When setting marketing as a percentage of revenue benchmarks, the firm Go-to-Market Strategies has published a study on normative levels. According to their research "30% of companies spend between 3-5% of revenue on marketing, with 45% spending over 6% (most of those between 6-10%). If you are launching a new product, or are expecting to launch into a new market or territory, expect to spend approximately 20% of revenue to fund that program."
The percentage of revenue approach, 8-10% of revenue should be spent on marketing, with approximately 5% of that going to labor (either for a department, or outsourcing to a marketing firm). What percentage you use is determined by a number of factors, how mature is your market (how much education do you have to do), how well known is your company in your industry (are you a new or established business, how much brand awareness do you have to do), and how fast do you intend to grow, just to name a few. Once you've received a commitment from management on your percentage of revenue each month, calculate the "allowed" monthly budget for marketing
This data was published on December 19, 2007.
IDC has published data in 2008 indicating that across surveyed IT companies the following ratios determined the marketing spend as a percentage of revenue and program spend:
Marketing spend/revenue ratio: 2.8% (range from .8% in services sector to 5.1% for software companies).
Approximately 49% of the marketing spend was dedicated to awareness building efforts with the remainder focused on demand generation.
Marketing programs represented 61% of total marketing spend.
A ratio of $293,000 of program spend for each marketing staff member.
Corporate Revenue per marketing staff member was $16.8M.
Other factors included 66% of marketing staff assigned to a central office vs. 36% as regional staff. Marketing operations staff represents 5.2% of the marketing spend and marketing automation is at 1.9% of total marketing spend.
Within the marketing program budget, in B to B, events represents 22% of spend, digital marketing 12%, advertising 17%, direct marketing 16%, public relations 5%, collateral 5% and research 4%.
Success covers a multitude of blunders.
Posted by: new balance | October 15, 2010 at 02:42 AM
It's interesting to see 1.9% of a marketing budget is spent on marketing automation. To be honest, I think that's low give the return marketing automation, or revenue generation provides. We're working on a marketing automation ROI calculator to support these statements and will be posted on our "Revenue Generation Blog" shortly. I believe this space is poised for larger budgets and higher growth as experts estimate only 2-5% of all B2B companies have adopted marketing automation solutions. Looking forward to tracking this further. If anyone has updates on this data I'd love to see it.
Posted by: marketing automation spend | February 11, 2011 at 12:54 PM
Nice one guys! We might try to work a reference to this one into our post about awareness campaigns next week is that's cool?
Posted by: Marketing for Awareness | August 10, 2011 at 05:35 AM
Absolutely, this is one of the most asked questions in marketing. It also helps to justify more of the intangible aspects of marketing which occur in the awareness/purchase interest part of the funnel, but that aren't as measurable or as easily tied to sales.
Posted by: Jeff Grill | August 24, 2011 at 01:47 PM
Does anyone know how many companies were in the survey? and their revenue size?
Thanks!
Posted by: Debbie Crawford | March 30, 2012 at 10:43 AM