2020 was a year unlike any other. One thing that remains constant, though, is the start of another budget season. During times of market volatility, 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 2020 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:
- 65.6% represented B2B businesses
- 98% worked at the VP level or above
- 72.7% served at organizations with sales revenue greater than $25 million
- 28.7% worked in technology or 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 11.3% of surveyed organizations’ budgets in 2019 and 8.6% of their revenue, a 9% increase compared to 2018. Participants expected marketing budgets to increase by 7.6% in 2020, representing a somewhat slower rate of growth than the prior year.
You can compare your current and projected marketing spend against these numbers from the survey respondents. Are you dedicating a larger or smaller portion of your overall revenue and budget toward 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.
How Are Other Companies Spending Their Marketing Budgets?
Unsurprisingly, spending on digital channels continues to outpace traditional advertising. Respondents expected their digital budgets to increase by 13% in 2020 as outlays for ads in print, broadcast and other offline channels shrink, as they have for the past several years. Individual marketing expenses vary considerably by sector and organization. But among survey participants, large majorities reported spending on social media (86.9%), brand-related expenses (80.4%), marketing analytics (72.5%), and marketing research (69.9%). Another notable finding was the ongoing growth in mobile marketing, with organizations expecting budgets for this channel to increase by an average of 23% over the next five years.
Spending on social media is also expanding quickly, growing to 15.2% of anticipated 2020 marketing budgets. Survey respondents expected social media to represent 21.5% of their spending in the next five years. Outside agencies provided nearly a quarter of all social media activities, the highest level reported since the question was first asked in 2014.
Putting Your Spending in Context
In addition to assessing broader trends in B2B, it can be valuable to evaluate your marketing efforts on a sliding scale. On one end is brand awareness and lead generation; on 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.
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 2021, 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 2021? Contact PMG to optimize your marketing strategy for B2B SaaS and technology.