Determining your marketing budget? Here is how your fellow marketers are tackling it
In recent years, companies have invested less and less in marketing experts, instead seeking refuge in paid media and marketing tools. This confirms that many CMOs pay too little attention to filling their sales funnel, focusing too much on short-term goals such as end-of-funnel lead generation. At the same time, they also recognize the danger in this. We would like to present some remarkable insights from a large-scale study investigating the ideal marketing budget.
Paid media over human expertise
From January to August 2024, 21.4% of the total marketing budget went to specialized agencies, and 22.5% to internal marketing specialists. These are the lowest percentages that CMOs across Europe have entrusted to research firm Gartner since 2019. This is an expected evolution since the arrival of many new (AI) technologies intended to make the marketer’s job a lot more efficient.
At the same time, investments in paid media—primarily through search and social ads—increased significantly over the years. Additionally, CMOs continue to invest in tools to monitor and analyze their marketing efforts.
And this is precisely where the danger lies. Marketers today are too busy (blindly) increasing budgets in search and social because they are too often guided by short-term parameters such as CPL and CPS. In this way, they continue to aim for end-of-funnel lead generation, while the big win actually sits at the front of the funnel. This comes in the form of strong brand awareness campaigns or distinctive and creative communication. It is exactly these elements that will truly convince potential customers to take those first steps toward their brand.
7.4% of revenue goes to marketing
The same study shows that 7.4% of projected revenue in 2024 went to marketing. This is a decrease of 1.4% compared to a year earlier, despite most surveyed CMOs indicating that their company revenue had increased. Nevertheless, this remains a significant budget that is best spent wisely, with an eye on both long-term and short-term objectives.
How is that marketing budget determined? A large portion of CMOs effectively prescribes a percentage of the target revenue as a marketing budget. Another group admits they look more at what the company can afford rather than focusing on which growth in business results is prioritized and what marketing investments are needed to achieve that. A third way to compile the budget is by looking at historical investments and adjusting based on those figures.
How do you utilize your marketing budget optimally?
What then is the ideal way to deploy your marketing budget? The perfect marketing mix is different for every company. Investing in short-term goals like lead generation is certainly fine, but what we believe you can never do without is investing in brand awareness. Because if your brand doesn’t resonate with your target audience, you’ve lost before you even started.
As marketing experts, we can certainly endorse the following tips from the study:
- Involve your organization in your marketing story: invest time in communicating your marketing strategy internally. Involve everyone in the narrative and you will see that your marketing makes a stronger impact.
- Measure everything that truly counts: focus on both short-term ROI and data that demonstrates live relevance among your target audience. These latter figures are a good indicator of future growth.
- Take marketing out of its silo: link your marketing efforts to other business goals and integrate them into your broader business strategy. This ensures that marketing is more widely supported and better understood within your company.
Plenty of opportunities for success... as long as you deploy your marketing budget effectively
And that is exactly what we at Expliciet love to help you with. Today, more than 100 SMEs and family businesses continue to build every day on the sustainable marketing strategy that we rolled out together and continuously refine.
Will you be our next marketing partner who can soon present outstanding results in the long term? Contact us for an introduction and tell us all about your business case.
