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WHAT SHOULD YOUR MARKETING BUDGET BE?

There are several elements that must be considered when establishing a marketing budget; the industry you are in, if you are a start-up, if you are in a highly competitive market, if you have big competitors, etc ... But there are some trends that can help you find the right amount according to your industry.

Here in Quebec, we generally use 1% to 6% as % of revenue (all percentages here are expressed as % of revenue), with 3-4% being a good base. For start-up companies and consumer packaged goods companies, it can go up to 10% and even 15%. And for some companies in the cosmetics industry, this amount can be as high as 55%.

The amounts are similar for our American neighbors, but some research gives greater precision with respect to different markets. Here is some additional information.

  • In the education field in the US, companies allocate 18.5% of their revenue to marketing.
  • In the consumer services sector: 17.4%
  • In the transportation sector, we see an average of 11.2%
  • For consumer-packaged goods, we are talking about 11%
  • In the field of service consulting we are at 9.4%
  • Technologies (IT, biotech, etc ...) are at 8.5%
  • The field of communications and media is at 6.6%
  • Healthcare: 6.2%
  • Banking, financial and insurance service companies; 3.9%
  • Retail sales and wholesale; 3.8%
  • Energy; 2.2%
  • And the mining and construction sectors are last at 2%
  • Of course this percentage is only for the amounts committed and does not consider the effectiveness and productivity of the efforts that have been made to increase sales and make the company more known. A company who understands the actions that are productive for it can have a 5% marketing budget. That can be much more efficient than another company who toys around with a budget of 10%.

    If you have questions or comments, do not hesitate to contact me. Happy thinking.

     

    Stéphane Elmaleh-Riel, B.Ed., MBA
    Marketing consultant

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    References :
  • https://www.webstrategiesinc.com/blog/how-much-budget-for-online-marketing-in-2014
  • https://vtldesign.com/digital-marketing/content-marketing-strategy/percent-of-revenue-spent-on-marketing-sales/
  • http://www.bang-marketing.com/publications/ebang/quel-budget-investir-en-marketing/

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