As a B2B company, you know that marketing is crucial to your success. But how much should you be spending on it?
This is a common question that many businesses, both large and small, struggle to answer. In this article, we'll dive into the world of B2B marketing budgets, explore the factors that influence them, and provide insights on how you can determine the right marketing spend for your business.
Factors that Influence B2B Marketing Spend
Before we dive into the nitty-gritty of B2B marketing budgets, it's important to understand the factors that influence them. Here are a few things to consider:
1. Industry
The industry you operate in can have a significant impact on how much you need to spend on marketing. For example, a B2B company in a highly competitive industry, such as software or technology, may need to allocate a larger budget to marketing.
2. Company Size
The size of your company also plays a role in how much you should be spending on marketing. Larger companies typically have bigger budgets to work with, whereas smaller businesses may need to be more conservative in their spending.
3. Objectives
Your marketing objectives should also influence your spending. If your goal is to increase brand awareness, you may need to allocate more funds to advertising and social media campaigns. On the other hand, if your goal is to generate leads, you may need to invest in more targeted, high-converting strategies like email marketing and content marketing.
Now that we've covered the factors that influence B2B marketing spend, let's take a look at some industry benchmarks.
Average B2B Marketing Budgets in the US
According to the 2020 CMO Survey, B2B companies in the US allocate an average of 7.6% of their revenue to marketing. This figure varies depending on company size, with smaller businesses typically spending a higher percentage of their revenue on marketing than larger enterprises.
Here's a breakdown of average marketing budgets by company size:
Small businesses (less than $5 million in revenue): 11%
Mid-sized businesses ($5-$50 million in revenue): 8.6%
Large enterprises (over $50 million in revenue): 6.2%
Average B2B Marketing Budgets in the UK
According to a report by the Institute of Practitioners in Advertising (IPA) and the Incorporated Society of British Advertisers (ISBA), UK B2B companies allocated an average of 6.4% of their revenue on marketing activities, compared to 10.4% for B2C companies.
This may be due to the fact that B2B companies often have longer sales cycles and rely more heavily on relationship-building and word-of-mouth marketing rather than expensive advertising campaigns.
Additionally, the UK-based marketing agency Ironpaper, found that B2B companies with revenue between £1m and £10m typically spend around 9-12% of their revenue on marketing, while larger companies with revenue over £50m may spend as little as 6-7%.
It's worth noting that these are just averages, and your company's unique circumstances will influence your own marketing budget. For example, if you're a new business trying to establish a foothold in a competitive industry, you may need to allocate a higher percentage of your revenue to marketing than an established business with a strong brand and customer base.
Determining Your B2B Marketing Budget
Now that you have an understanding of the factors that influence B2B marketing budgets and industry benchmarks, it's time to determine your own budget. Here are some steps you can take to get started:
1. Set Marketing Goals
As mentioned earlier, your marketing goals should influence your spending. Take some time to define your objectives, such as increasing website traffic, generating leads, or improving brand awareness.
2. Analyse Your Current Situation
Assess your current marketing efforts to determine what's working and what's not. Look at your website traffic, social media engagement, email open rates, and other metrics to identify areas for improvement.
3. Research Your Industry
Research your industry to understand what your competitors are doing and what kind of marketing strategies are effective in your niche.
4. Consider Your Unique Circumstances
Factor in your company's unique circumstances, such as your size, budget, and growth goals. Determine how much you can realistically afford to spend on marketing.
5. Create a Budget
Based on your goals, current situation, industry research, and unique circumstances, create a budget that outlines how much you will spend on each marketing.
Conclusion
While there is no definitive answer to how much B2B companies spend on marketing, studies have shown that the average B2B company spends around 8% of their total revenue on marketing. This figure can vary significantly depending on a range of factors, including company size, industry, and growth objectives.
Ultimately, the key to determining the right marketing budget for a B2B company is to take a data-driven, strategic approach.
By carefully evaluating market conditions, target audience preferences, and the effectiveness of marketing initiatives, you can ensure that you are investing marketing resources in the most effective and efficient way possible.