Answering the question “How much does marketing cost?” is tricky. We can give you some examples of industry budgets and estimates, but it varies greatly depending on your revenue, your goals, and your market position. Established brands have a significant advantage, while newer entrants likely need to spend more to gain awareness. A new product launch may require more investment. If it’s time to rebrand your business, your rebranding budget may need to be adjusted.
Marketing is not a one-size-fits-all solution. There are, however, some baselines that can help. First, we want you to be aware of the dramatic shifts in B2B sales that will impact your marketing budget today.
B2B Marketing Has Changed Dramatically
The current global health crisis has affected people in more ways than just health-wise. In business, it’s caused companies to reevaluate their entire business models beyond just having employees working from home. It has accelerated the digitization of customer interactions by years.
B2B buyers were already moving online with their research before the pandemic hit. Since the start of the pandemic, however, the move away from person-to-person and printed sales material to digital has become complete. B2B buyers are now 80% more likely to conduct business digitally compared to the pre-pandemic era.
Clients also no longer want to meet. Those that do are aging and retiring, just like many industry salespeople. If you haven’t fully embraced a digital strategy for your B2B company, you’re now in the minority and run the risk of falling further behind.
Marketing Budgets and Costs by Industry
Despite reduced overall spending, marketing spending on digital solutions grew 11.5% in 2020. Compared to revenue, the average marketing expenditure across all industries rose to 13.2% — the highest levels in the history of the CMO Survey, which tracks marketing expenditure across business sectors.
As companies rebound, Deloitte predicts brand digital marketing spending will increase by 14.3% in 2021. On the other hand, marketing efforts to build brands will increase by 9.5%, while traditional advertising will decrease by 0.2%. Clearly, B2B marketers are adapting to the way B2B buyers are doing business.
As you’ll note, marketing costs can vary wildly by industry, but here are the averages — represented as a percentage of revenue — for companies in the $10 million to $200 million range.
- Oil and Gas: 0.75% to 3%
- Chemical Companies: 3%
- B2B Services: 7% to 9%
- Technology: 9% to 50%
Software as a Service (SaaS) companies tend to be the heaviest spenders and continue to grow in terms of monthly subscribers.
Marketing Costs by Growth Delta
Another way companies approach a B2B marketing budget is by focusing on the growth they want to experience.
Examine the Annual Recurring Revenue (ARR) that your company brings in each year and forecast the amount of growth you want to achieve in the year ahead. This is your growth delta. For example, if your organization earns $50 million in ARR and you hope to grow your revenue base to $52 million in the coming year, the $2 million difference is your growth delta.
B2B companies typically spend 40% of their growth delta on marketing to achieve their goals. In this case, 40% of $2 million would reflect an increase of $800,000 in marketing expenditure.
Building a Market Strategy
While every business approaches their marketing a little differently, they generally follow the same process.
It all starts with defining a strategy. This typically includes holding a strategy workshop, onboarding a marketing team, and focusing on aligning sales and marketing teams. These strategy workshops should put intense focus on creating an effective strategy specific to the desired results.
Upon formulation of the strategy, planning and execution will follow.
A big part of your strategy will include a well-designed website that is built with SEO and lead generation baked in. Your website becomes the central hub for prospects and customers. With the right marketing strategy that incorporates strong brand messages and core selling messages, your website becomes a 24/7 hub for your clients, potential clients as well as stakeholders.
So, how much does a B2B website cost?
Well, expect to pay between $20,000 and $60,000 depending on the scope and scale. This includes brand development, designing and building out all the pages, creating navigational flow, and imagery.
For engineering, science-based, or tech companies, white papers and gated content need to be part of the plan. Articles, blog posts, and resource hubs should be part of the overall marketing strategy. Sales presentations and online advertising/marketing should be part of your automated and segmented marketing strategy to grab attention and nurture prospects through the customer journey.
How Much Does a Marketing Agency Cost?
How much a marketing agency will cost will depend on your needs. A larger agency will bring greater resources than a smaller one, so it’s going to cost more. Costs will also depend on your current market positioning, where you want to go, and your business objectives.
If you have several agencies bidding on the same parameters, you’ll likely see estimates in a similar price range.
If you’ve set a marketing budget or use one of the percentages of revenue averages to create a marketing budget, you can work within it and find the best marketing group for the job. Just be sure to choose an experienced group that will grow your business. In reality, it’s more about return on investment (ROI) than pricing. 10% off won’t help you if you can’t create sustainable growth.
Just as important is the trust factor. The success of your business will depend, in large part, on the digital strategy you deploy, so you need to work with people that your trust.
While an internal marketing team is important to any successful business, it can also be difficult to stay on top of the latest trends, platforms, and technology. Whether you partner with an agency, outsource your marketing, or add specialists to augment your staff, you also need the marketing tools to get the job done efficiently.
According to Gartner, more than half of all marketing budget dollars are spent on outside agencies and marketing technology (MarTech). The more you leverage automation, the more time your internal team can spend on building your brand and executing your marketing strategy.
Big Ideas that Drive Business
S.O. Creative specializes in brand development and integrated B2B marketing solutions for some of the country’s largest tech, energy, chemical, oil and gas, and B2B service companies. We focus on value creation by concentrating on customer engagement and provide big ideas that drive business. If you need a brand development partner or an integrated B2B marketing solution, fill out our online form to schedule a consultation with one of our brand strategists today.