Can you hear it? That’s the groan rising out of Corporate America marking the start of the annual budget season. We get it. You have enough to do without extra meetings and project planning for next year. But intelligent allocation of scarce resources is a prime way senior leaders add value in an organization. As you dive into this year’s budget process, what B2B marketing budget benchmarks are available to guide you?
Ask a CMO
One great place to start is the 2019 CMO Survey from Deloitte and Duke University’s Fuqua School of Business. In true marketing fashion, the survey’s website includes a snappy description:
“The CMO Survey collects and disseminates the opinions of top marketers in order to predict the future of markets, track marketing excellence, and improve the value of marketing in firms and in society. Founded in 2008, it is the longest running non-commercial survey for and about the field of marketing.”
Among CMO Survey respondents:
- 68% represented B2B businesses
- 97% worked at the VP level or above
- 31.5% served at organizations that are smaller than $25 million
- 29.5% worked in the technology and professional services
Because no CMO is going to tell you exactly how much they are spending, the CMO Survey measures trends in changes to marketing budgets year-over-year. Thankfully, trends offer more than adequate benchmarks to guide your marketing budget.
What Do Other Companies Spend On Marketing?
On average, marketing represented 12 percent of an organization’s overall budget and 9.8 percent of overall revenue. Those costs include salaries, benefits, and proportionate costs for facilities and overhead, plus programmatic costs such as events, printing, video production, advertising, subscriptions, technology, and outsourcing. Overall, CMO Survey respondents expected their marketing budgets to grow by 8.7 percent in the coming year.
You can compare your current and projected marketing budget against these numbers from the survey respondents. Are you dedicating a larger or smaller portion of your overall revenue and budget towards marketing?
If in the past you’ve felt you were being out-marketed by your competition, this benchmark might be the reality check your leadership needs. Maybe your organization has under-invested in marketing. The survey offers objective data to lobby for more resources.
On the other hand, if you’re spending significantly more than the survey average, this might be your year to find new efficiencies in your marketing spend.
Read: 5-Step Framework for B2B Digital Marketing
How Are Other Companies Spending Their Marketing Budget?
In the CMO Survey, two-thirds of the respondents said they are investing in “managing the present” rather than “preparing for the future.” Broadly speaking, that reflects support for current sales efforts more than generating leads for future sales.
Think about marketing effort on a sliding scale. One end is brand awareness and lead generation; the other end is sales enablement. Visualizing your priorities on this scale helps you align your marketing strategy and guide the allocation of resources and people. For example, if you’ve set your marketing ratio at 60:40 between lead gen and sales support, then your budget should reflect that proportion.
Remember, we’re talking B2B marketing. Sales cycles are long. Purchase decisions are complex. You need to play the long game of relationship and trust building. It’s usually wise to skew toward nurturing prospective customers through the sales funnel, although, this should be balanced with generating new leads.
Content that can support drawn-out sales cycles includes:
- Case studies
- White papers
- Product videos
- Email drip campaigns
- Fact sheets with technical specs
- Product and technology comparisons
These marketing assets help your sales team deepen relationships with prospects and continue moving them closer to a decision. For maximum effect, your budget should also include resources for refreshing, repurposing, and promoting this type of content through paid and social channels.
At the same time, awareness should remain a priority, even if it’s not tied to specific lead generation efforts. CMO Survey respondents reported they will spend an average of 9.3% more on branding in the year ahead.
Three Ways to Shake Up Your B2B Marketing Budget
The adage, “Insanity is doing the same thing over and over again and expecting different results,” certainly applies to budgeting. If you want different results from next year’s marketing budget, here are three ways to shake up your spending:
- Start, Stop, Continue
Gather stakeholders from sales, product, and marketing teams, as well as some sticky notes and pens. On a wall, mark off areas labeled Start, Stop, and Continue. Each member of the group writes down the marketing activities and related initiatives they think the company should continue doing, should start, or should stop next year. The group can then sort and prioritize within each category to help set spending priorities.
- Dig into your data
Budgeting season is the time to dive deep into your marketing metrics for the last year and find what spending was truly effective. What were the top three activities that generated the most leads or contributed to the most deals? Beyond prioritizing those tactics for 2020, focus your efforts on making them more efficient to scale their impact. If your metrics don’t offer a clear picture of your campaigns’ effectiveness, you can make the case for investing in better tools for analytics.
- Test early, test often
There are plenty of trendy marketing activities you could introduce in your next budget: Think chatbots, personalization tools, voice search, VR customer experiences, and anything AI. Are any of these worth some of your budget? Maybe. Dedicate a bit of your spending to trial new approaches on a limited basis. Decide in advance what success would look like for what you’re testing and set expectations with leadership that not everything trialed will be adopted.
In a way, budgeting is placing a bet on the future. B2B marketing budget benchmarks drawn from surveys of your peers, combined with your internal KPIs, can help you know what’s a losing wager and when to double down.
Want to maximize your spending for awareness, demand generation, and sales enablement in 2020? Contact PMG to optimize your marketing strategy for B2B SaaS and technology.