Outsource2Us breaks down how much you should be spending on marketing to stay competitive in your industry.
Everyone knows the adage – you must spend money to make money. This applies to being able to successfully market your business to potential customers. Although there are marketing activities you can complete without spending money, such as general SEO work or organic social media posting, many of the most effective strategies and campaigns require injecting a budget.
Why do I need a Marketing Budget?
Simply put, your business needs a marketing budget to stay competitive. In 2022, Australia’s marketing sector spent 17.3 billion dollars on internet-based advertising – so if you’re not spending, you’re not competing.
In today’s economic landscape, competition in every industry is fierce, so without a healthy marketing budget, it can be challenging to keep up or get ahead of your competitors. This is especially true if your competitors are allocating much more time and money to their own internal marketing and/or outsourced marketing efforts.
Furthermore, the business landscape is always changing and evolving as consumers’ preferences and behaviours shift. By allocating a marketing budget, you can adapt to these changes by exploring new channels and experimenting with different tactics – otherwise, you’ll get left behind.
So, Just How Much Should I be Spending on My Marketing Budget?
To put your current spending in perspective, below are the average percentage of revenue that businesses in different industries are spending on marketing in 2023 according to Deloitte.
- Banking, Finance, Insurance, and Real Estate – 15%
- Communications media – 7%
- Consumer packaged goods – 24%
- Consumer services – 5%
- Education – 5%
- Energy – 6%
- Healthcare – 11%
- Manufacturing – 20%
- Mining and construction – 4%
- Professional Services – 22%
- Real Estate – 3%
- Technology – 29%
- Transportation – 9%
- Retail Wholesale – 16%
We recommend you review your current spending on marketing and compare it to the above figures. How does your current spending compare to this? If it’s significantly less, you may not be spending enough to keep up with your competitors.
How Should I Distribute My Budget?
So now you’re prepared to invest a bit more to get better results, but what is the most optimal way to split up your spending? This all starts with creating a robust marketing strategy.
Once you’ve established your industry benchmark, you need to consider your marketing goals and allocate your funds accordingly. For instance, if your goal is to gain more followers on social media, it may be wise to dedicate a portion of your budget to influencer marketing or to Facebook, Instagram, and LinkedIn advertising.
Within your budget, you must also factor in subscription costs such as your scheduling platforms, your SEO research software, and graphic design costs. It can be worthwhile to do a regular review of your current budget and performance to identify areas where money is being wasted, or where there is a low return on investment (ROI).
Hire an Expert
If you’re unsure about where best to focus your budget, or you don’t have time to invest in managing your own marketing, it is a wise decision to hire an expert to do the hard work for you. Professional marketing agencies can advise you on how best to spend your marketing budget and adjust your spending according to your results.