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Marketing ROI

Mid-Year Marketing Budget Check Up—Does Your Spending Match Trends?

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Most professionals love the close of Q2 each year: summer weather is getting into swing, many people have prepared to take well-earned vacations, and it’s time for the marketing conference circuit to kick into high gear. There’s a lot to look forward to. But for Cassandra, the close of Q2 is bringing nothing but stress.

Cassandra is a marketing executive for a mid-size B2B tech company. As she watches her employees pack their bags for Florida, she knows she has to stick around and report on the current state of their marketing budget. Not most people’s idea of a good summer vacation.

To make matters worse, Cassandra isn’t entirely sure what’s she’s going to find. It’s been an aggressive six months of growth at the company, and she’s aware of the toll that’s taken financially. But what she doesn’t know is whether her creeping costs and laundry list of requests are going to be met with acceptance, or with more questions.

When it comes to budget conversations, the essential question to answer is: “Was this spending justified?” The two primary ways to address this are to demonstrate the value of your team’s work through ROI, and to put budgetary demands into the context of ongoing marketing spending trends.

So as Cassandra gets ready to settle in and get very cozy with her good friend Excel, what benchmarks should she consider as points of comparison for her own team’s expenditures?

Woman works on laptop

Image attribution: Andrew Neel

Keeping Up With The Joneses

Right from the start, it looks like Cassandra is in for a fun conversation with company leadership.

Across US marketing teams, Gartner’s most recent CMO spend survey found that budget share has crept up another percentage point in 2017, meaning that the average marketing team now claims about 12 percent of their company’s revenue. What’s more, if Cassandra’s company is looking to grow from mid-size to a fully scaled company in the next couple of years, they should expect to see this revenue proportion grow significantly—the larger the company, the more distributed and inefficient a marketing team becomes. At least for now, this gives her space to highlight her team’s current high level of efficiency.

As for why spend has continued to trend upward, marketing technology is largely to blame. Gartner’s studies also uncovered that CMO tech spending is on pace to exceed CIO tech spend, making marketing the most expensive tech buyer for most companies. Econsultancy found that analytics spending in particular accounted for a large portion of this growth (49 percent). To combat this, marketers would do well to meet with their IT teams to discuss goals and possible overlap in their technology portfolios before increasing their tech buying budgets.

In the B2B space, Cassandra’s team is primarily tasked with driving leads for their in-house sales team. Thanks to numerous improvements to marketing targeting tech in recent years, 2017 is proving to be a year where B2B marketers are not only focusing more of their budget on lead generation, but also shifting their focus from driving volume to improving lead quality. For marketing teams that have lead scoring practices in place, this trend only requires a shift in KPIs and relevant targeting tactics. But for teams who don’t have robust lead scoring, this shift is going to require additional work and spending to ensure they have the right infrastructure for improving lead quality.

Content and Distribution

The dirty word on most marketers’ minds when it comes to analyzing marketing spending trends is “advertising.” How much of my budget is going to be tied up in pushing out promotions for my brand?

Despite some hopeful speculation that the advertising market was reaching saturation and that marketers were going to reduce their spend in 2017, more marketing teams have seen their advertising budgets continue to rise.

For content marketers with less of a focus on advertising tactics, there’s good and bad news. The good news is that content marketing, on average, accounted for just shy of six percent of most marketing budgets, and was the second-lowest spending category on a typical marketing budget. The bad news however is that this represents a doubling of costs over 2016, from 0.3 percent of revenue share to 0.7 percent. If your team finds that content tactics have more than doubled in revenue share over the past year, you may want to examine your content schema for costly inefficiencies.

As for actually distributing that content, websites are one of the most expensive—but also most important—digital properties for marketers. According to Gartner, a regular marketing team should expect to see around 9 percent of budget attributed to ongoing website improvements and maintenance, while larger publishing brands bumped that margin up to around 14 percent. So for brands that rely largely on content marketing, a website improvement value between 9 and 14 percent of the budget lands squarely in the ballpark of competitive efficiency.

So what does all of this mean for marketers like Cassandra?

  1. Marketers should expect to see some increase in their spending and budgetary needs in 2017. The marketplace has gotten more competitive, which drives up ad costs, and tech spend is a costly and necessary expense.
  2. Websites are an essential backbone for any digitally competitive brand, and marketing spending has begun to reflect that. If your teams isn’t allocating around 10 percent of budget to web development, you may be hampering your digital efforts across the board.
  3. Content marketing continues to be a cost-effective method in an oversaturated marketing space. For marketers looking to improve buy-in for content marketing initiatives, try to emphasize the growing cost and stagnant returns of advertising, especially compared to the lower cost and steadily growing returns of a content marketing strategy.

Most importantly, however, aligning your budget with other trends in the marketplace isn’t going to magically improve your current workflow. Each brand is unique, and budget trends provide a powerful way to examine your setup for inefficiencies that might be eating away at the ROI of your team’s hard work. For content marketers in particular, this approach should help make your content efforts stand out as a cost-effective investment that your leadership team will continue to support in the future.

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Featured image attribution: Wojtek Witkowski

Kyle Harper is a writer, editor, and marketer who is passionate about creative projects and the industries that support them. He is a human who writes things. He also writes about things, around things, for things, and because of things. He's worked with brands like Hasbro, Spotify, Tostitos, and the Wall Street Journal, as well as a bunch of cool startups. The hardest job he's ever taken was the best man speech for his brother's wedding. No challenge is too great or too small. No word is unimportant. Behind every project is a story. What's yours?

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