Comparisons for your Marketing budget review

Marketers are always curious to know how their budgets compare to other companies.

We often find ourselves asking:

  • How should a marketing budget be divided up between the different media channels/mediums
  • Am I too light in one area?
  • Are others doing things I don’t know about?

 

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There are no hard and fast rules in marketing on how you spend your budget. If there were they would be:

  • Spend it where your customers / future customers are
  • get the best bang for your buck and
  • spend it where you’re getting results.

This will be different for everyone and for every industry. Wouldn’t it be nice to know what percentage marketers spend on print vs digital vs events vs outdoor?

Industrial marketers who are selling B2B products and services in South Africa have to make hard choices because:

  • there are very limited mediums that are targeted towards the industrial buyer
  • B2B industrial marketers often don’t have the big budgets which FMCG products have.If they can afford the big ticket channels like Billboards and Radio Ads they have a huge amount of waste because such a large percentage of that medium is B2C focused. The B2B buyer market is quite small in South Africa and hence doesn’t warrant its own media channel.

Many B2B marketers spend the bulk of their budgets on:

  1. Print
  2. Outdoor
  3. Radio
  4. Eventing

But what are the real numbers behind these areas and what are their relative percentages?

Time for a little research:
Step1: built a marketing budget for the typical industrial B2B company with a turnover of about R200m per year. (It scales very well from R40m to R400m.) I based it on my knowledge of those I have worked in and those I have consulted to in SA.

Step2: I calculated what percentage each medium contributed to total marketing spend in a year.

Step3: I phoned a friend and compared my “experience aggregated” budget to her real budget. In some areas we were quite different but after discussion realised that it was a matter of definition, she had a separate line item for novelty gifts and I had it tagged into events.

Step4: I took this “good times budget” and gave it some punishment. I cut it back 65%, which is the accelerated effect of a few years of constant budget cuts. This resulted in what we can call a hard times budget, where the company turns like a rabid dog onto its marketing department. (PS. the next cut is in marketing salaries.)

Step5: How do we make it a smart budget. I wanted a clever budget that keeps the various industrial B2B budget items adequately handled. Cutting a budget often impacts results. The smart budget is designed to cut spend on typical waste areas, while upping the spend on items that are yielding the best results for B2B companies. The net result is a budget that costs the same or less than the hard times budget but delivers better results than the good times budget. (And yes it is possible)

Here is the budget breakdown in percentages:

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This was such a valuable exercise in summarising discussions I have had in the past that I have decided to make the Excel template I used available for you to download.
You can see the budget numbers I used (annually) and you can input your own numbers in to see how you compare. Then be sure to drop me a mail with some feedback so that I can improve the model.

Download Budget Tool

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