Marketing Budget Revenue Ratio

What is a good marketing roi.

Marketing budget revenue ratio. A 5 1 ratio is in the middle of the bell curve. After hitting a peak in 2016 marketing budgets remained steady at 11 2 percent of revenue in 2018 according to the gartner cmo spend survey 2018 2019. They have their loyal customers that really aren t going anywhere. A ratio over 5 1 is considered strong for most businesses and a 10 1 ratio is exceptional.

Is now a 30 billion larger market than tv advertising. Fall 2019 report from deloitte found organisations are on average spending 9 8 of their revenue on marketing and 12 of their total company budget. Marketing is responsible for leading revenue growth at 38 4 of companies and while the 10 number may be right for some businesses it s not a one size fits all figure. As previously mentioned established brands don t need to market as heavily.

For example five dollars in sales for every one dollar spent in marketing yields a 5 1 ratio of revenue to cost. This infographic from captora provides some insight. Small business administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you re doing less than 5 million a year in sales and your net profit margin after all expenses is in the 10 percent to 12 percent range. Whilst gartner s annual cmo spend survey 2019 2020 puts that figure higher with 10 5 of overall revenue going to marketing.

Selling your marketing budget to other executives is a common problem faced by b2b marketers and looking at marketing spend as a percent of revenue i e. 24 of companies spend 9 to 13 of overall revenue. The marketing budget ratio is the most common way to set and justify marketing spend. 46 of companies spend less than 9 of overall revenue.

But why so little compared to those little companies. According to information from marketing charts digital advertising in the u s. Marketing budgets for established companies. For established companies at least 6 12 of your gross revenue should be allocated to marketing.

And this figure changes again when you compare industries. Some companies may be highly profitable with a marketing budget set at a fraction of one percent whereas others might need to spend a quarter of their revenue on sales and marketing. Marketing budget as a percentage or revenue must increase if you hope to accelerate your business growth. Marketing budget ratios marketing spending as a percent of revenue is one of the more popular marketing budget ratios used to discuss average budgets.

The revenue to marketing cost ratio represents how much money is generated for every dollar spent in marketing. 30 of companies spend greater than 13 of overall revenue. What is the revenue to cost ratio. What s that sweet spot.