A Guide to Marketing Budgets (How Much do Your Colleagues Spend?)

Ah, it's that time of year - summer is winding down and we're all gathering data in advance of asking for budget increases. 

But finding comps to justify a marketing budget has been historically challenging. The good news is, we're swimming in a sea of data these days. So we have more clues than normal. 

If you're curious what you should be spending, or how much your colleagues or competitors are spending, keep reading.

Gartner's CMO Spend and Strategy Survey

(TLDR: Gartner found marketing accounts for 9.5% of total company revenue)

Here's the longer story:

The latest Gartner survey reveals that marketing budgets rose to 9.5% of total company revenue in 2022, marking a notable increase from the 6.4% reported in 2021. The study, known as the Gartner 2022 CMO Spend and Strategy Survey, involved 405 CMOs and marketing leaders across North America and Northern and Western Europe. The findings were presented at the Gartner Marketing Symposium/Xpo event, where experts highlighted the trends and implications of the data.

Despite ongoing economic uncertainties, CMOs appear optimistic about their economic outlook. The survey highlighted that 70% of respondents reported budget increases this year. However, it's important to note that even with the rise, the current marketing budgets have not yet reached the pre-pandemic levels. Between 2018 and 2020, the average budget was 10.9%.

The survey further revealed shifts in marketing strategies. Digital channels still dominate with 56% of the marketing spend allocated to online platforms, while offline channels have made a rebound, accounting for 44% of the budget. Notably, social advertising, paid search, and digital display were among the top spending areas across industries.

CMOs exhibited confidence in brand management capabilities, with brand strategy and activation accounting for almost 10% of the budget. However, certain capability gaps persist, including marketing data and analytics, customer understanding and experience management, and marketing technology.

While many industries reported increased marketing spending, there were variations, with financial services leading with a budget of 10.4% of company revenue. Additionally, the survey indicated that 61% of CMOs lack in-house resources needed to deliver their strategies, indicating a challenge in securing the right talent.

As marketing faces a surge in talent demand in 2022, CMOs are urged to prioritize resource allocation to align with their CEO's goals and focus on brand and customer experience.

Statista: Marketing Budget Allocation

(TLDR: 25.4% of marketing budgets in 2022 were allocated to marketing technology, and around 11.2% of marketing budgets were devoted to digital advertising channels in 2021, with an estimated global digital ad spend of 455 billion U.S. dollars that year.)

The longer story with a cheeky segue...

Okay, so average spend is between 9-10% of company revenue.

(Note that it's looking a bit down in 2023 - closer to 9.1%.) 

Still, a solid chunk.

According to Statista, here's HOW CMOs spend that chunk o' change.

Statista's survey spanned North America, France, Germany, and the United Kingdom. Around 25.4% of marketing budgets in 2022 were channeled into marketing technology, or MarTech.

With data-driven strategies like marketing automation and personalization driving efficiency across diverse stages, MarTech solutions have evolved into indispensable components of global digital marketing campaigns.

The current valuation of the marketing technology industry has surged beyond 211 billion U.S. dollars, underscoring marketers' steadfast commitment to bolstering investments in this realm.

Digital Advertising Takes Center Stage

Digital advertising's primacy has been underscored by the results of a recent survey involving chief marketing officers from four major global markets. The findings illuminated a compelling pattern, with digital advertising commanding the largest portion of marketing budgets. Remarkably, approximately 11.2% of marketing budgets were dedicated to digital advertising channels in 2021.

Concurrently, the global digital ad spend was projected to reach an impressive 455 billion U.S. dollars in the same year. As the surge in online consumer engagement, catalyzed by the pandemic, persists, marketers remain unwavering in their commitment to harness the power of digital ad campaigns, recognizing the undeniable allure and effectiveness of these platforms.

SEt Your 2024 Marketing Budget

Budgeting for marketing is a crucial aspect of any business strategy. Here are a few tips to help businesses effectively allocate funds for their marketing efforts:

1. Set Clear Goals: Start by defining your marketing goals and objectives. Whether it's brand awareness, lead generation, or sales growth, having well-defined goals will guide your budget allocation.

2. Understand Your Audience: Know your target audience's preferences, behavior, and buying patterns. This insight will help you prioritize and allocate resources to the most effective marketing channels.

3. Research and Analysis: Conduct thorough market research to understand your industry trends, competitive landscape, and customer needs. This information will inform your budget decisions.

4. Allocate Based on ROI: Focus on marketing channels that historically provide the best return on investment (ROI). Prioritize those channels that have consistently generated leads and conversions.

5. Consider the Marketing Mix: Create a balanced marketing mix that includes various channels such as digital advertising, social media, content marketing, and traditional methods like print and events. Allocate funds based on the relevance of each channel to your target audience.

6. Test and Adapt: Allocate a portion of your budget to experimental campaigns. Test new strategies, channels, and messaging, and analyze their performance. This approach allows you to optimize your budget allocation over time.

7. Use Data Analytics: Utilize data analytics to track the performance of your marketing campaigns. Monitor key metrics like click-through rates, conversion rates, and customer acquisition costs to make informed budget adjustments.

8. Flexibility: Be prepared to adjust your budget throughout the year based on changing market conditions, campaign results, and emerging opportunities.

9. Prioritize Seasonality: Allocate higher budgets during peak seasons when customer demand is higher and adjust downward during off-peak periods.

10. Consider Fixed and Variable Costs: Differentiate between fixed costs (e.g., software subscriptions) and variable costs (e.g., advertising spend). This will help you plan for ongoing expenses and allocate additional funds strategically.

11. Invest in Talent: Budget for hiring skilled marketing professionals or agencies that can execute your strategies effectively. Quality marketing execution is just as important as budget allocation.

12. Emergency Fund: Keep a contingency fund within your marketing budget to address unexpected opportunities or challenges that may arise during the year.

13. Monitor and Evaluate: Regularly review your budget against actual performance. Assess whether your budget allocations are meeting your goals and make adjustments as needed.

14. Educate and Communicate: Ensure that your entire team understands the marketing budget and its goals. Effective communication will help everyone work towards a common vision.

15. Benchmark: Research industry benchmarks to understand the average marketing spend for businesses of similar size and industry. This can provide insights into whether your budget is aligned with industry standards.

Remember that marketing budgeting is an ongoing process that requires adaptability and responsiveness to changing market dynamics and consumer behavior.

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