Chances of growth for your business are slim to none if there is no deliberate marketing of your product or service. Marketing budgets are determined based on the nature of the business, how competitive the particular market is and the company's revenue.
For the last five years, investments in traditional advertising such as radio and newspapers have consistently decreased each year. This money is now being spent on the likes of email marketing, social media marketing, and SEO. However, as a whole, marketing budgets are increasing, and the statistics for ROI are increasing year on year, ultimately resulting in profitable sales.
What Are Your Needs?
Setting the right budget for your marketing strategy has the potential to make or break your business. Are you looking to increase your sales? Get more leads? Gain further brand awareness? Whatever it is you intend to achieve, first you look at your goals, and then you look at the money you have to play with.
If you are unsure, which is okay, many will be, seek professional advice. That's what marketing agencies are there for.
B2B & B2C Marketing Budgets
Here are the average percentage of revenues businesses were spending on their marketing in 2015:
- B2B Product – 7.4%
- B2B Service – 8.6%
- B2C Product – 9.1%
- B2C Service – 9.3%
The above are what companies were spending on their marketing, however in my opinion, a few years ago B2B companies were definitely not sparing enough pennies for their strategies.
B2B marketing usually requires a lengthier more complexed message, and the benefits of the product advertised in a full detailed manner. The audience responds better to thorough information as they usually have a thirst for knowledge. This in theory requires a larger budget than B2C marketing.
Although B2C marketing requires more emotion, consumers will want you to get right to the point when introducing the features and benefits of the product. This is a lot simpler and an arguably easier concept, therefore most likely won't need quite as big of a budget as B2B. Horace Dediu, former Nokia business development manager, once said “The stronger, more differentiated the product, the less it needs to be propped by advertisement.”
Established Brands & Newcomers
From the get-go, companies need to devise a budget and understand exactly what they should be spending on marketing.
For well established brands, around 6 to 12% is a good amount of revenue to spend on marketing. These businesses would usually be at least five years old. Successful firms grow year over year, such as Twitter and LinkedIn who both have large sales and marketing budgets. In 2014, Twitter invested 44% revenue ($614, 110, 00) in sales and marketing and in return they saw 111% growth! Also in 2014, LinkedIn invested 35% revenue in to the same sector of the business and saw the company grow by 45% year by year!
Newer companies will most likely need to spend substantially more in order to capture new market share and develop brand recognition. They should be looking into investing 12 to 20% of gross revenue on marketing. 'Newer companies' usually means five years or younger.
Hopefully these points have helped you understand the importance of your business' marketing strategy and budget. If you have any queries, please comment below or call us on 01332 343281 for an informal chat.