Three Considerations for your B2B Marketing Budget

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Most B2B company leaders understand the need for a strategic marketing budget: it can help build awareness for your brand, prompt partnerships and turn cold leads into hot prospects. But many executives underestimate the work, time and money required before teams see significant results. If you’re not seeing as great a return on your marketing spend as you would like, there are a couple things that might be getting in the way.

Consideration No. 1 – It might be time for a budget increase:

A recent CMO study found that as overall revenue company revenue increases, total marketing spend decreases. Firms operating with less than $25 million typically allocated 11 percent to marketing spend, while firms with $26-99 million in overall revenue spent only seven percent of that on marketing:

Sales                              Marketing

<$25M                              11.10%

$26-99M                            6.90%

$100-499M                        4.50%

Companies that do not invest the right proportion of their revenues in marketing can’t confidently expect to reach their desired ROI. To get big rewards, teams need to be willing to spend a little more at the outset.

Consideration No. 2 – You might need to reallocate your budget:

You can’t simply increase the marketing budget and expect the results to follow. To really be effective, you have to focus your time on the marketing initiatives that are going to help you reach your set business goals. A Forrester survey on the allocation of B2B marketers’ budgets revealed the largest and second largest portions of marketers’ budgets accounted for in-person conferences, trade shows and events (14 percent) and digital advertising/marketing (10 percent), respectively. One of the smallest aspects was testing new market innovation (two percent).

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Budget allocation should be indicative of the organization’s priorities. For example, if a company’s primary marketing goal is to increase sales to existing customers, but it is only investing two percent of the marketing budget into demand generation nurture campaigns, it will not see impressive ROI. And if the marketing budget is already less than 10 percent of the overall company’s budget, then the nurture campaign budget is basically nonexistent. Brands can’t afford to be cheap if they are looking to disrupt the market and achieve lofty goals; an effective marketing budget spends the required dollars to match the goals trying to be achieved.

Consideration No. 3 – Plan for the future:

The marketing industry shifts constantly, and to stay ahead, companies must be on top of trends in order to plan for how a budget will change in the future.

The same CMO Survey revealed that, on average, a B2B company selling a product is spending seven percent of its marketing budget on social media. In the next five years, that number is projected to jump up to 17 percent – a 10 percent increase. The extra 10 percent isn’t going to appear out of thin air; it’s going to be sourced from decreasing the budget of other marketing channels that are no longer as effective as social media.

Shifting a budget in any dramatic fashion must be strategic, gradually implemented over time, and clearly map to your business goals. If a company isn’t staying on top of marketing and industry trends and anticipating how its budget may change, it cannot expect to stay ahead of the competition or achieve a solid ROI in the long-term.

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