The annual Gartner CMO Spend Survey has just been released.
And this year it’s all about results. Marketers are focusing more efforts on existing customers. They are also allocating 9.2% of their total marketing investment to analytics—the most of any of the 13 marketing capabilities in the survey.
Sixty-five percent of respondents reported that they expected an increase in budget from 2017 to 2018. Only 35% expected the same or lower levels. The biggest areas of investment growth remain digital advertising, websites and social marketing.
On average, marketing budgets for B2B firms are in the range of six to seven percent of revenue. This includes internal marketing staff, marketing agency fees and all advertising costs. It’s up from the four to six percent range a few years ago, but relatively flat with last year.
Using benchmarks like these is certainly a place to start, but if you want to outperform your peers, you may want to consider investing more, or at least investing more smartly.
Benchmarking against your peers can also be more helpful than benchmarking against what you spent last year, which is the way 47% of CMOs currently set budgets. This unsophisticated approach can perpetuate issues. For example, if any aspect of your marketing is under-budgeted (or over-budgeted) currently, the budget from last year can act as an anchor against getting to the “right” number.
At Pepper Group, we recommend that our clients take a strategic approach to budgeting that considers two major areas:
A marketing budget should be based on business goals and what it will take to achieve them. This is identified through an integrated plan that we build using our proprietary Revenue Tower™ framework. Create the plan first with the goals in mind and identify performance metrics for every tactic. Then, you can use benchmarks like these as a final comparison check.
In addition to how much you invest, the other half of the equation is how well you invest it. Creativity, both in approach and execution, can significantly impact marketing effectiveness. The key is thinking differently and bringing a novel and creative approach to the integrated effort. A creative program dramatically increases the impact you get from every dollar of marketing investment.
If you are interested in setting or reallocating your budget to build a stronger Revenue Tower and drive better results, let’s talk. Pepper Group has a wealth of information, case studies and experience that can help. And after all, results are what it’s going to be all about in 2018.