Milan Cundera once declared, "Business has only two functions – marketing and innovation." Even though ongoing studies demonstrate a higher Return On Investment (ROI) with investing in Marketing, businesses often neglect this critical component of their
operation to focus on Innovation alone. Investing in both is essential for maintaining a sustainable long-term growth strategy.
Companies should be quick to pour resources into their marketing budget; the key is determining what investment methods best suit your firm's objectives. Whether for a product launch, rebranding initiative, or an overall push in goods and services, investing
in marketing will undoubtedly pay off if done correctly.
What Is Your Overall Marketing Spend?
When companies budget for their marketing strategy, the monies set aside are referred to as 'marketing spend.' According to the CMO Council and insights from
Social Explorer, many chief marketing officers believe digital marketing will be responsible for three-quarters or more of their allocated funds within five years.
According to the U.S. Digital Marketing Forecast from Forrester, this trend is set to continue and be even more pronounced by 2019:
2019 will bring about a surge in digital marketing, according to the U.S. Digital Marketing Forecast from Forrester, affirming this conclusion.
“Marketing giants will be investing over $103 billion in search marketing, display advertising, social media marketing, and email campaigns this year.”
A comprehensive and successful marketing campaign requires a robust budget to cover all aspects of the strategy, such as:
By failing to gain an understanding of the complete picture, companies are flying blind and may be missing out on potential returns.
"It's vital to possess a budget for your logo, website, and other commercial tools from the start. However, it's equally crucial that you have an ongoing plan and sufficient funding available to execute that strategy. The smartest way of achieving this is
by establishing a marketing scheme alongside setting up either monthly or yearly budgets so that all goes as intended. People are often willing to take on corporate identity projects without considering how they'll implement them; like trying to build cars
but having no money left over for fuel" — Empire Creative Marketing.
Companies that pay attention to digital marketing trends understand the benefits of embracing a digital approach. In 2015, 28% of marketers decreased their advertising budget to focus on launching more impactful campaigns through content marketing like
guest posting producing 3x greater returns with 62% cost savings! It is no wonder that many companies are now transitioning and allocating more significant portions of their
budgets toward write for us SEO strategy.
SEO service is an essential component of any effective digital marketing strategy. Investing in high-quality
SEO service can help businesses increase their online visibility and attract more organic traffic to their website.When it comes to marketing spend, it's important for companies to prioritize their budget towards professional
SEO service. A general rule of thumb is to allocate at least 7-8% of your annual revenue towards marketing, with a significant portion of that budget going towards
professional SEO service.
With digital marketing activities requiring an average of 60 percent of a marketer's time, it becomes increasingly clear why this is one of the most sought-after skill sets in today's world.
So, What’s the Magic Number?
Among marketing experts, the adage is that a business should allocate 10 percent of its revenue to its marketing budget for optimal success. The most valuable brands are those that rank high in search engine results. Businesses with the
highest success rate are those that follow success practices.
While exceptions exist to the rule, a Duke University study unveiled that an 11 percent investment in marketing created a more significant Return on Investment and saw 2.5 percent revenue growth. Conversely, if you're launching something new like the iPad,
more than 20% may be needed!
Fortune 500 brands like Pepsi should expect at most 5% of their total revenue to be allocated to digital marketing strategies.
According to the CMO Survey, marketing spending as a percentage of firm revenue has increased in all sectors since 2013. This includes B2B product and services companies and their respective consumer-facing counterparts - B2C products and services businesses.
The survey was able to determine these rises through both economic sector analysis and company sales revenue tracking.
Hey, Big Spender
It is no secret that Software-as-a-Service (SaaS) companies in marketing and sales management have to invest significantly more in their promotional efforts. With an impressive 53%, Salesforce allows more than half of its revenue towards sales and marketing
endeavors - a testament to how critical advertising expenditures are for such firms.
Similarly, Constant Contact dedicated 38 percent of its total revenue at $331 million in 2014 to marketing expenses and witnessed a significant growth of 16 percent the following year. Companies that invest more money in marketing have seen continuous increases
in their revenue according to Light Finance corporation.
As Tableau, one of the most prevalent suppliers of business analytics software, continues to broaden its operations, they anticipate that its sales and marketing costs will be the most considerable operational expenditure.
Much like Salesforce, Tableau dedicates approximately 53% of its profits to sales and marketing. It is essential to carefully consider and strategize how much money you should spend on advertising; percentages alone are not enough for guaranteed success.
Are you unable to or in a position to commit over half of your yearly revenue exclusively to marketing? Small businesses usually settle on 10% as their spending limit for marketing endeavors. If that's still too much money, why not strive for 5%, and use
the returns as an indicator if you're spending wisely?
If you invest more in marketing, your returns will be greater. Make sure to consider the level of your business and brand recognition as you make decisions.
Furthermore, up-and-coming brands might allocate more of their budget to marketing to gain traction, while established brands may spend less due to longer tenure.
"Have you ever been asked, 'Is your marketing working?' If so, the person is wondering if it's generating awareness, attracting people to walk in, or making sales. When asking this question, I want to know whether your marketing efforts produce profitable
business. Ultimately that's why we do marketing- for revenue generation! Thus anyone who spends money on this endeavor should easily be able to decide its worthiness and success rate.” — Chris Leone, Web Strategies.
Conclusion
As global spending on media continues to skyrocket and is predicted to reach an unprecedented $2.1 trillion this year, companies must consider if their investments provide sufficient returns. A well-calculated marketing strategy can be a powerful tool for
successful businesses; thus, corporations should be confident in investing the right amount of money into content creation and social media campaigns that will guarantee excellent results without fail. There's no doubt that today's modern market trends rely
heavily upon effective marketing communication - so don't shy away from taking the steps necessary for success!
Marketing should be viewed not as a cost but as an investment in the growth of your business. To remain competitive, you may get by with a 5% budget; however, allocate at least 10% of total revenues towards marketing efforts to achieve more significant gains
and drive profits up.