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The 5 Key Steps to Creating Your B2B Marketing Budget

Posted October 10, 2016

The 5 Key Steps to Creating Your B2B Marketing Budget

Posted October 10, 2016

We’re at that time of year where we need to take a long hard look at our B2B marketing budget for 2017. In order to make an informed decision, take this five step journey to make sure you are aware of the latest findings that could influence your budgeting process.

1. Re-evaluate the “Magic” 10%

There has been a general acceptance of the idea that the ideal marketing spend should be 10% of revenue. However, we cannot have a one number fits all approach as we are looking at vastly different companies with dramatically different needs. One has to take account of the business type, revenue and its growth goals. A company starting out in its growth phase cannot have the same budget as an established brand. The start out has to invest heavily in the mechanism that will create its growth i.e. marketing. According to a 2014 CMO survey companies with less than $25 million in revenue spent an average of 11% on marketing while those with $25-$99 million in revenue spent an average of 9% on marketing.

2. Observe The Big Spenders

Take a look at marketing and sales management software companies who really believe in the power of the marketing spend. They truly understand that more money must be spent to amplify a brand. A massive spend of 53% of their $4.1 billion revenue shows how Salesforce values the power of marketing. And the ROI? They grew 33% over the previous year. 38% of Constant Contact’s revenue of $331 million resulted in a 16% growth over the previous year. Both companies are spending way more on marketing and sales compared to research and development. This trend is noticeable across most industries. This solidifies the argument that 10% is not going to cut it any more.

3. Is There a New “Magic” Percentage Spend?

This is a difficult question as marketing spend is currently between 10% -50%. It is no surprise that in the technological age the tech companies are on the top of the Forbes list. While they don’t have to spend as much as smaller companies they still do need to invest a sizeable amount in marketing. Marketing budgets are increasing with a 13.7% year-over-year increase. Where is your business situated on the start up – established scale? If you’re a smaller player, you are definitely going to have to spend more of your total revenue. The average B2B marketing spend is sitting between 7% -12% of total revenue. We are seeing a rise in B2B marketing spending in the last few years.

4. What Strategies Are Leading the Pack?

Digital is soaring while offline is in steep decline.

Automation and marketing technologies are highly effective in achieving better results. Out in the lead is email marketing followed closely by SEO (organic search), next up is content marketing and then Paid Search (PPC)

Some of the greatest lead generation results from email marketing is due to marketing automation. A data-based marketing automation platform, like InsightBASE® enables you to automatically send out targeted, personalized emails by connecting to your CRM. Thomson Reuters saw a 172% increased revenue when they upgraded to a marketing automation solution.( Email Benchmarks)

Traditional advertising (television, radio and newspapers) has dropped by single digit percentages every year for the past half decade while digital has grown by double digits. It is clear that businesses have been shifting their marketing spend quite effectively towards digital –email, search and social. 2017 is set to be the year where digital spending will surpass TV ad spend in the US. ($77.37 billion on digital vs $72.01 billion on TV). By 2020 digital will surpass TV by 36%.

5. How do you Allocate your Budget Across All Channels?

The trend is definitely to spend more on digital and content marketing at the expense of traditional advertising channels. We are witnessing that the bulk of the digital budget is going to Search and Display marketing.

A report from Forrester Research concludes that the average budget in 2016 allocated 30% of the budget to online but its expected to grow to 35% by 2019. Search engine marketing was allocated the lion share of the online at around 47% which translated to around 14% of the total marketing budget. 34% spend was allocated to online display (10% of total budget). 6% of the total online spend was allocated to social media (2% of total budget) with Mobile taking 10% of digital marketing budget (3% of total budget).

The Content Marketing Institute concluded that the most successful B2B marketers are spending around 39% of their marketing budgets on content.

The distribution of marketing funds will be driven by the nature of each business, their competitive landscape and the buying behavior of their customers. But these figures give you some clear ideas of where to allocate your marketing funds.

But remember while the channel strategy you use will play a huge role in the effectiveness of your lead generation it is dependent on how well you execute your campaign.

Last word

Perhaps your strategy for 2017 is to stick to what is working for the industry?  But it’s not a bad idea to investigate a degree of diversity from the herd and allow a touch of experimentation to unearth even bigger growth opportunities. However, always ensure you are testing each of your tactics across channels to see how they are working for you and refine them over time. Sometimes the best lead generations come from trying various tactics across multiple channels.