What percentage of your revenue should go into marketing?

Marketing Budgets - here's what you should be investing

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Putting a price on marketing is a difficult task. Agencies and marketing managers commonly hit a brick wall with decision makers when it comes to marketing and budgets - “great, how much is this going to cost?”. Many view marketing as an intangible expense, no different to those other costs that are necessary to operate, like rent. While the majority of decision makers know that marketing is necessary and useful for their business, they don’t value it and this results in a significantly lower marketing spend than what would generally lead to success. 

Consider the following: 

  • What does your business look like if your marketing is able to create more leads and sales than you need to hit your targets? 

  • What does your business look like if you under-invest in marketing compared to your competitors? What would having fewer leads and sales mean for your goals? 

So what is the average spend on marketing? Typically, on average businesses spend 10-13% of revenue on marketing. This is evident in Deloitte’s CMO Survey and Gartner’s 2020 CMO Survey. But do you consider your business average? We wouldn’t! 

Simply running the maths to find out what 13% of your revenue is and dedicating that as your marketing budget isn’t how this works. The average percentage of revenue spent on marketing could be irrelevant to your business in a number of circumstances:

  • Your company is a fast-growth company that generates more leads that turn into more revenue than competitors, typically achieved by significant and effective investment in marketing. 

  • You’re running a start-up that needs to generate a lot of awareness with very little revenue.

  • Your company operates in a highly competitive market where you’re fighting for business amongst competitors that heavily invest in marketing.

  • Your company is undergoing significant change, such as entering a new market, requiring increased marketing efforts. 

To make more informed decisions around setting a marketing budget, researching industry-specific insights would be your first step to finding out what similar businesses are investing. 

Conversation around marketing budgets is nothing new to us. We welcome an open approach to the discussion as understanding where you’re at in terms of budget allows us to align more closely with your expectations. The upcoming financial year is the perfect time to start doing marketing right - let’s talk budgets!

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