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How much should you budget for marketing in B2B?


How much should I budget for marketing?

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Whether you're a growth company or a B2B business, finding the right budget can be tricky.


'While there’s no one-size-fits-all answer, Tanja shares her insights from discussions with CEOs and CMOs on revenue percentages, what factors to consider, and even concrete numbers!


Thanks for watching, and let us know in the comments below what insight you got from this episode.


 


Can’t watch it right now? No problem, there is a full transcript of the video below.


Tan
All right.
Welcome to another episode of CMO Chat.

I'm Tan

Tanja
And I'm Tanja.

Tan
Hi, Tanja.
It's been a while.

Tanja
It's been six months.

Tan
So in that time, I've been thinking
about a lot of marketing related topics, and I always think of you and I have a list of things that I have to talk to Tanja about. So the first one let me ask you, because this came up recently for me. Setting the marketing budget.What what percent is it set by a percentage of the company's revenue, or do you get the number arbitrarily
from some way?
Like, what is your opinion on how
a company should set the marketing budget?

Tanja
Yeah, that's a really good question, and it's something that CEOs, CFOs, CMO's are wondering a lot; how to set the marketing budgets.

And of course it depends on the company,
it depends on the size, it depends on the industry, depends if you're B to B or B
to C, depends on the profitability.
But I mean, when CEOs come talk to me,
that's something to ask. And I often tell them, well,
if you're a growth company,like a high growth company,
they are investing between like 10 to 20% of their annual revenue.
Tan
I love that you have numbers.

Tanja
Which is a lot.

So but I'm talking about high growth
companies here.

I've been working a lot
in a manufacturing industry recently

00:01:39:21 - 00:01:43:12
and in the manufacturing industry, B2B,
And there it's different. What I've seen is like between 0.5% to 2% they're investing in, but they're not in like these high growth paths.
So I would say that if you want to grow,maybe 5 to 10% is a really good start.

On the other hand, I mean, if you don't want to base it on revenue,
I always say that, for instance, when somebody hires a CMO,
which costs a certain amount of money,but then you don't have a budget
to execute,it's going to be a waste of your money
to pay a CMO.But then you don't have any operational marketing budget
that she or he can work with.


So let's say, like it was an example that you pay CMO like 80,000 a year,
then your marketing budget should be at least double or ideally triple that so that that person can actually hire
People, do something, have operational marketing, budget and so on.

Tan
Right.
To recap,
so you said high growth companies
10 to 20% of revenue.

You said manufacturing.
Did you say 1 to 2%?

Tanja
Yeah.
What I've seen from the research.
Tan
And then you said if you're hiring a CMO,
it's a multiple of CMO salary.

Tanja
Yeah.


I mean, that's something that I gave as a ballpark figure when CEOs are asking what should our marketing budget be? Because we have no idea that it's like, okay, if you pay somebody 80,000, 100,000 a year, but then the actual marketing budget is 20,000 a year, it doesn't add up. And Gartner actually did this interesting study last year where they ask like CMO was from more than 500 companies in the states in Europe.
Like bigger companies.

And then the result was that at the moment that pre-pandemic it was more than 10%.
Then during the pandemic, it went down to like 6%, and now we're up again like 9.5% or something like that.

Tan
And what kind of companies are these?


Those are bigger companies with more revenue, not like snbs.
Tan
Yeah. Okay, cool.
So a range of 0.5 to 20% depending on your particular situation.
Tanja
Yeah.

Tan
Awesome.
Tanja, once again, thank you so much.

Tanja
Thanks. Tan.


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