Marketing is a crucial aspect of any business, serving as the bridge between products/services and potential customers. However, determining the right amount to invest in marketing can be challenging. In this blog post, we’ll delve into the data to understand how much businesses typically spend on marketing each year, exploring trends across different industries and company sizes.
Overall Marketing Spend Trends
According to the CMO Survey, a biannual survey conducted by Duke University’s Fuqua School of Business, marketing budgets as a percentage of company revenue have been relatively stable in recent years. The survey found that, on average, companies allocate around 11% of their total revenue to marketing. This percentage can vary significantly depending on factors such as industry, company size, and marketing objectives.
Industry Variations
Different industries have different marketing needs and, therefore, varying budget allocations. For example, the CMO Survey found that companies in the consumer packaged goods industry typically allocate a higher percentage of their revenue to marketing, averaging around 24%. This is due to the competitive nature of the industry and the need to constantly engage consumers through advertising and promotions.
On the other hand, industries like healthcare and education tend to allocate a lower percentage of revenue to marketing, averaging around 7% and 9%, respectively. This is because these industries often rely more on word-of-mouth referrals and reputation management than traditional advertising.
Company Size
Company size also plays a role in determining marketing budgets. Smaller companies with limited resources may allocate a higher percentage of their revenue to marketing in order to compete with larger competitors and increase brand awareness. According to the CMO Survey, companies with less than $25 million in revenue allocate around 12% of their revenue to marketing, compared to just 8% for companies with over $25 million in revenue.
Digital Marketing vs. Traditional Marketing
The rise of digital marketing has had a significant impact on marketing budgets. According to a report by Gartner, digital marketing accounts for an average of 26% of total marketing budgets. This includes spending on digital advertising, social media marketing, content marketing, and email marketing. This percentage is expected to continue to grow as businesses increasingly shift their focus towards digital channels.
In contrast, spending on traditional marketing channels such as print, radio, and television advertising has been on the decline. According to the CMO Survey, spending on traditional advertising accounts for just 23% of total marketing budgets, down from 29% in 2018.
Overall, businesses allocate a significant portion of their revenue to marketing each year, with the average hovering around 11%. This percentage can vary widely depending on factors such as industry, company size, and marketing objectives. Digital marketing has become an increasingly important component of marketing budgets, accounting for an average of 26% of total spending. As the marketing landscape continues to evolve, businesses will need to carefully assess their marketing needs and allocate their budgets accordingly to ensure they are reaching their target audience effectively.
