As businesses finalize their 2018 budgets, one critical question remains top of mind: How much should you spend on marketing? The answer isn’t one-size-fits-all. In our strategy practice, we’ve worked with over 50 Vistage members. We have observed that marketing investments vary significantly across industries and businesses. Marketing spend is, as they say, like a box of chocolates—you never know what you’re going to get. But 2018 marks a tipping point, with powerful market dynamics reshaping how companies allocate their sales and marketing budgets.

The State of Marketing Spend in 2018

Recent studies provide valuable insights into marketing trends for 2018. These studies are from the American Marketing Association, Deloitte, Duke University’s CMO Survey, and Forrester. Here’s what you need to know:

1. B2C vs. B2B Marketing Spend
   Traditionally, B2C (business-to-consumer) companies, especially product-based businesses, have been more aggressive with their marketing budgets. In contrast, B2B (business-to-business) companies often underinvest in marketing. However, this trend is shifting. Digital tools like websites, SEO (search engine optimization), and social media are becoming prevalent. B2B companies are recognizing the value of strategic marketing investments. In fact, B2B service companies are expected to increase their marketing spend by 11% compared to 2017.
2. The Digital Marketing Revolution
   Digital marketing continues to dominate, offering cost-effective and measurable ways to reach target audiences. SEO, content marketing, and paid social media campaigns are becoming essential components of marketing strategies. Companies that leverage these tools effectively can achieve higher ROI (return on investment) and better customer engagement.
3. Industry-Specific Variations
   Marketing spend varies widely by industry. Retail and e-commerce businesses often allocate a larger percentage of their revenue to marketing. In contrast, professional services firms spend less on marketing. Understanding your industry benchmarks is crucial to making informed decisions.

How Much Should You Spend on Marketing?

While there’s no magic number, here are some general guidelines based on industry standards:

• B2C Companies: Typically spend between 10% and 15% of their revenue on marketing. Product-based businesses often fall on the higher end of this range.
• B2B Companies: Traditionally, they spend around 5% to 10% of revenue on marketing. This percentage is increasing as digital tools become more effective.
• Startups and High-Growth Companies: They may allocate 20% or more of their revenue to marketing. This allocation fuels rapid growth and market penetration.

Key Considerations for Your 2018 Marketing Budget

1. Align Marketing Spend with Business Goals
   Your marketing budget should reflect your company’s strategic objectives. Are you focused on brand awareness, lead generation, or customer retention? Each goal requires a different allocation of resources.
2. Invest in Digital Transformation
   Digital marketing is no longer optional. Ensure your budget includes investments in SEO, content creation, social media, and analytics tools to track performance.
3. Test and Optimize
   Marketing is not a set-it-and-forget-it activity. Allocate a portion of your budget to testing new strategies and optimizing campaigns based on data-driven insights.
4. Monitor Industry Trends
   Stay informed about emerging trends in your industry. For example, video marketing, influencer partnerships, and AI-driven personalization are gaining traction in 2018.

Final Thoughts

2018 is a pivotal year for marketing, with digital transformation driving significant changes in how companies allocate their budgets. Whether you’re a B2C or B2B business, the key is to invest strategically. Leverage data and industry insights to maximize your ROI.

If you’re still unsure about how much to spend on marketing, consider consulting with experts or benchmarking against industry peers. Remember, marketing is an investment in your company’s growth—so make it count.

For more insights on marketing strategies and budget planning, visit Vistage Research Center.