When I was hired for my first marketing role, I was very excited to introduce new, exciting ideas to my team.
And, as long as I had data to support the potential success of a project, I thought my team would be excited to hear these ideas.
What they were. But they were also careful and one of their biggest problems was, “Okay, that sounds great … but how much is it going to cost?”
Ultimately, being a successful marketer isn’t just about thinking strategically. It’s also about staying on a strict budget and reaching new levels of growth while choosing the most cost-effective option for your business.
It examines typical marketing budgets, as well as marketing budgets by industry, so you can determine how your budget ranks against the competition.
We’ll also look at how much of your annual sales you should reinvest in marketing materials for stronger growth over the long term.
What is a typical marketing budget percentage?
According to Deloitte’s annual CMO survey from February 2021, marketing budgets now amount to around 11.7% of the total corporate budget – a slight decrease from the 12.6% of marketers in June 2020, but still a record high that most Marketers haven’t seen this in the past four years.
(It’s important to note that over the course of the pandemic, we’ve seen record-breaking marketing budgets when companies shifted some budget towards digital marketing strategies rather than offline tactics.)
Gartner’s 2020 CMO Survey confirms that most marketing budgets represent around 11% of total corporate budgets.
While your own marketing department’s budget will depend on a variety of factors – including your industry, company sales performance, and business needs. However, this should help you determine a fair percentage of your total company-wide budget to allocate to your marketing teams.
Which strategies / channels marketing teams choose to invest naturally depends on the company’s individual goals. For example, while 73% of companies invested in website optimization in 2020, only 20% invested in machine learning and automation.
Web optimization, digital media and search, and digital marketing were the top three priorities for companies when determining budget allocation in 2020 – around 73%, 65% and 57% of companies invested in these, respectively.
These trends are expected to continue through 2021 and beyond.
However, the data we’ve reported so far relates to the percentage of the marketing budget of the entire company budget – but what about the marketing budget as it relates to the company’s total sales? Let’s get into that next.
Marketing budget revenue percentage
The US Small Business Administration recommends that small businesses (companies with sales less than 5 million) devote between 7% and 8% of total sales to marketing, assuming your company has margins in the range of 10 to 12 percent.
The number of revenue companies allocate to marketing has steadily increased over the past 10 years. The average marketing share of revenue was 13% in 2021, compared to just 8% in 2011.
The B2B product sectors invest an average of around 10% of sales in marketing, similar to B2C services (10.1%). B2B Services and B2C Product account for higher numbers of 15% and 18% of total sales, respectively.
Of course, decisions related to marketing budget allocation remain largely industry-specific. To get more accurate, industry-specific insights, let’s next examine marketing budgets by industry.
Percentage of marketing budget by industry [2021 Data]
Deloitte’s 2020 CMO survey found that B2B (product-centric) companies spend around 9.4% of their total budget on marketing efforts, while B2B (service-centric) companies spend 11.4%.
If you work for a B2C (product-centric) company, Deloitte states that 15.9% of the total budget is the average of the marketing teams. For B2C companies (service-oriented) this value is closer to 12%.
Of course, the type of business you work in (B2B or B2C) is only one factor in determining the percentage of the marketing budget. Industry also plays an important role.
For example, marketing costs are highest in the education sector at 19.4% of the total budget – and lowest in the energy industry at around 4%.
If you work in the healthcare industry, you might expect a marketing budget of around 7% of the total budget.
Alternatively, consulting services usually attribute 13%. After all, technology / software platforms attribute 12% of the total company budget to marketing.
If you’re unsure of how to manage your marketing budget, you’re in luck. We covered marketing budgets in depth under Managing Your Entire Marketing Budget [Free Budget Planner Templates]. Check out this post to help craft a marketing budget that’s right for you – and use templates and examples to get you started.