend – % of firm budget||12.8%||9.4%||24.2%||15.5%||7.5%||5.4%||11.6%|
|Marketing spend by industry sector||Healthcare, Pharma.||Manufact.||Mining, Construction||Comm., Media||Retail, Wholesale||Transpor.|
|Marketing spend – % of firm revenue||7.0%||4.5%||2.8%||7.5%||6.7%||8.0%|
|Marketing spend – % of firm budget||14.8%||9.0%||5.0%||8.1%||9.9%||6.1%|
* The complete 2015 CMO Survey Results can be reviewed here. (http://cmosurvey.org/results/). This data was sourced from the CMO Survey Report: Topline Results, Aug 2015.
If you want to include all of the CMO Survey factors when determining your marketing budget, add the economic sector average spend, revenue sector average spend, and the industry sector average spend and divide by three.
For example, if I was planning a budget for a B2C Services company, doing less than $25 million in revenue, in the Communications industry, I would add 5.3% + 7.3% + 7.5% and divide by 3 to get 6.7% as my percentage of revenue budget for marketing spend. So, if the example company had $20 million dollars in revenue, they would be dedicating $1,340,000 to their marketing budget.
How much of that percentage goes toward employee and non-employee expenses depends on the make up of each organization. It stands to reason that the bigger your internal marketing team, the less you would spend on outside agency partners and media spend varies greatly from one organization to the next, depending on your offering, industry, customer segment and market size.
Another useful source for aggregated data on marketing spend from all these surveys and marketing peers is the CMO Council website at www.cmocouncil.org.
If you have other sources you like to reference or another way you go about setting your budget, please feel free to share. Obviously, every organization has thoughts on how to set an appropriate marketing budget but I firmly believe that to succeed, you have to be current and competitive so, this data provides valuable guidance on how to stay up to speed or out perform the rest of the pack.