Did you know the average marketing spend for companies is 7.8% of revenue?* And – for ambitious, growing companies (that’s us all right? 😉) – it’s on the rise.
Here is what various sources say:
According to Gartner (The State of Marketing Budget and Strategy 2022, latest figures available), survey results show that the average marketing spend increased from 6.4% to 9.5% of company revenue across almost all industries.
According to Hubspot*
B2B product industries allocate, on average, roughly 7.8% of revenue to marketing. This is similar to B2C services (6.5%) and B2B services (5.9%). B2C Product allocates the highest amount at 15.1% of total revenue.
According to The Marketing Spend Decision: Benchmarks for B2B Companies survey by the CMO council, B2B companies spend on average 7.5% of their revenue on marketing.
What does that mean for your marketing Spend?
Taking the sources of revenue examples, we’ve created a guide on what you should be investing for the size of your company. It’s interesting findings.
Revenue to marketing
7.8%
B2B product industries
6.5%
B2C services
5.9%
B2B services
15.1%
B2C Product
Marketing Spend V Turnover
For the size of business, we have focused on the average sales (turnover) of Glow’s clients. We have also looked at where your marketing budget should be allocated.
To calculate the marketing spend v size of business we have taken [just below] the average from the research sources and suggested this as the recommended investment of 7.5%, pretty good as 4.5% and squeezed at 2.5% [of turnover].
The % marketing investment includes your in-house marketing teams, your agencies, digital, website, communications, advertising – everything that falls under ‘marketing’
Marketing Spend V Size of Business
Size of Business | Marketing Spend | ||
Recommended
7.5% | Pretty Good 4.5% | Squeezed
2.5% | |
£5,000,000 | £375,000 | £225,000 | £125,000 |
£10,000,000 | £750,000 | £450,000 | £250,000 |
£25,000,000 | £1,875,000 | £1,125,000 | £625,000 |
£50,000,000 | £3,750,000 | £2,250,000 | £1,250,000 |
£100,000,000 | £7,500,000 | £4,500,000 | £2,500,000 |
Marketing Spend Allocation
Every company will have different models on how to distribute its marketing budget, but we think it is useful to provide a useful suggestion of how to divide the pot.
We’ve taken the % marketing investment for each business size; whether they are investing in the recommended, pretty good or squeezed and then looked at the allocation per 4 areas: Agencies, Paid Media, Labour and Marketing Technology.
Size of Business: £5 million
Marketing Allocation | 2022 Figures (%) | Marketing Spend | ||
Recommended | Pretty Good | Squeezed | ||
Agencies | 24.00 | £90,000 | £54,000 | £30,000 |
Paid Media | 25.70 | £96,375 | £57,825 | £32,125 |
Labour | 24.90 | £93,375 | £56,025 | £31,125 |
Marketing Technology | 25.40 | £95,250 | £57,150 | £31,750 |
Total | 100 | £375,000 | £225,000 | £125,000 |
Size of Business: £10 million
Marketing Allocation | 2022 Figures (%) | Marketing Spend | ||
Recommended | Pretty Good | Squeezed | ||
Agencies | 24.00 | £180,000 | £108,000 | £60,000 |
Paid Media | 25.70 | £192,750
| £115,650
| £64,250 |
Labour | 24.90 | £186,750
| £112,050 | £62,250 |
Marketing Technology | 25.40 | £190,500 | £114,300 | £63,500 |
Total | 100 | £750,000 | £450,000 | £250,000 |
Size of Business: £25 million
Marketing Allocation | 2022 Figures (%) | Marketing Spend | ||
Recommended | Pretty Good | Squeezed | ||
Agencies | 24.00 | £450,000 | £270,000 | £150,000 |
Paid Media | 25.70 | £481,875 | £289,125 | £160,625 |
Labour | 24.90 | £466,875 | £280,125 | £155,625 |
Marketing Technology | 25.40 | £476,250 | £285,750 | £158,750 |
Total | 100 | £1,875,000 | £1,125,000 | £625,000 |
Size of Business: £50 million
Marketing Allocation | 2022 Figures (%) | Marketing Spend | ||
Recommended | Pretty Good | Squeezed | ||
Agencies | 24.00 | £900,000 | £540,000 | £300,000 |
Paid Media | 25.70 | £963,750 | £578,250 | £321,250 |
Labour | 24.90 | £933,750 | £560,250 | £311,250 |
Marketing Technology | 25.40 | £952,500 | £571,500 | £317,500 |
Total | 100 | £3,750,000 | £2,250,000 | £1,250,000 |
Size of Business: £100 million
Marketing Allocation | 2022 Figures (%) | Marketing Spend | ||
Recommended | Pretty Good | Squeezed | ||
Agencies | 24.00 | £1,800,000 | £1,080,000 | £600,000 |
Paid Media | 25.70 | £1,927,500 | £1,156,500 | £642,500 |
Labour | 24.90 | £1,867,500 | £1,120,500 | £622,500 |
Marketing Technology | 25.40 | £1,905,000 | £1,143,000 | £635,000 |
Total | 100 | £7,500,000 | £4,500,000 | £2,500,000 |
Marketing Allocation Source LinkedIn, Adam Turinas, 5-star rated Author of Total Customer Growth
It is important you use these percentages as benchmarks, as you will have your own industry circumstances. Some industries, for example, may have a need to invest more in agencies and labour with less on marketing technology. But as with any benchmark they exist for a reason, to help make sure your marketing budget is on track.
Where to spend your marketing budget?
Prioritisation of marketing channels is shifting. Traditional advertising was predicted to make up less of 2023’s marketing budget (Deloitte reports). Instead, marketers planned on spending more money on social media and new media platforms.
Having a top-notch website and social channels – as with delivering a quality service (given in any business)- is a must.
In addition to your digital presence, channels will be determined by your sector; and will include a well-balanced mix of advertising, sponsorship, conferences, brand engagement, white papers, case studies, video, animations, paid media, market research, analytics and more….
We are quite keen on businesses to also look at being brave and disrupting their marketplace. For example, for B2B brands to gain exposure on TikTok and to use influencers, which can be especially good as a lead-generation.
Make it count!
Whatever is in your marketing channel mix, make sure it is delivered on brand – both with design and messaging. Poorly executed campaigns with shoddy designs and dodgy copy will not only hinder results, but they will also severely damage your brand.
Advice from the boss
I can’t stress enough that marketing IS NOT just to increase sales. It’s for communication of all aspects of your business – to investors, stakeholders, clients, prospects, staff, and recruitment campaigns. It is the one function that will build a strong brand. Which, spelling it out, will increase staff retention, improve recruitment, attract investments and build ‘the right’ growth strategies.
As well as CEO of Glow I am hugely privileged to be a NED of Business South, and talking to many companies I am very aware that too many companies are not spending anywhere near the recommended marketing budgets. They are investing in HR, technology, projects, finance, operations – absolutely all vital. But the one department that is at the bedrock of the business, of communications, brand reputation, brand enhancement is getting short changed, and often by a lot.
Don’t worry though if you are not investing enough in your marketing, this can easily be rectified, just start spending more! It’s a bit like finding the money for that holiday, new trainers, or essential bit of kit. When there is a will, a need, and a must, there is always a way! You may need to review your strategy and attract new investors. Or redistribute profits.
Advisory note: If you fail to invest into marketing with gusto – the recommended and pretty good percentage bands are the aim (see tables) – and wonder why growth, strategy, staff retention, recruitment, brand recognition or communications are not performing exceptionally well, this will be a fundamental reason why.
Here to help
If you don’t know where to start, how to shift up a gear, or you’d just like a savvy chat on all things marketing email me on lisa@theglowstudio.com or DM me on LinkedIn or Instagram.
I can give advice on:
- Business & Marketing Strategy
- Tips for making the most of your marketing budget.
- Why you need a marketing budget.
- Contents of a marketing budget.
You could also book one of our business & marketing workshops too.
Useful Associated Articles: Why history tells us to spend high on marketing.
