Determining a marketing budget can be frustrating. Are you investing enough? Are your marketing dollars being applied in the most efficient way? How do you know if what you’re doing is working? What worked last year, or even last quarter, isn’t necessarily going to work this year and this quarter.
What the “big” guys spend on marketing
Do you ever wonder what the marketing budget is of major public companies? Here’s your answer to what the big companies spend on marketing as a percentage of total revenue.
Twitter spends 44%
Microsoft spends 18%
Salesforce spends 53%
Oracle spends 20%
If you’re not Twitter and Salesforce, what’s the target percentage of total revenue to spend on marketing and how do you go about determining your marketing budget?
formula for your marketing budget
The benefits of marketing are clear. All successful companies invest a significant amount in marketing tools and services. A Gartner/CMO Magazine report from 2015 showed major public companies spend more than 10 percent of their total revenue on marketing. What should you do? The most successful B2C software companies on average dedicate 15 percent of revenue to marketing.
All industries, on average, do well when they spend 10 percent of revenue on marketing. One study also showed that when companies fall below 5 percent, they experience slow growth or no growth at all.
But as the actual numbers show, there is a direct correlation between a company’s success and its investment in marketing. If you look at the equation of (1 = 10), we’ve found that for every dollar you put into your marketing budget, you will see a return of $10 in revenue, by default.