To succeed this year, you need to know how much you’ll be spending on marketing overall and how much you will allocate to each marketing channel. Figuring out the right budget can be tricky — you don’t want to cut corners or overspend. The first step is to decide on your business goals. From there, you can use various B2B marketing budget benchmarks to help you set your budget.
For instance, you can calculate your budget as a percentage of your B2B company’s revenue or overall budget. You can also look at your predicted growth or the average budget in your industry. Other benchmarks include splitting your budget between in-house and outside spend, or traditional and digital advertising.
Let’s take an in-depth look at these six B2B marketing budget benchmarks to help you decide on your marketing budget for 2021.
1. B2B marketing as a percentage of the company budget
Calculating a percentage of the overall budget is a widely used benchmark across industries. According to the 2020 CMO Survey, B2B firms across various industries allocate on average 11.3% of their company budgets to marketing. While each business has a unique situation, chances are the right budget for you won’t be too far off from that percentage.
Take a look at your historical data and try to estimate how much you need to increase or decrease your marketing budget. Keep in mind other business expenses as well as your business goals.
Once you come up with a percentage and a figure, you need to divide your marketing budget into categories. While the breakdown varies from one business to the next, the following categories are more or less ubiquitous — especially in the current digital-focused world:
- Content marketing
- Social media marketing
- Paid media
- Marketing software and tools
- Public relations
2. B2B marketing as a percentage of company revenue
Revenue is another popular metric for determining a marketing budget. You can simply calculate a percentage of last year’s total revenue. The rule of thumb for this B2B marketing budget benchmark is taking 5% of overall revenue, but the exact percentage will depend on your marketing strategy, business overheads, and available funds.
B2B marketing budgets have been increasing in recent years due to fierce competition. Even B2B companies that saw a decrease in overall revenue last year still need to invest in marketing as much as before — if not more — to maintain brand awareness and visibility. The CMO Survey of February 2020 states that marketing budgets as a percentage of company revenues amount to 8.6%.
A 5-10% percentage may fit your situation. But if you are aiming to scale fast, consider raising your marketing budget above 10% of your overall revenue.
3. Predicted growth as a benchmark
Your growth targets can help you figure out your marketing budget. The higher the estimated total revenue, the more you should spend on marketing to hit that goal. Likewise, if you run a B2B start-up, you need to be aggressive with your marketing to gain visibility.
Moreover, if you are planning to launch a new product or service this year, you will probably need a bigger marketing budget than last year, as you will have to create content, ads, and maybe even an event around that launch. Getting the word out requires more work and more money, but once that product or service is well established, you can dial back your digital marketing spend.
4. Industry spend as a benchmark
Another good starting point to set your overall budget is to research how much product or service companies in your industry allocate to their B2B marketing budgets. This information can be insightful since competitors are dealing with similar circumstances and challenges. Of course, you don’t need to follow what others are doing — you can always find a way to run your business more efficiently.
The average marketing budget varies from industry to industry. The 2017 CMO Survey found that the average budget for the software/technology industry was 9.7% of their company revenue.
This may give you a better understanding of the kind of budget you should be aiming to set, but doing more research around your particular tech industry may help. There are websites that provide industry statistics and reports, such as LivePlan or BizStats.
5. In-house vs. agency spend
Another question to consider is whether you should hire more in-house staff or outsource part of your marketing efforts to a B2B marketing agency (like Gripped!)
With remote work being a major trend, hiring an agency to handle marketing has become an even more appealing option for businesses. Outsourcing has several benefits:
- You leverage an agency’s expertise
- You can quickly scale your marketing capabilities to support your growth
- You don’t need to go through the lengthy process of hiring an employee
- You save the cost of benefits, training, and development
That said, in-house marketing staff can have a deeper understanding of your SaaS solutions and customers on top of handling critical tasks.
Both options have their pros and cons. But you don’t have to choose one at the expense of the other — you can have a mix of in-house staff and agency.
To determine how much of your marketing budget you should allocate to outsourcing, list the marketing skills and resources you currently lack. Do you need an SEO expert? Or a CRM tool? What tasks can your employees successfully handle and which ones they are too busy or tackle?
6. Traditional vs. digital spend
They say the future is digital, but the matter of fact is that the present is already digital. The digital customer experience is more important than ever, and marketing automation tools are very popular among B2B marketers.
Most if not all industries will increase their digital marketing spend going forward — an ongoing trend that was accelerated even further during the last year. Reports from Forrester Research and eMarketer indicate that more than half of marketing budgets in 2021 are going to digital.
Since digital marketing is here to stay, does that mean you should give up on traditional marketing like print and radio? Not necessarily. If you use a traditional advertising channel and it’s working well for you, keep using it — offline marketing can help you stand out if your target audience is receptive to it.
Now, you might ask: what about events?
B2B event marketing is a proven method for raising brand awareness, building relationships, and shortening the sales cycle. But as you know, organisations worldwide have shifted to virtual events and conferences. This trend will most likely carry on due to how convenient it is. As for trade shows and other traditional events, they take a long time to prepare, and even if they resurge some time this year, attendance rates will be low. With that in mind, your priority should be to focus your resources on your digital marketing budget.
Here are a few questions to help break down your digital spend:
- How effective is your website at attracting and converting leads?
- What is your content marketing strategy for this year?
- What advertising channels have generated the most leads last year?
- What are your plans to enhance brand awareness, engagement, and loyalty?
- What do you need to improve in your mobile user experience?
- How can you optimise your sales funnel(s) to drive more conversions?
- What can you do to better align sales and marketing?
Tailor your marketing budget to your needs
Remember there’s no one right answer when it comes to setting your marketing budget. Using these six B2B marketing budget benchmarks will give you the clarity you need to decide on how much you will have to spend on marketing and how much you will allocate to each channel of your marketing mix. Your marketing budget must be tailored to fit your business goals and marketing strategy.
Granted, digital marketing can be overwhelming. There are so many options to connect with your target customers and it’s not always clear where you should spend your budget marketing — especially in today’s world. If this is a challenge you are currently facing, we can help. At Gripped, we work with B2B firms to make the most out of their digital marketing activities. Get in touch today for a free growth assessment!