A strong brand and marketing strategy is a powerful asset and Jobs knew it.
Determining the affect of marketing on a company’s growth is not black and white. There are many factors that combine to create a successful and growing business. However, without marketing and sales a company gets very little, if any, promotion or exposure, meaning the chances of growth are slim to none. This is a well-known fact among marketers, evident in the amount of dollars successful corporations allocate towards sales and marketing every year.
In 2014, Microsoft, Cisco, Quest Diagnostics, Intel, Salesforce, Constant Contact, LinkedIn, Marketo, Bottomline Technologies, Marin Software, IDEXX Laboratories, Tempur Sealy, Tableau and Twitter among many more all had marketing and sales budgets that were greater than 14% of revenue, some spending as much as 50%! All of these companies also grew year-over-year.
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So, how does a company determine how much of their budget to spend on marketing? We decided to look at a handful of some of the most successful large and mid-sized companies across a range of industries to find out how much they allocate for marketing and what they get in return.
Is 10% the Magic Number?
According to a 2014 Gartner Research study, “companies spent on average 10.2% of their annual 2014 revenue on overall marketing, with 50% of companies planning to increase
According to a 2014 CMO survey published by the American Marketing Association and Duke University, companies with:
- less than $25 million in revenue spent an average of 11% on marketing
- $25-$99 million in revenue spent an average of 9% on marketing
The study also broke down the averages for marketing investment as a percentage of revenue by business type:
- B2B Product Businesses: 10.6%
- B2B Service Businesses: 10.1%
- B2C Product Businesses: 16.3%
- B2C Service Businesses: 10.9%
So while the 10% number may be right for some businesses, it is definitely not a one size fits all figure.
Where is the Marketing Money Being Spent?
As the economy stabilizes and begins to rebound, marketing budgets remain healthy and are predicted to grow, mostly around digital and content marketing. According to the Content Marketing Institute, as of 2014:
- The most effective B2B marketers spend 39% of their marketing budgets on content
- 59% of marketers expect their organization’s content marketing budget to increase spending in the next 12 months
Similarly, the Custom Content Council said:
- Marketing budgets are heading up 13.7% year-over-year, and content will make up 37% of that spending plan (2013)
Overall, companies are spending money on marketing because it matters to the bottom line. The amount each company spends differs according to a number of factors including business type, revenue and growth goals, but the message is clear: Unless you are Apple, spending less than 10% of your revenue isn’t going to cut it. In order to see growth, companies, especially companies in their growth phase, need to invest heavily in the mechanism that promotes, sells and creates this growth. That mechanism is marketing.
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- Tolulope Adeyemi ➤➤ Digital & Content Marketing Specialist | SEO, SEM & SMM Expert
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