CMO’s Share B2B Marketing Budgets (Industry Statistics)

One of the questions I am most frequently asked is: “How much money should my company be investing in marketing?” Here’s a summary of B2B marketing spend, as a percentage of total company budget, as a percentage of revenue, and by industry. Wondering how you stack-up? Read on…

The 2019 CMO Survey (polling nearly 3,000 marketing executives in the US) provides solid insights and industry benchmarks for B2B and B2C companies.

B2B Marketing as a Percentage of Total Company Budget

Overall companies are spending more money than ever on marketing. B2B companies are well aligned with this US average, with services companies grabbing a slightly higher percentage than product firms:

• For B2B product firms, marketing budgets comprise 10.3% of total company budget
• For B2B service, marketing budget is 11% of total company budget

B2B companies are well aligned with this US average, with services companies grabbing a slightly higher percentage than product firms:

• For B2B product firms, marketing budgets comprise 10.4% of total company budget
• For B2B service, marketing is 12.6% of total

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B2B Marketing as a Percentage of Revenue

Marketing investment as a percentage of revenue for all companies in the US shot up 9.8% of company revenues continuing a very strong 3 year trend.

Again, B2B firms are very close to this US average:

• For B2B product companies, marketing spend is 8.6% of total revenue
• For B2B service firms, marketing is 8.7% of revenue

B2B Marketing Budgets by Industry

Averages provide a meaningful data point, but marketing investment varies greatly, industry by industry. For example:

• Manufacturing companies devote 6.4% of the corporate budget to marketing, which is only 2.7% of revenue.
• Technology/Software companies devote 9.3% of the corporate budget to marketing, which is nearly 10% of revenue.

Digital vs Traditional Marketing

Companies overall continue the rapidly accelerating trend of spending a higher percentage of their marketing budget on digital vs. traditional:

• In 2016 companies spent 37.5% of their marketing budget on digital
• In 2019 the percentage is 55%, reflecting an increase of 47%

Since digital surpassed TV in 2016 the trend has only accelerated and is expected to continue on that trajectory thru 2022.

Determining Your B2B Digital Marketing Budget

The first step in determining your B2B digital marketing budget is to determine what role digital should play in your marketing mix. The answer will likely vary based on the type of product you sell and how complex your sales cycle is. Here are a few examples…

Complex Sales Cycle

For example, we work with many SaaS firms. These companies generally have long, complex sales cycles. This is typically a high-cost investment and a high-consideration purchase/partnership.

We have seen various spending models work in this situation, with companies spending anywhere from 15% to 100% of their marketing budget on digital. I’d have to say that a reasonable average is 25-50% of total marketing investment spent on digital. To do some easy math, assuming a SaaS company with $50M in annual revenue:

• $50M in annual revenues
• 8.6% of revenues invested in marketing
• 25-50% of marketing budget focused on digital
• $50M x .086 x (.25-.50) = $1 – $2.1M annually invested in digital marketing

B2B eCommerce

Let’s say you have a simpler, more standardized product that can be purchased on-line such as an expensive replacement part for equipment, a server or storage array. In this case digital will likely play a larger role in your overall marketing mix. This could put you in the 35-75% range for digital marketing spend. Let’s look at a reasonable digital marketing budget for the same size B2B eCommerce company:

• $50M in annual revenues
• 8.6% of revenues invested in marketing
• 35-70% of marketing budget focused on digital
• $50M x .086 x (.35-.75) = $1.5 – $3.2M annual digital marketing budget

Common Challenges

Based on our experience leading digital marketing programs for B2B companies, the biggest issue we struggle with in achieving ROI is insufficient resources. Typically this stems from the following two challenges:

1. Company does not dedicate enough staff to digital marketing. This results in timelines not being met and recommendations not being implemented in a timely manner.
2. Company does not allocate enough budget to digital marketing. This results in not being able to collect and analyze a sufficient amount of data to draw meaningful conclusions about results and ROI.

Conclusion

We know that digital marketing continues to grow. B2B marketers are shifting funds from traditional channels into digital. In order to determine your optimal budget, determine how your customers’ digital experience fits into your overall marketing plan, assess the complexity of your sales cycle, and ensure you are investing adequate funds to properly assess results. Don’t ignore the substantial and continual growth of mobile and use these B2B budget ranges as a starting point for your successful digital marketing program.

Budget Questions? Request Free Consultation!

Patricia Hursh April 3, 2020

Patricia Hursh is the president and founder of Avid Demand. Today she leads the agency’s Client Service Department, guiding multi-functional teams to ensure bottom-line business results for Avid Demand clients.  Patricia specializes in developing digital marketing strategies and full-funnel marketing solutions for B2B companies.