Posted at Aug 8, 2019 10:17:00 AM by THAT Agency | Share
Who doesn’t love crunching the numbers and planning the next fiscal year’s budget? All right… not the most fun project, but it is one of the most critical in terms of your business’s ability to survive and thrive in the coming year. It can be helpful to analyze B2B marketing spend by industry to see how your numbers align with your competitors. Let’s get to it.
The Marketing Outlook
You feel overworked and underappreciated, right? Ah, the life of a marketing professional! The good news is that marketing budgets increased about 9% in 2019, showing a shift toward recognition that marketing is an invaluable business function. Overall, marketing accounts for an average of 10.4% of total company budgets for B2B product firms and 12.6% for B2B service firms.
Marketing spend tends to be different across industry lines. For example, manufacturing companies devote an average of 6.4% of their overall budget to marketing, while technology and software companies put down 9.3%. Some other generalities include:
B2B manufacturing, construction, engineering, and industrial firms typically have a lower marketing spend, accounting for just 0.5 - 2% of their overall revenue.
Oil/gas/chemical B2Bs spend 0.5% on marketing.
For electronics and scientific equipment, this ticks up to 1%.
Construction and real estate double this for 2%.
Startups usually dedicate as much as 5% of their overall revenue, and tech companies are as high as 9.7% of overall revenue.
Looking at stats pertaining to marketing budget by industry can be informative - but should it inform your spend? Using these figures as a benchmark is problematic; using them as a starting point for your own budget process is much more useful. You can see how your competitors are spending - and the results you are seeing - to align your own numbers.
How Do B2Bs Spend Their Marketing BudgetS?
Just as important as the total spend is how B2Bs are using their marketing dollars. We’re seeing a focus on:
Content Marketing. More than three-quarters of marketers say that they are “very” or “extremely” committed to content marketing, and we’re seeing spend increase to a quarter of the marketing budget or more.
Digital Marketing. Your customers are online, so it makes sense that your marketing budget would head into digital territory as well. According to Forrester, B2Bs will spend about 42% of their marketing budget online, and this is projected to increase to 45% by next year. Video will take up a significant percentage of this, as will social media.
Demand Generation. This aspect of marketing is focused on increasing awareness of and interest in your brand’s solutions. A majority of marketers say they’re going to increase funding for demand generation in 2019 and 2020.
Analytics. Good! If you are not tracking the efficacy of your marketing initiatives, you don’t know if you’re spending wisely or foolishly. Are you casting money to the wind, or is each dollar helping drive mission-critical goals? You need to know. Key metrics (e.g., reach, awareness, click-through rates, conversion rates, etc.) matter, and more B2Bs are placing an emphasis on these insights to target their marketing campaigns more effectively.
It is useful have a sense of B2B marketing spend by industry - but ultimately, your business’s success depends on its individual goals and needs. You need to fund critical initiatives that will drive your business forward. If you need expert input into the best use of your marketing dollars, do not hesitate to contact THAT Agency.