How to Set up a B2B Marketing Budget in 2023
To maximize ROI for your B2B marketing budget, you need to allocate your resources effectively. However, this isn’t about making everyone happy; it’s about achieving your marketing goals. This post will guide you on how to determine your overall marketing budget and where to invest your marketing dollars for optimal results. Traditional wisdom suggests that the ideal marketing spend should be 10% of revenue. New companies are advised to spend between 12-20% of gross revenue on marketing to scale quickly, while established companies can spend 8-12% to increase profitability. The CMO Survey found that, on average, marketing budgets across industries comprised 11.1% of total company budgets in 2018, but caution against relying on these figures too heavily as they may not align with your specific challenges and objectives.
To help you get started on preparing your B2B digital marketing distribution that will make your CFO happy while ensuring you have the time and resources to make it all happen, we’ve defined some of the most crucial steps.
Determine Your Marketing Budget
Determining your marketing budget for a B2B company can be a complex and challenging task. It requires a deep understanding of your company’s financials, industry trends, and marketing goals. Generally, B2B companies spend around 6-7% of their total revenue on marketing, but this can vary significantly depending on the industry and company size. Setting clear and measurable marketing goals is critical to determine where to allocate your budget.
Defining your target audience, understanding the sales funnel, and identifying which marketing channels work best at each stage of the funnel are essential steps in building an effective marketing budget. Additionally, investing in reporting tools like Google Analytics or working with a marketing agency to track your results and make data-driven decisions is crucial for optimizing your marketing budget over time.
Define Your Goals
Once you have an idea of how much you can allocate toward marketing, you need to define your goals. Having big-picture goals defined early in your planning process is important so that you can later hammer out the details of your B2B digital marketing budget allocation. Ask yourself questions such as:
- Are there emerging or growing competitors?
- What are the biggest opportunities in your industry?
- Are there new products/services to highlight?
- How effective is your website at converting leads?
- What channels were most effective at bringing leads last year?
- What’s new/emerging in your industry?
- What is your monthly target for qualified leads?
- How many new inquiries per month are needed to meet your leads goal?
- How many repeat leads do you need to reach your returning customer goal?
- What is your estimated timeline for achieving specific goals?
Allocate Your Marketing Investment to Align with the Funnel Your investment should align with your sales funnel. Just as the funnel pieces move from larger to smaller, so will your investment. This means that the most expensive part of marketing is awareness building, and the most cost-effective is towards the bottom where small changes can have a very high impact. Your breakdown might look something like this:
Brand Awareness: Paid Ads (Google, LinkedIn) and SEO – 40% of the budget
Trust Building: Content Creation/SEO – 30%
Engage: Email marketing, website UX enhancements, organic social – 15%
Retention/Loyalty: New product promo, survey, exclusive offers – 15%
Creating your strategy starting from the bottom and working up can be very effective. Small changes like updating your forms, improved CTAs, and more personalized touchpoints (i.e. email) can push that prospect into the MQL category. From there, you should work your way up the funnel, identifying what kinds of tools/resources are needed to build trust, and then into the awareness stage where you can promote those resources to a prospective audience.
Don’t Forget About Reporting
Reporting is crucial for determining what channels are most effective. At the very least, make sure you are taking advantage of tools like Google Analytics (don’t forget to upgrade to GA4!).
In conclusion, allocating a digital marketing budget for a B2B company requires careful planning and execution. By following these steps, you can be sure to set a budget that aligns with your business goals and delivers a strong ROI.
FAQ
1. What factors should I consider when setting up a marketing budget for my B2B company?
When setting up a marketing budget for your B2B company, you should consider your company’s revenue, profit margin, customer acquisition cost, and the marketing tactics that will best reach your target audience.
2. How do I determine the appropriate percentage of my revenue to allocate towards marketing?
Traditional wisdom suggests that B2B companies allocate 10% of their revenue toward marketing. However, the appropriate percentage may vary depending on the company’s goals and growth stage. New companies may need to allocate more towards marketing (12-20% of gross revenue), while established companies may be able to allocate less (8-12% of revenue).
3.What are some common mistakes to avoid when setting up a marketing budget for my B2B company?
Some common mistakes to avoid include underestimating the cost of certain marketing tactics, neglecting to measure ROI, and failing to allocate enough resources towards long-term relationship building with potential customers.
4.How do I prioritize marketing tactics when setting up my B2B marketing budget?
When prioritizing marketing tactics, consider which tactics are most effective in reaching your target audience and achieving your company’s marketing goals. For example, if your target audience primarily uses social media, you may want to allocate a larger portion of your budget towards social media marketing.
5. How can I adjust my marketing budget over time as my company grows and evolves?
As your company grows and evolves, you may need to adjust your marketing budget to reflect changes in revenue, profit margins, and marketing goals. Continuously measuring ROI and analyzing the effectiveness of your marketing tactics can help you make informed decisions about how to adjust your marketing budget over time.
Table of Contents
- Determine Your Marketing Budget
- Define Your Goals
- Brand Awareness
- Don’t Forget About Reporting