Deciding how best to use your company’s marketing budget can be fraught with confusion and more than just a touch of anxiety. Businesses, big and small, often struggle with finding answers to questions like: “which marketing method works best?” Or “where are others in my industry spending their marketing budgets?”
In the worst case scenario, a marketing campaign is launched in scattershot fashion without a proper budget, a solid plan, or based off of weak secondhand data (for example, running Google ads simply because you read you were “suppose to”.)
Funnel Amp has put together this post specifically to help answer some frequently asked questions on the subject. We hope you find the information useful and that it assists you with making better decisions with your online marketing. If you’d like more in-depth guidance with your next marketing campaign, feel free to tell us where you need help.
What are businesses spending on marketing? An industry breakdown…
As you can probably guess, the amount spent on marketing varies vastly by industry. Knowing where and how your competitors are investing their marketing budgets can provide valuable insight into what you’re doing right (or wrong) with your own marketing dollars, as well as reveal important developing trends.
Read the CMO Survey
Every marketing plan should start with solid data and one of the resources Funnel Amp frequently recommends is the biannual CMO (Chief Marketing Officer) Survey.
Duke University in collaboration with Deloitte LLP and the American Marketing Association poll around 3000 companies to gather data on current marketing and advertising trends; below we highlight some of the more valuable points regarding industry spending. You can download the most recent survey and past publications by visiting the Deloitte website.
Recent CMO Survey Highlights:
- On average, companies spent around 11% of their total annual budget on marketing.
- Companies that are B2C often spend more than B2B since their products and services are targeted at a larger customer pool (though trending data shows this number is coming down).
- Out of all of the industries surveyed in the past year, consumer packaging spends the most on marketing at 24%, while the energy sector spends the least at just 2%.
A common budgeting suggestion is to reinvest around 10% of revenue back into marketing. Based on the survey data, the actual average spent on marketing by companies was 7.5%, with consumer-focused businesses once again taking an outlier position at 18.9%, and manufacturing only reinvesting 2.4%.
According to survey results, when defining what encompassed a total marketing budget, companies included: social media spend, tools for mobile marketing (such as chatbots, messaging apps, direct push, etc.), sales staff, marketing research, and analytics in their budgets.
If you need quick ROI Google and Facebook ads are attractive, but pricey
When companies approach Funnel Amp wanting marketing help, and they preference needing ‘quick’ results we know in most cases what they’re seeking is a PPC (pay-per-click) campaign, usually using Google or Facebook.
Why these two companies? Because they dominate the lion’s share of search engine and social media markets (Google controls 92% of search engine traffic and Facebook commands nearly 70% of social media activity).
Many companies also rely heavily on paid search to generate traffic for their business because data and results can be gathered quickly. PPC overall tends to have high conversion rates, and a marketing manager can control with greater precision where traffic is directed (to an optimized landing page for example).
While high conversion and quick data are very attractive reasons to utilize paid search, a full picture of the effectiveness of this method of advertising is not complete without specifically looking at return on ad spend. A few facts to consider:
- Facebook social media ads cost less than Google search ads, however Google ads have a higher conversion rate.
- Facebook users are in less of a mind frame to “spend” than someone actively searching for a solution using Google.
- Currently, you can get a much better return on ad spend with Facebook ads, but Facebooks ads are becoming more expensive.
- Eventually there will be little to no difference in price between running a Facebook ad campaign versus a Google ad campaign.
Although paid traffic advertising exhibits faster results than most forms of marketing, and it’s definitely cheaper than legacy forms of advertising (television, radio, and print) it has to be utilized with caution. It’s extremely easy to blow through a PPC marketing budget without appropriate pre-planning and competent campaign management. For the highest return on PPC marketing, we suggest using this method of advertising only if:
- You have the available ad spend for it; at the very least $500 per month, more realistically, at least $1500-$2500 per month.
- You already have conversions and customers so you have a solid idea of whom you should target and what type of product or service will lead to higher conversions.
- You are ready to commit to a campaign that will run for at least 3 months uninterrupted, with 6 months being more ideal
Which type of marketing produces the highest ROI and longest lasting benefits?
Organic search optimization (SEO) and content marketing are the pillars of continued, natural traffic to your business. Organic search provides the highest ROI among digital marketing channels and of all online marketing methods, SEO and content marketing have the longest shelf-life.
Content marketing consists of regularly developing content like blogs, whitepapers, optimized landing pages, podcast transcripts, video, etc. to establish your business as an authority in your industry, educate and inform your customer base, and encourage them to take action.
SEO, in particular on-site SEO, takes your published content and makes certain that it’s properly optimized to ensure it pops up when your target audience is conducting an online search. Savvy businesses utilizing SEO and content marketing have been found to enjoy 6x higher conversions on their websites.
In comparing the pros and cons of various marketing methods, the one potential drawback of SEO and content marketing is that it’s not as fast as paid search. Companies engaging in this method of marketing should be ready to commit to 6 months or more of campaign activity to see a return—however, the cost effectiveness and high ROI for content marketing and SEO make it a worthwhile investment.
Although one blog post will not double your sales overnight, continued effort in producing high-quality content will have compounding effects that are greater than other types of digital marketing.
And let us not forget Email
Email as a method of communication is 40 years old now, and while it’s a little long-in-the-tooth compared to other digital marketing platforms, it continues to be an important pillar of a company’s marketing tool chest. It’s especially worth noting that when you deploy content on other companies’ platforms (social media pages, Amazon listings, etc.) the clients you attract are not “yours” until they begin to engage you directly.
Your email list is an incredibly valuable asset that will continue to deliver over months and even years. Email lists help cultivate customer loyalty, brand awareness, and allow for low cost, effective promotional campaigns for your company.
While retooling your marketing budget, avoid these common mistakes
Now that you’re familiar with some key best practices for approaching marketing, here is a roundup of what to avoid as you plan your next campaign:
- Avoid bad data. It’s crucial for your business to make sure the data you’re using is accurate. This will go a long way to prevent loss of money and time wasted on efforts that don’t match your business’ specific needs or goals.
- Ensure your marketing is driving sales. There is a saying in digital marketing: if it wasn’t tracked, it didn’t happen. Make sure that you install an analytics tracker on your website such as Matomo or Google Analytics to count conversions. Most SaaS applications (like Mailchimp, Hubspot, Shopify, etc.) along with any advertising platform will provide further valuable statistical data to round out your analytics report.
- Lastly, test methods to see what works best for your business. Give a marketing method a try and double down if it works. What will work for your business is likely a hybrid of several methods; keep experimenting, pivot and refine according to your needs.
With many marketing methods available, it’s important to make sure your chosen strategy is tailored to what works for your industry and your company. Gather as much data as you can before launching into a campaign, and ensure you have a solid plan in place, as well as available budget to commit to a long term campaign since longer campaigns produce greater results.
We hope you found this post informative (and inspiring!) If you’d like a helping hand with your marketing strategy, don’t feel shy about reaching out to us. Tell us about your goals for attracting more traffic, leads and customers, we’ll work closely with you to achieve it.
About the Authors
Head Project Manager / Developer
Sequoia is the founder and Head Project Manager at Funnel Amp. She launched the agency to provide clients with access to full-stack content marketing services that focus on high-quality and conversion optimization.
Content Marketer / Copywriter
Dhoof is a freelance content writer. When he’s not writing for Funnel Amp, you can find him working with underrepresented youth at the Rochester International Youth Organization, and reading up on value investing.