Table of Contents
- Understanding the Importance of a Marketing Budget
- Key Marketing Budget Trends
- Average Marketing Budgets for E-commerce and B2B Businesses
- Determining Your Small Business Marketing Budget
- Conclusion
1. Understanding the Importance of a Marketing Budget
Setting a “marketing budget” can seem like a daunting task for many small business owners. This pivotal financial outline allows companies to strategically allocate funds towards promotional efforts, aiming to reach more customers and grow their business. From traditional advertising channels to digital marketing techniques such as SEO and social media campaigns, the marketing budget covers a range of activities designed to boost a company’s visibility and profitability.
We have learned that in order for a brand to have a chance at success, all marketing channels (omni channel) need to be considered. Our world is so divided that users gravitate towards channels that align with their beliefs more often. For instance, we find an abundance of conservatives on Truth or Rumble and now Twitter. Most Gen X’ers and above loiter on Facebook, still the largest social media platform. This does not mean that there is no overlap. In fact, there are a lot. Which is why it’s even more important to be everywhere your audience is to create authority.
2. Key Marketing Trends
The digital age has revolutionized the way businesses approach their marketing strategies. According to Gartner’s CMO Spend Survey 2023, businesses are now investing an average of 11.2% of their company revenue into their marketing budget, an increase from the past years. This surge demonstrates a growing recognition of marketing’s importance in gaining a competitive edge and driving growth. According to Deloitte, marketing will comprise roughly 13.6% of a company’s total budget in 2023.
One key trend is the shifting focus towards digital marketing, with businesses dedicating nearly half (45%) of their total marketing investment to digital channels. This evolution reflects the ubiquity of online activity in modern consumers’ lives and the potential for businesses to reach larger audiences at lower costs than traditional marketing methods.
3. Average Marketing Budgets for E-commerce and B2B Businesses
Breaking it down by industry, e-commerce and B2B businesses present different averages. For e-commerce companies, marketing budgets typically comprise around 7-12% of total revenue, with some companies even pushing up to 20% for aggressive growth strategies.
On the other hand, B2B companies allocate around 6-7% of their revenue to their marketing budgets. While this percentage might seem smaller, the higher average transaction value in B2B often means a larger absolute marketing spend per customer acquisition.
However, we do see content marketing companies invest roughly 80%-90% of their budgets. All of this depends on what you want for your business. Are you relying on the profits of your business to pay the bills or are you comfortable operating in the red in order to grab more market share in order to sell in five years?
4. Determining Your Small Business Marketing Budget
So, how much should a small business invest in their marketing budget? The answer isn’t one-size-fits-all; it depends on various factors, such as the industry, business size, growth stage, and overall revenue.
For a new small business with less than $5 million in revenue, it’s recommended to invest between 7-12% of your gross revenue into marketing. This allocation should encompass all marketing activities, from digital advertising and content creation to SEO and social media initiatives.
However, the key is to have a strategic plan for the investment. Focus on channels that give you the best return on investment. For some, this might be social media advertising or influencer collaborations. For others, it could be search engine advertising or content marketing. Use data-driven decisions to guide your spending and continually optimize your marketing budget for the best results.
5. Conclusion
In conclusion, the right marketing budget for a small business depends on many variables. A data-driven approach that aligns with your overall business objectives will allow for effective utilization of your marketing investment. It’s essential to regularly review and adjust your budget, tracking metrics to ensure your marketing efforts are delivering a positive return on investment.
By taking the time to understand your industry trends, average spending, and your business’s unique needs, you can create a marketing budget that not only makes sense but drives your business forward towards its growth targets. Remember, investing in your marketing is investing in your business’s future.
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References:
https://blog.hubspot.com/marketing/marketing-budget-percentage
https://www.webstrategiesinc.com/blog/how-much-budget-for-online-marketing