NewsDanny Elkhoury

How Much Should You Invest in Digital Marketing as a B2B Company?

NewsDanny Elkhoury
How Much Should You Invest in Digital Marketing as a B2B Company?

There are numerous papers and articles discussing marketing budgets out there. However, as with any complex issue in a dynamic environment, opinions vary wildly, and most of the information relates to B2C companies. With that being said, it is not the purpose of this article to provide an exact number or percentage, rather, we’re going to take a look at current trends and various data points to get a more complex picture and understand what factors come into play when building an effective marketing budget and strategy.

By the numbers

Digital marketing is taking up more and more of marketing budgets across the board. In fact, digital marketing is currently holding the lion’s share with 40.8% of marketing budgets worldwide, followed by 34.8% on TV adverts, 12.2% in print, and a total of 12.1% in radio, out-of-home and directory marketing. This is a significant growth from 2014’s 28.3% share of the budget for digital marketing. Furthermore, eMarketer predicts that the digital marketing budget will continue to grow up to 44.9% of the overall budget by 2020.

If we break down the digital marketing budget itself, we have several avenues of spending. In a different survey from eMarketer, marketing professionals shared the areas where they intend to increase spending in 2016. At the top of the list was AdWords spending, with 75% of respondents looking to increase budget allocation for this marketing avenue. This was followed by marketing on Mobile – 73%, Facebook – 69%, Bing – 53%, Instagram – 41%, and a variety of other social media marketing avenues and mobile platforms.

It’s also important to take into account another trend – mobile will soon become a dominant platform, with a recent prediction from CMO Survey stating that mobile marketing budgets will increase by 118% over three years, from 3.8% to 8.3% of the overall marketing budget. However, some say that even this prediction is on the conservative side.

Building the B2B digital marketing budget

According to CMO Survey, the average B2B firm will spend anywhere from 6% to 9% of its revenue on marketing, this number varying between service-oriented and product-oriented businesses, with the former being at the lower end of the estimate (around 6%) and the latter at the higher end (9%).

Things get a little more complicated when we try to determine how much of this budget will go to digital channels. There are two main factors that come into play here: the product/service itself, and the complexity of the sales cycle.

Companies that have a long, complex sales cycle tend to rely more on a digital marketing strategy. SaaS companies in particular are known for complex sales cycles, but any company that relies on products/services that require a high-cost investment and a high-consideration partnership/purchase will have a similar cycle.

Companies in these situations use various budgeting strategies, with some going as far as dedicating 100% of their marketing budget to digital avenues, while others allocate as little as 15%. However, if we were to average the digital marketing budget for most companies with complex sales cycle, it would land somewhere between 25 to 50%. For e-commerce B2B companies that have a more standardized product offering the budget could range anywhere from 35 to 75%.