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How Much Should You Budget For Marketing In 2016?

Marketing Budgets 2014

An Update From Our Popular 2014 & 2015 Articles

As the end of 2015 nears, we begin to think about that question again and how our businesses are going to grow and compete in 2016. This article provides information that can guide you about how to budget for marketing and where to invest your marketing dollars. Included in this article are:

  • How much are companies spending on marketing?
  • Where are marketing dollars invested offline and online?
  • What marketing strategies and tactics are getting results?

The answers to these questions come from a few reliable sources, 1) an annual survey of Chief Marketing Officers (CMOs) from a variety of industry sectors and firm sizes, 2) a leading research group report about interactive (digital/online) marketing trends and predictions and 3) other leading digital marketing research firms.

So, how much should your firm budget for marketing expense?

who has the biggest marketing budgets?The CMO survey offers some answers. In the charts below you’ll see how marketing professionals from all types of firms responded to this question in 2012-2013 and then in 2015. Here are some important data points to remember from our last post:

Marketing spending in 2012-2013:

  • For B2B firms, marketing budgets as a % of firm revenue fell within the 5-6% range
  • For B2C firms, marketing budgets as a % of firm revenue fell within the 11-13% range
  • Across both economic sectors (B2B & B2C), marketing budgets have decreased from last year
  • Marketing budgets for firms selling products to the consumer marketplace (B2C) increased from last year

How does that compare to marketing spending in 2015:

  • B2B budgets have increased to the 7-9% range
  • B2C budgets are hovering around the 9% mark

Based on these results, we see that B2B marketing spending has increased over the past couple years, whereas B2C marketing spending has actually dropped a bit.

How do you rate the following channels in terms of return on investment?[RELATED: The Top B2B Digital Marketing Strategies]

It is important to note that these percentages represent the total marketing investment, not just advertising or media spend. They include things like marketing staffs, customer relationship management, investments paid to agencies and other outside suppliers, advertising costs, media spend, etc.

Firms seeking to grow market share will likely be on the high side of these averages vs. firms planning for modest growth, which may be on the lower side. Additionally, the competitive nature of a certain marketplace will influence where a particular firm falls among these average figures.

Whatever overall investment you make in marketing, the next question is where to allocate that budget. The chart below provides some guidance.

How to allocate marketing budgets across channels

The next question to answer is how to allocate marketing budgets across channels – offline and online, and how to spread the online investment across the various online/digital channels. A report from Forrester Research shows the estimated allocation of marketing funds offline vs. online and across the digital channels. Here are some conclusions from the 2014 report:

Conclusions from the 2014 report:

  • 29% of your total marketing budget allocated to online/digital channels
  • Search engine marketing (SEO & SEM) will continue to capture the largest share of online spend at 47% or about 14% of the firm’s total marketing budget
  • Online display advertising (banner ads, re-marketing & re-targeting) will capture the next biggest share of the online spend at about 34% of total online spend and about 10% of the total marketing budget
  • Social media investments are estimated at 6% of total online spend and a bit less than 2% of the total marketing budget
  • Mobile, the fastest growing digital marketing channel, will garner about 10% of the total digital marketing budget and slightly less than 3% of the total marketing budget.
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