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How Much Should You Actually Spend on Marketing?

Mountain Pool Image - How Much Should You Spend on Marketing?When it comes to marketing, there are endless ways to utilize your budget, whether it is scaled up or sized down. But the question always boils down to: how much, exactly, should you be spending on marketing?

Over the last two decades, we have witnessed a shift within the marketing space , alongside a massive growth in consumer spending power . With more tools, channels and capabilities available than ever before, businesses have invested more of their budget into marketing to remain relevant and attract new consumers. In fact, 60% of brands that increased their media spending last year saw a more significant ROI.

Despite the fluctuating economic climate, most marketing teams do not plan to pull back on their budget. According to a HubSpot survey, nearly half(47%) of marketers reported a budget increase for 2023, while 45% reported their budgets to remain the same. With consumers spending less, there is less demand, which increases competition. More competition leads to more advertising and therefore, higher costs. With everyone trying to fight for a smaller slice of the market, navigating marketing avenues has never been more complex (and expensive).

Regarding sectors, B2B companies spend an average of 7.8% on marketing, whereas B2C businesses have a higher spend of around 15%. Those averages break apart even more when you consider individual industries, which is another crucial part of the puzzle. For example, industries that historically spend less on marketing, like education and construction, spend as little as 3%. In comparison, industries like technology and service consulting spend around 21%. These benchmarks help us to better understand how much you should spend, and may also reveal opportunities for how you can stand out and grow your business.

Keeping a pulse on the evolution of the market ensures we can help our partners navigate the market, plan effectively and develop a budget that makes sense.

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Strategize Before Spending

Before determining an exact budget, it is important to first determine your goals and KPIs for the year ahead. As a starting point, we sit down with our clients to pose the following questions to help determine a realistic and effective budget:

  • What percent of your revenue can you invest in your marketing spend?
  • How does that percentage match up with your competition?
  • What is your average cost per lead?
  • What is your typical acquisition percentage?
  • What is your average cost per acquisition?
  • What are your pace and revenue goals for the year ahead?

Once budget and KPIs are established, a deeper dive into channel optimization can begin:

  • What channels are right for the audience you are seeking?
  • What are the effective rates of spend on each preferred channel?
  • What is going to yield the most effective ROAS?

As the conversation grows into more specific marketing avenues, we can better prioritize which platforms and channels are best suited for your budget and industry.

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Taking a Holistic Approach

When we discuss marketing budgets with our clients, we take a holistic approach based on organization objectives, effective budgets to achieve those objectives and prioritized campaigns to yield the most favorable results. Our partnerships are exclusive, meaning that we will only work with one organization in a specific market and vertical. Within such a competitive market, having a marketing partner dedicated to your success and your success exclusively makes all the difference.

All marketing budgets vary significantly, but as your digital marketing partner, it is in our best interest to help you determine a marketing budget and build a strategy that will actively contribute to your overall growth for years to come.

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