Milan Kendra once said: "Business has only two functions - marketing and innovation." Although ongoing research shows a high return on investment (ROI) in marketing, companies often neglect this important part of their operations, focusing only on innovation. Investing in both is important to support a long-term strategy of sustainable growth.
Companies must invest resources quickly in their marketing budgets; The key is to determine which investment methods best suit your company's goals. Whether it's a product launch, branding initiative or general promotion of goods and services, marketing investments can definitely pay off if done right.
What is your total marketing spend?
When companies plan their marketing strategy, the money allocated is called marketing expenditure. According to the Council of Chief Marketing Officers, many CMOs believe digital marketing will account for three-quarters or more of their budgets within five years.
According to Forrester's US digital marketing forecast, this trend will continue and become more pronounced in 2019:
According to Forrester's US Digital Marketing Forecast, 2019 will bring significant growth in digital marketing, which supports this conclusion.
Marketing giants will invest more than $103 billion this year in search marketing, advertising, social media marketing and email campaigns.
A comprehensive and successful marketing campaign requires a solid budget to cover all aspects of the strategy:
Without understanding the full picture, companies are blindsided and potentially missing out on potential profits.
"It's important to have a budget for your logo, website, and other business tools right from the start. But it's also important to have an ongoing plan and adequate funding. The smartest way to do this is to decide monthly and annual budgets to keep things on track." Marketing Strategy “People are often willing to take on branding projects without thinking about how they will work, like trying to build a car but running out of gas money” – Empire Creative Marketing.
Companies paying attention to digital marketing trends understand the benefits of going digital. In 2015, 28% of marketers reduced their advertising budget to focus on running more effective content marketing campaigns, resulting in a 3x increase in revenue and a 62% reduction in costs! Not surprisingly, many companies are now making the switch and allocating a portion of their budgets to this strategy.
With digital marketing activities taking up an average of 60 percent of a salesperson's time, it's becoming increasingly clear why it's one of the most in-demand skill sets in today's world.
So what is the magic number?
There is an old saying among marketing experts that a business must allocate 10 percent of its revenue to its marketing budget for a product to be successful. The most valuable brands are those that rank high in search results. The companies with the highest success rates are those that follow successful practices.
Although there are exceptions to the rule, a Duke University study found that market investments of 11% provided a greater return on investment and increased revenue by 2.5%. Conversely, if you're launching something new like the iPad, you might need more than 20%!
Fortune 500 brands like Pepsi should expect to allocate no more than 5% of their total revenue to digital marketing strategies.
According to the CMO Survey, marketing spending as a percentage of company revenue has increased across all sectors since 2013. The study tracks this growth in both economic sector analysis and company sales revenue.
About a big spender
It's no secret that SaaS marketing and sales management companies need to invest more in their advertising efforts. At 53%, Salesforce allocates more than half of its revenue to sales and marketing - a testament to how important advertising spending is to such organizations.
Similarly, in 2014, the company spent 38% of its total revenue of $331 million on marketing, and the following year the increase was 16%. According to Light Financial Corporation, companies that spend more money on marketing are growing steadily.
Tableau, a leading provider of business intelligence software, expects sales and marketing costs to become a significant operating expense as it expands.
Like Salesforce, Tableau allocates roughly 53% of its revenue to sales and marketing. It is important to think carefully about how much money you should spend on advertising and develop a strategy for it. Percentages alone are not enough to guarantee success.
Can't spend more than half of your annual income on marketing? Small businesses are supported at the 10% level due to the marketing activity spending limit. If that's still a lot of money, why not aim for 5% and use the return as an indicator of whether you're spending wisely?
The more you invest in marketing, the higher your profits. Be sure to consider the level of your business and brand awareness when making your decision.
In addition, new brands can direct their marketing budgets to increase demand, while established brands can spend less due to longer exposure.
"Do you have a marketing job?" have you been asked yet? If so, the person is raising awareness, attracting people, or making a sale. When I ask this question, I want to know if your marketing efforts will generate a profitable business. After all, that's what we do marketing for - to make money! Therefore, anyone investing in this project should be able to easily determine its compatibility and success rate. - Chris Lyon, Web Strategies.
summary
As global media spending continues to grow and is expected to reach an unprecedented $2.1 trillion this year, companies must consider whether their investment will yield a sufficient return. A well calculated marketing strategy can be a powerful tool for a successful business; Therefore, companies need to make sure that they are spending the right amount of money on creating content and social media campaigns that are sure to deliver good results. There is no doubt that today's modern marketing trends depend on effective marketing communications - so feel free to take the necessary steps to succeed!
Marketing should be seen as an investment in growing your business, not an expense. To be competitive, you can have a budget of 5%. However, allocate at least 10% of all revenue to marketing efforts to generate large profits and increase profits.
