Marketing as a Percentage of Revenue Benchmarks

By Engagez Admin On Dec 18, 2009 Site: Marketing and Sales 2.0 (Public) Type: Resource - Tags: Marketing - # of views: 3907

When setting marketing as a percentage of revenue benchmarks, the firm Go-to-Market Strategies has published a study on normative levels.  According to their research "30% of companies spend between 3-5% of revenue on marketing, with 45% spending over 6% (most of those between 6-10%). If you are launching a new product, or are expecting to launch into a new market or territory, expect to spend approximately 20% of revenue to fund that program." 

The percentage of revenue approach, 8-10% of revenue should be spent on marketing, with approximately 5% of that going to labor (either for a department, or outsourcing to a marketing firm). What percentage you use is determined by a number of factors, how mature is your market (how much education do you have to do), how well known is your company in your industry (are you a new or established business, how much brand awareness do you have to do), and how fast do you intend to grow, just to name a few. Once you've received a commitment from management on your percentage of revenue each month, calculate the "allowed" monthly budget for marketing

This data was published on December 19, 2007.

IDC has published data in 2008 indicating that across surveyed IT companies the following ratios determined the marketing spend as a percentage of revenue and program spend:

Marketing spend/revenue ratio: 2.8% (range from .8% in services sector to 5.1% for software companies).

Approximately 49% of the marketing spend was dedicated to awareness building efforts with the remainder focused on demand generation. 

Marketing programs represented 61% of total marketing spend.

A ratio of $293,000 of program spend for each marketing staff member. 

Corporate Revenue per marketing staff member was $16.8M.

Other factors included 66% of marketing staff assigned to a central office vs. 36% as regional staff.  Marketing operations staff represents 5.2% of the marketing spend and marketing automation is at 1.9% of total marketing spend.

Within the marketing program budget, in B to B, events represents 22% of spend, digital marketing 12%, advertising 17%, direct marketing 16%, public relations 5%, collateral 5% and research 4%.