What’s in a Marketing Budget: Past, Present and Future

Hummingbird CreativeAdvertising & Marketing, Social Media

Marketing budgets are like a black box for many of us. What’s in there? What do we put in it? What do we take out? What should we do with it?

When you’re staring into the big black box of marketing budgets, it helps to know what other companies spend on marketing—and how they’re shaping their budgets for the future.

Two well-known surveys of Chief Marketing Officers offer a picture-window view of the norms and trends of marketing spending. The CMO Survey is conducted twice yearly among US CMOs as a partnership between Deloitte, Duke University’s Fuqua School of Business and the American Marketing Association. Gartner’s CMO Spend Survey is conducted annually among marketing leaders in North America and the UK.

We looked at their most recent surveys to get a read on what companies have spent on marketing… what they spend now… and what they expect to spend in the next few years.

How Much Is “Normal”?

What companies spend on their marketing varies—by industry, by type of business and by what they choose to include in their marketing budgets.

As a percentage of company revenue, marketing spending varies among industries. On February 2020’s CMO Survey, the breakdown looked like this. (To see how quickly things can change, take a look at this breakdown from a couple of years ago.)

  • Banking/finance/insurance/real estate – 15.9%
  • Communications/media – 13.7%
  • Tech/software/biotech – 13.1%
  • Service consulting – 8.3%
  • Consumer packaged goods – 7.7%
  • Retail/wholesale – 7.5%
  • Education – 7%
  • Healthcare/pharma – 6.1%
  • Consumer services – 6%
  • Manufacturing – 5.1%
  • Transportation – 3.6%
  • Mining/construction – 1.1%
  • Energy – 0.1%

Marketing budgets also vary by type of business. A company that provides B2B services spends a smaller percentage of its firm’s revenue than a B2C product company:

February 2020 CMO Survey

Since 2011, average marketing budgets as percentage of company revenue have fluctuated from 7.9% (February 2013 and 2018) to a high of 9.3% (2014). Budgets have risen in the past two years from 7.9% to 8.6%. Over the past several years of the Gartner Survey, marketing budgets have hovered around 11% for North America and the UK, taking a dip in 2019 to 10.5%.

Marketing budgets as a percentage of company budgets have been fairly stable on the CMO Survey, generally hovering between 10 and 12% since 2012. In February 2020, B2C products companies were on the high end (averaging 20% of company budgets), followed by B2B products (10.4%), B2B services (9.9%), and B2C services (8.2%).

Want to get a quick read on how much your budget should be? Download this calculator from WebStrategies. Plug in your annual revenue, type of business and percent of revenue generated online to get ballparks on total marketing budget and digital spend.

What’s in a Budget?

Budget statistics are served with a grain of salt, because what companies choose to include in a marketing budget varies. In the most recent CMO Survey, most if not all included social media marketing. About half included marketing training, but only 13.7% included sales staff. The CMO Survey’s Highlights and Insights Report lists typical expenses and what percentage of companies include them in their budgets:

Both CMO and Gartner indicated that many companies rely on outside marketing agencies to meet their needs. Gartner companies surveyed allocated about 25% of budgets toward outside agencies, increasingly for strategy development and strategic activities. In CMO’s survey, companies indicated that outside agencies took on nearly 25% of their social media activities—up from 17% in February 2014.

One significant area of growth in CMO’s survey is customer experience. It’s grown rapidly from around 9% of marketing budgets three years ago to 15% now; it’s expected to hit 20% in the next three years.

The Move to Online, Mobile & Tech

No big surprise, but growth in digital marketing spending far outstrips traditional advertising. Historic data in the CMO Survey indicates that companies’ expected growth for digital has ranged from 8.2% (February 2014) to 15.1% (February 2018), whereas traditional advertising has run in negative territory, with -0.4% growth expected last year. These statistics held true for all types of businesses; only B2B product companies reported positive growth last year (3.73%) for traditional advertising.

Gartner’s survey indicates that paid media rose last year to 25% of total marketing budget. With search advertising, digital ad spending is about 16% of total marketing budget. The digital bucket contains social media, display advertising, video, affiliate/co-op and Amazon—each receiving about a fifth of digital advertising spend. For comparison, 7% of marketing budgets were allocated to offline advertising.

Social media has grown to 13% of marketing budgets in the CMO Survey—the second highest point in social’s steady climb of the last 10 years. Companies with Internet sales understandably spend more on social media than those with none, but companies of all sizes and industries anticipate social media spending to rise by 62% in the next five years, to 21.5% of total marketing budget. B2C services expect the most growth in social.

Mobile marketing is expected to rise over the next five years. Mobile’s percentage of marketing spend has increased steadily in the CMO Survey from 3.7% in 2017 to 13.5% last year; marketing leaders expect it to hit 23.3% five years from now. Healthcare companies expect to double mobile’s share of their spending in the next five years. The largest allocation within mobile spending—about a quarter—goes to social ads, followed by user experience.

That Was Then, This Is Now

Besides year-to-year changes, we now have the elephant in the marketing budget—COVID-19. Big changes have been inevitable as company revenues and budgets shrink and spending shifts.

The situation has warranted a special edition in June 2020 of the CMO Survey. With the onset of the pandemic, 62.3% of senior marketers say that marketing is even more important—but they’re scrambling to pivot and try new strategies, such as digital interfaces for customers (which customers seem more willing to try).

Company budgets and revenues have shrunk, so marketing budgets have taken a hit. But so far, around a third of marketing pros have seen no changes to their budgets. As a percentage of company revenues and budgets, marketing budgets have actually risen to 11.4% and 12.6%, respectively—the highest levels in the survey’s history and a nod to marketing’s role in retaining customers and maintaining brand awareness.

Other pandemic takeaways:

  • Mobile and social spending have increased 70% and 74%, respectively.
  • Spending on customer experience has increased about 10%.
  • Marketers expect a big jump in use of influencers in the next three years, from 7.5% to 12.7% of marketing budgets.
  • Reduction in spending on traditional advertising is huge, with a drop of 5.3% expected over the next year, butdigital is here to stay. About half of digital marketing budgets have remained stable; digital spending that was cut is expected to return quickly.

Lots of things to consider, and lots of changes in the works for everyone. If we can help you shine a little light into the black box of marketing budgets, give us a shout!


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