- Contest Factory
- August 22, 2023
2024 Marketing Budget: How Much Should You Spend on What?
As the landscape of marketing continues to evolve, understanding how to create and allocate your budget effectively is paramount. In the ever-changing world of marketing, it’s essential to adapt to shifting trends and consumer preferences. Let’s review the dynamics of crafting your marketing budget for 2024 and provide actionable strategies to optimize your spending.
Marketing Budget as a Percentage of Revenue
It’s common practice to report your marketing budget as a percentage of revenue. This also enables you to be prudent and pull your budget in or increase your budget based on marketing campaign performance. Using this common metric also enables you to work towards reducing the percentage you allocate to pay as efficiently as possible for your customers.
The allocation of marketing budgets has evolved over the past 12 years, with an average of 6.4% to 9.5% of company revenue across almost all industries. This represents a growth of over 5% since 2011.
Across different industries, the percentage of revenue designated for marketing varies. B2B product industries allocate an average of approximately 7.8%, similar to B2C services (6.5%) and B2B services (5.9%). The highest allocation is observed in the B2C product sector, with a notable 15.1% of total revenue.
Which Organizations Spend the Most on Marketing & Advertising
Which companies allocate the highest budgets for advertising? Leading global advertisers in 2021 | Statista During 2021, Procter & Gamble claimed the position of the largest global advertiser by investing a staggering 8.1 billion dollars in promotional endeavors. Following closely, Amazon secured the second spot with an ad expenditure of 4.8 billion dollars, while Unilever rounded out the top three by dedicating 4.7 billion dollars to their advertising efforts. This is quite the shake up in the top 3, as Unilever has been known as the global leader in ad spending for decades.
Which Industries Spend the Most on Marketing & Advertising?
According to a recent survey by Deloitte, here is the average industry spend by industry. These averages are based on how these industries spend their holistic budget, recognizing one industry may have higher operating costs or lower margins, so marketing fluctuates to balance this equation.
The leaders of the pack are consulting and technology with a tie at 21% followed by healthcare at 18%.
|Average Marketing Budget as a % of Company Revenue
|Banking & Finance
These industry-specific insights serve as valuable benchmarks to guide your budget allocation decisions. In industries where marketing budgets are relatively modest, there exists a unique opportunity for your team to stand out and demonstrate the impact of effective marketing strategies.
Inside a Typical Marketing Budget
The dynamics of marketing spending are shifting dramatically. Traditional advertising investments have consistently decreased, while digital marketing spend has grown substantially year after year. Balancing marketing budgets across offline and online channels requires strategic planning. According to Gartner’s estimates, a shift toward equilibrium is observed with 56% allocated to digital channels and 44% to offline channels.
It’s important to invest in your marketing efficiently. This means buying your new customers for the lowest possible price. This means you will calculate your cost to acquire a customer from each medium to determine where to spend the most and least. You also need to remember the funnel and at which stage you are appealing to a customer. At the top of the funnel, advertising to customers who do not know you will cost more, but it’s imperative to fill your funnel or the bottom will only be in-market shoppers and you will miss out on a lot of wins.
Understand Your Customer Journey
Before allocating any budget, take time to understand the journey your customers undertake. Tailoring your efforts to meet their specific needs and preferences ensures the highest ROI. Use our handy customer journey template to identify yours, if your organization has not done this exercise.
Social Media Marketing Budget
Social media marketing stands as a pivotal pillar of modern marketing strategies, essential for connecting with audiences in an increasingly digital world. Allocating a significant portion of your marketing budget to social media is not only prudent but necessary to leverage the consumption metrics and engagement potential these platforms offer. With platforms like Instagram, Facebook, and Twitter boasting billions of active users, the opportunity to reach and interact with your target audience is unparalleled. Engagement metrics, such as likes, comments, shares, and clicks, highlight the direct and impactful nature of social media interactions. For instance, on Instagram alone, brands experience an average engagement rate of 4.7%, which surpasses other digital advertising channels. With this in mind, investing in social media marketing ensures your brand’s visibility, fosters genuine connections, and maximizes your marketing efforts for lasting success in the digital landscape.
Video Marketing Budget
Video marketing has emerged as an indispensable component of modern marketing strategies, garnering significant attention due to its remarkable consumption metrics and unparalleled engagement levels. As audiences increasingly favor visual content, allocating a portion of your marketing budget to video marketing becomes not just advisable, but imperative. With statistics indicating that video content is consistently preferred and shared more than any other type of content, investing in video marketing ensures that your brand’s message resonates powerfully, capturing attention and fostering a deeper connection with your target audience. As consumption patterns evolve, embracing video marketing within your budget demonstrates a commitment to staying relevant and effectively engaging with your audience in a dynamic and impactful way.
Content Creation Budget
Repurposing and updating evergreen content serves as a strategic approach to not only extend its lifespan but also to maximize its value without incurring additional costs. By revisiting and reimagining existing content, businesses can breathe new life into valuable pieces that have stood the test of time.
This practice is especially relevant in a digital landscape where content saturation is a challenge. Repurposing evergreen content allows companies to reach new audiences, reinforce key messages, and adapt to evolving trends—all while maintaining the authenticity and relevance of the original material.
The cost of content creation can vary widely depending on the type of content being produced. Here’s a general overview of estimated costs for different content formats:
- Photography: Photography costs can range from a few hundred to several thousand dollars per photoshoot, depending on factors like location, props, models, and complexity. Repurposing photography content might involve selecting and editing existing photos for different campaigns or platforms.
- Video: Video production costs can vary significantly based on factors such as video length, production quality, scripting, editing, and post-production effects. On average, a professionally produced video might cost anywhere from a few thousand to tens of thousands of dollars. Repurposing video content could involve editing existing footage for new messages or platforms.
- Written Content: Written content creation, such as blog posts or articles, can range from $100 to $1,000 or more per piece, depending on length, complexity, research required, and writer expertise. Repurposing written content could involve updating, expanding, or adapting existing articles for different audiences or channels.
- Slide Shows: Creating slide shows or presentations can cost around $500 to $1,500 or more, considering design, content creation, and visual elements. Repurposing slide show content might involve repackaging existing slides into new presentations or formats.
- Puzzles and Interactive Content: The cost of creating puzzles, quizzes, interactive infographics, and similar content can vary based on complexity and functionality. On average, these might cost a few hundred to a couple of thousand dollars to develop. Repurposing interactive content involves adapting existing content for different topics or campaigns.
It’s important to note that these are general estimates and actual costs can vary based on factors like the content’s complexity, the level of customization, the expertise of the creators, and any additional services required.
By strategically repurposing and updating content, businesses can make the most of their existing investments while delivering fresh value to their audiences. This approach optimizes resources, extends content reach, and ensures that the content’s original message continues to resonate effectively.
Real Time Bidding Advertising
Real-time bidding (RTB) display advertising is a dynamic and data-driven approach to digital advertising that enables advertisers to bid for ad placements in real-time auctions. It allows brands to target specific audiences based on factors like demographics, browsing behavior, and interests, ensuring that their ads are delivered to the right people at the right moment. RTB empowers advertisers to optimize campaigns for maximum effectiveness by adjusting bids and targeting parameters in response to real-time data and performance metrics.
Allocating a marketing budget to real-time bidding display advertising requires careful consideration of various factors:
- Campaign Objectives: Determine your campaign goals—whether it’s brand awareness, lead generation, conversions, or engagement. Different objectives may influence budget allocation.
- Target Audience: Identify your target audience and assess the value of reaching them through RTB. Understand their online behavior and preferences to tailor your messaging effectively.
- Competition: Consider the competitiveness of your industry and the demand for ad placements in your target audience segments. Higher competition may require a more substantial budget to secure desired placements.
- Ad Creatives: Budget for creative development, including design and copywriting. Engaging and relevant ad creatives contribute significantly to campaign success.
- Ad Formats: Different ad formats (banners, videos, interactive ads) have varying costs associated with production and placement. Factor these costs into your budget.
- Testing and Optimization: Allocate resources for A/B testing, performance analysis, and ongoing optimization. Adjustments based on real-time data enhance campaign effectiveness.
- Platform Fees: RTB platforms and demand-side platforms (DSPs) may charge various fees for using their services. Account for these fees when setting your budget.
- Bid Strategy: Decide on bidding strategies (e.g., cost-per-click, cost-per-impression) that align with your goals. Budgets should accommodate the chosen strategy.
- Data and Analytics: Investing in data analysis tools and resources enables you to derive insights and make informed decisions for effective campaign management.
RTB budget allocation can vary widely based on factors like industry, target audience, campaign objectives, and the overall marketing budget. Traditionally display media has been purchased direct from publishers at a much higher rate. Now, with RTB, you get fractional costs due to the publisher offering remnant inventory to the RTB demand side platform. You will still want to buy priority placement inventory with the publisher directly. However, it’s safe to say that should be minimal compared to your RTB spend as it is much more efficient.
Pay Per Click Marketing Budget
Google AdWords, now known as Google Ads, is a powerful online advertising platform that allows businesses to display targeted ads to potential customers when they search for specific keywords on Google. One particularly effective aspect of Google Ads is its ability to tap into in-market search behavior, which has proven to yield higher conversion rates and is positioned lower in the marketing funnel.
In-market search behavior refers to users actively searching for products or services that indicate a strong intent to make a purchase. These users are already researching options and are closer to making a buying decision. As a result, ads shown to users with in-market search behavior are more likely to resonate with their needs, leading to a higher likelihood of conversions.
Allocating a solid budget to Google Ads for targeting in-market search behavior involves a strategic approach that considers your keywords, search volume, and cost per click.
Over The Top Marketing Budget
Allocating a budget to Over-The-Top (OTT) media advertising involves considering both its cost and effectiveness in reaching your target audience. OTT refers to content delivered via the internet to viewers on connected devices, bypassing traditional broadcast methods. With the rise of streaming platforms and cord-cutting, OTT has become an attractive advertising channel. However, the optimal budget allocation varies based on several factors, including reach, CPM, CTR, CTA, and LTV.
eMail Marketing Budget
Email marketing is widely recognized as one of the most efficient and cost-effective marketing strategies available to businesses. This is primarily due to its unique attributes that allow you to maximize your budget while maintaining control over customer data and communication. While this is one of your most important channels, it is also one of your most affordable channels. Budgets here should be less than 3% of your total marketing budget. Here’s why allocating your budget to email marketing is a smart move:
- Ownership of Customer Data: With email marketing, you have direct access to your audience’s contact information and preferences. Unlike other advertising channels where you’re renting access to an audience, email marketing empowers you to build a valuable database of customers and prospects. You own this relationship.
- Cost-Effective Communication: Email campaigns allow you to reach a large number of recipients with relatively low costs. Your primary expenses are centered around your email service provider (ESP) costs and creative development.
- Personalized Messaging: Email marketing enables personalized communication based on user preferences, behaviors, and purchase history. This tailored approach increases engagement and conversion rates, resulting in a higher return on investment (ROI).
- Segmentation and Targeting: By segmenting your email list based on demographics, behavior, or interests, you can send relevant messages to specific audience segments. This targeted approach enhances the effectiveness of your campaigns and reduces wastage.
- High Engagement Rates: Compared to other digital channels, email marketing boasts higher open and click-through rates. When your content is valuable and resonates with recipients, they’re more likely to engage with your messages.
- Automated Campaigns: Email automation allows you to set up triggered campaigns based on user actions. These automated workflows nurture leads, onboard new customers, and re-engage dormant subscribers without continuous manual effort.
- Integration with Other Channels: Email can complement other marketing efforts, such as social media and content marketing. By including email in your multichannel strategy, you create a cohesive brand experience for your audience.
Taking these items into account, you will design a well balanced budget with a solid omnichannel marketing strategy. Continue to analyze your response rates, cost to acquire, and lifetime value to optimize and balance your budget.
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