B2B product industries allocate, on average, approximately 7.8% of their revenues to marketing. In simple terms, your marketing budget should be a percentage of your revenue. A common rule of thumb is that B2B companies should spend between 2 and 5% of their revenues on marketing. Horvath suggests that a good way to reduce your target budget is to research what is common in your industry and what your competitors are spending.
While the B2C product sector spends an average of 15.1% of revenues on marketing budgets, the B2B product sector reports 7.8% of revenues dedicated to marketing expenses, much lower. After examining the general indicators of marketing costs, you can more accurately understand how and why different companies spend this or that part of their revenues on advertising. Gathering data from these trusted sources in the marketing community should help you determine how much to spend on marketing and where to apply those investments. At the same time, transportation companies can spend less than 5%, since most of their businesses rely on existing relationships.
While some companies include all marketing expenses and even those related to sales, others classify some of those expenses separately as part of their total company budget. Every year, in the CMO survey, top marketers are asked how their marketing spending is expected to change in the next year. The age and intention of the desired audience are the main factor when choosing a platform, and B2C companies are more likely to reach their target audience on social networks than B2B companies. This is considered to be a reflection of the increase in revenues of companies, which exceeded spending on marketing during this period of inflation, and of the continuing considerations of supply and demand.
One of the difficulties in providing a general budget recommendation is that not all companies are consistent with what they include in their marketing budget. This is because B2C companies often need to invest in more marketing channels to reach various customer segments. Evaluate your marketing budget quarterly and annually to see if your projections align with your actual spending. This is the total cost of getting a new customer and includes branding efforts, advertising expenses, salaries for the design and marketing team, and the costs of the sales process.
Digital marketing spending, by comparison, has steadily grown in double-digit increases year after year.