How much should industrial companies budget for marketing?
Many of our manufacturing clients ask us how much they should spend on marketing. Marketing budget benchmarks for manufacturers provide a data-informed starting place.
Things to consider before you set your marketing budget as an industrial company
Benchmarks will get you started, but the best answer to how much your company should budget for marketing depends on your business goals and resources.
From there, consider the likely ROI on your marketing spending. Higher ROI will build greater resources for future budgets.
Starving your marketing budget, on the other hand, could lead to a dangerous decline in sales revenue over time. Likewise, spending that lacks a strategic framework will not get you the ROI you need.
Marketing budgeting requires careful consideration. That’s why I want to cover some strategic marketing tips before we get into the 2022 marketing budget benchmarks for manufacturers.
Questions to ask before you set your marketing budget
Do your business goals include ambitious growth plans?
What about a new product launch?
Will you pursue rebranding or an updated brand this year?
Do you need to modernize your website?
Could this be the year to invest in more or better marketing videos?
If you answered “Yes,” to any of these questions, then you need to be at the higher end of the marketing budget spectrum.
Setting goals and making a marketing plan that will deliver results
Once you have defined your business goals, you will need a strategic marketing plan designed to achieve those goals. See this case study of Ability Engineering as an example of what goal setting and planning looks like.
The Ability Engineering representative expressed the “goals first” approach well in this testimonial quote:
“StratMg did more than provide a solution based on just our needs, they implemented a strategy based on the results we were looking to achieve. With this results-focused approach, it was easy to see the impact their efforts made throughout the life of the project.”
How marketing automation fits into budget planning by helping you measure ROI
Using a marketing automation platform, you will gain access to abilities that otherwise elude the marketing and sales teams:
Monitor and respond to prospect and customer behaviors
Design and modify email, social, and search campaigns based on performance data
See what works well and what needs improvement
Find the gaps in your customer journey and fill them in with content that converts
Define and measure metrics for success
Make continuous improvements based on what you learn
Personalize the user experience and generate interactive marketing content
How much are manufacturers spending on marketing?
The results of the most recent CMO Survey, published in February 2022 show that, like other industries, manufacturing companies increased how much they spent on marketing.
B2B product manufacturers on average spent 8.8% of their annual budget on marketing in 2021, up from 4.1% in 2020.
B2B product manufacturers spent 9.4% of annual revenue on marketing budgets
From 2020 to 2021, product manufacturers increased marketing budgets by 6.0%, and planned to increase marketing budgets by 9.2% in 2022.
What do manufacturers spend their marketing budget on?
Again, how you allocate your budget will depend on your goals. Here I summarize spending trends that the CMO research found.
Customer experience initiatives: Mid-sized B2B product manufacturers spend 11.6% of their marketing budget on customer experience.
Digital marketing accounts for 53.2% of B2B product marketing spending, and, businesses expect to increase digital marketing spending by 16.2% in 2022.
Traditional marketing spending has hit bottom and started to bounce back with companies planning to increase traditional marketing spending by 2.9% in 2022.
Customer relationship management spending hit a historic high last year and is expected to continue to increase.
New product introduction spending was expected to rise 8.8%.
Allocate marketing spending based on your company’s sales needs
In summary, the key to marketing budgeting isn’t about what everyone else does, it is about understanding your business goals. Often, this relates to the characteristics of your sales funnel.
Do you have a lead acquisition a gap?
Are you having trouble pulling prospects through the funnel?
Or is your issue deeper in the funnel with lagging sales conversion?
What other opportunities can you identify to improve results?
A performance analysis of your current initiatives will help you answer these questions. Combined with your marketing goals, this information should give you what you need to determine not only how much, but also where to allocate your marketing dollars.
What are you hearing about marketing budgets and spending priorities? We’d love to hear from you! Connect with us on LinkedIn or Tweet us. Or, if you prefer, let’s talk!