The Shocking Truth About How Much Companies Spend on Marketing. (And it is more than you think!).
People often wonder how much their competitors are spending on their marketing, and the real numbers will probably surprise you.
Most business owners invest less in their marketing than they should, and usually spend a modest 5% to 10% of their annual sales on marketing, but the reality is that many companies invest far more of their revenue into marketing than you would expect.
In this brief blog, we will lift the lid on what businesses are really investing in and why.
Across most established industries, companies typically spend anywhere between 7% and 12% of their total annual revenue on marketing.
This may include Google Ads, LinkedIn ads, social media marketing, search engine optimisation and other forms of digital Marketing.
But this is just the average, and well, some business sectors invest less than this, others invest significantly in their marketing to generate more leads, which allows them to choose better quality customers to work with and helps them to grow quicker.
Many e-commerce companies typically spend between 15% and 25% of their annual revenue. These companies fight too hard for attention. They typically work in ultra-competitive spaces and are up against some of the biggest names in the industry.
For example, many e-commerce websites could be competing with eBay, Amazon, ASOS, Wayfair and some of the other well-known household brands. Those brands have huge budgets, some spending £100K a day and even more on driving traffic, which makes the landscape super competitive for many of the smaller e-comm brands.
Those businesses in the manufacturing and industrial sectors typically spend much less, anywhere between 1% of 5% of their annual revenue, because typically these businesses survive on relationships and longer sales cycles.
Marketing does exist, but it’s minimal and is more about brochures and trade shows than digital marketing.
Professional services businesses, including Accountants, Solicitors, Architects and Estate Agents, etc, typically spend around 12% of their annual revenue on marketing.
Technology businesses are where there is a massive difference, software as a service type businesses (SAAS), where they have higher margins, often invest between 30% to 40% of their annual revenue into marketing and sales, growth is everything, and it’s all about scaling, and budgets are huge.
Trade construction and local services type businesses, for example, builders, roofers, locksmiths and landscape gardeners typically invest around 10% of their annual revenue in marketing.
Search engine optimisation (SEO), Google Ads and Meta Ads are the foundation for many of these businesses to help drive traffic, leads and enquiries.
Hospitality and travel typically related businesses can spend between 10% and 20% with seasonal peaks and the constant need for new customers. These sectors invest significantly in digital marketing.
Whilst there isn’t necessarily a perfect marketing budget, the fact is that digital marketing is more competitive than ever and more effective than ever, and the businesses that are outperforming their rivals are typically putting more fuel into the engine!
This means that they are investing an outsized / more significant chunk of their annual revenue into marketing, and research shows that those businesses that invest 15% or more of their annual revenue into marketing typically perform better when the economy is tough and continue to bring on both new customers and show annual growth.
Every business is at a different stage in its journey, and that’s where a team like Altitude Internet can typically help you with fast, effective Internet marketing.
To find out more about how we could tailor a plan to meet the needs of your business, click here to schedule a call with a member of our team.
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Our team of experts can take a deep dive into your website and digital marketing and put together a plan of action to help you generate more traffic, leads and enquiries. We have been established since 2014, and have a team of experts here, ready and able to help you grow online.
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