by Usman SheikhWhat Is A Good Digital Marketing Budget For Your Company in 2021? (Post COVID-19)
What Is A Good Digital Marketing Budget For Your Company in 2021? (Post COVID-19)
Good Solutions & Offerings Still Needs To Be Marketed
Even in post COVID-19 times, a good digital marketing budget is a must.
One of the things that business leaders need to understand is the importance of digital marketing in the new normal. While there are some leaders who have a hard time figuring this out, we just want you to remember about Apple from the 90s. Not the Apple today but from back then.
I may be dating myself – but there was a time when Apple was not the giant it was and Microsoft and IBM dominated the world of Tech.
So what happened? How did Apple come to dominate and the likes of Microsoft, IBM, and other dinosaurs today come to take a back-seat in market-caps? (don’t get me wrong, IBM and Microsoft are still innovating, but they have not been able to get their leadership position in 2021).
When Steve Jobs took the reigns, he knew that the company needed a lot more than good products. They needed a well-thought marketing strategy that allowed people to get to know their products. So, with this in mind, he set up his action plan and the reality is that he did it. No one can believe that when Jobs took over Apple at that time, the company was near bankruptcy.
While not all companies can be Apple and not all business leaders are Steve Jobs, the truth is that we can all learn from this real example. A good digital marketing plan can help your company grow.
Digital Will Play A Bigger Role Post COVID-19
With most western nations expected to roll-out the vaccines in 2021, we expect digital marketing to play a bigger role than pre-COVID-19 levels.
According to the latest research in 2020 of surveys done with Chief Marketing Officers – there “Digital is King” and is expected to account for 80% of the total Budget.
Source: Gartner.com – CMO Spend Infographic 2020-2021
Additionally, in the same research paper, the analysis revealed that CMOs do see tech as the path to more customer intimacy and recovery. In 2021, with the vaccines rolling out and traditional marketing activities and in-person eventing coming back into play, digital will account for approx. 26% of the total marketing budget spend across many industries in big business.
Different Industries Have Different Budgets
While having some amounts in mind is a good thing, you can’t forget that the money or percentage that you decide to invest in digital marketing ultimately depends on your industry. Education tends to be the industry that has a high budget for marketing, followed by consumer services, and transportation, and the industries that tend to have smaller marketing budgets are usually a part of the mining/construction and energy industries.
Different Industries Have Different Levels Of Adaption To Digital:
Source: The CMO Survey. Conducted by Deloitte, AMA & Fuqua School of Business. Results Published June 2020.
A great summary attached in the link showcases that there are opportunities in Manufacturing & Pharma industries not adapting as fast in providing a better digital experience in a post-pandemic world.
I suppose that is to be expected, given many manufacturing businesses that were hard hit because of the pandemic was likely saving the spend in marketing given the loss in revenue. Others that may have seen the increase in revenue because of the pandemic (think PPE suppliers) were so intent and likely focused on fulfilling demand, that digital spending were likely not the priority in this interim.
However, digital experiences expected to return in 2021 as that is the sentiment across most industry market leaders as per below:
Source: The CMO Survey. Conducted by Deloitte, AMA & Fuqua School of Business. Results Published June 2020. Pg 16.
As the above chart shows, a bulk of marketing leaders expect the digital to play pre-pandemic roles in generating revenue by July 2021 (given this survey was conducted in June 2020 in the middle of the pandemic). This is in line with expectations as western markets have the vaccines being rolled out and will likely be the case as the world gains immunity and things come back to normal.
Finding The Right Number
So, what percentage should you devote to marketing? What should be taken into consideration?
The truth is that there isn’t a right or wrong answer to this question. Nevertheless, and even though you may have the biggest budget in the world, you need to know how to apply it.
If you decide to pose this question to different marketers, most of them will say that it depends on your industry. And they are right. However, if you push them to give a more detailed answer to this question, most of them will say that if they need to say a number they would say 10%.
In our opinion, there isn’t a magic number like 10% or 15% of your revenues. The truth is that the budget that you dedicate exclusively to marketing depends on many different factors.
Even during the pandemic, when companies took a significant drop in revenues, the percentage of marketing spends increased to the highest level in the last 10 years as a percentage of total revenue. This indicates the importance of marketing spends even during the pandemic. There was a drop in marketing dollars, but the percentage increased and there was changing the mix towards more online or customer experience vs. offline marketing training initiatives within the budget from a survey done by TheCMOSurvey.org.
This is to be expected as due to this pandemic, social distancing measures and multiple lockdowns that occured, we were little cut off from delivering off line or in person marketing initiatives.
So how do we know what percetange is right for your company or brand having understood a greater shift towards digital?
The marketing budget of an established company like Apple (in its current state), for example, should be completely different than the marketing budget of a company that is still in its beginning or the growth phase.
According to a study made by Gartner Research, larger companies that have revenue over 5 $billion tend to spend, on average, 13% of their revenue on marketing.
This is also in line with the research shared by The CMO Survey where in the middle of the pandemic, marketing spends as a percentage of revenue were between 11-13%.
In what concerns to smaller companies which include the companies that have revenue between $250 and $500 Million, they tend to spend about 10% of their annual revenue, on average, on marketing.
Smaller companies will likely have a higher percentage of revenue but a lot lower dollar amount given their size. Even on a shoe-string budget, there are core digital and traditional marketing activities that budget should allocate funds to keep their pipeline humming and nurture existing and future customers.
So our recommendation at Web Worx Labs is that you should plan your budgeting cycle by having at least 10% of your revenue allocated to marketing activities to help derive future sales, grow your presence and awareness, and continue generating new business for your brand.
Conclusion
With a higher or lower budget for marketing, the most important thing to retain is that this budget is crucial as well as where you apply it.
Digital marketing has a huge influence on how people look at your company, at your products and your brand presence vs. others offering similar solutions in the markets you compete in.
Successful digital marketing campaigns are part of the mix and do bring a lot of value (sales, revenue, leads, new customers) to your company.
If your business is starting to grow, this is the perfect time to make a true investment in your brand via marketing.
Do you need help in understanding where digital marketing fits in your media marketing mix? Call us at 1 833 WEB WORX or reach out via email info@webworxlabs.com and we would be happy to assist.
You can also schedule a free consultation if you have questions on how the digital marketing budget can impact your brand’s growth potential. Reach us via filling out this contact-form
Or if you have thoughts you want to add to this article or think we missed something in the analysis above – let us know and we would be happy to add your thoughts to the discussion!
Happy budgeting!
Related: Comprehensive Guide On Types of Advertising
From a start-up helping local small businesses, over a span of 5 years, Usman has built Web Worx Labs to be a leading provider of digital marketing solutions that employs 15+ full-time employees and has customers in over 30 countries.
Outside of work and his passion for all things digital, Usman is a proud father of three, loves running and is an avid reader.
Follow Usman on LinkedIn or Twitter as he is always sharing tips on strategy, branding, marketing and analytics.