Looking at a number of pieces of research, it becomes clear that since 2000, companies in the US allocate about 9%-12% of their budget to marketing needs. Being as low as 4% in 2000, it rose to 8% on average in 2011 and now tends to grow to 12% (and in some industries, it is as high as 19%). The industry of B2C is the leader in high marketing budgets. Also, marketing takes approximately 7%-8% of the company’s yearly revenue.
Let’s consider industries and the percentage that they spend on marketing compared to the entire yearly budget:
- Finances & insurance: 9.2%
- Communication, media & consumer packaged goods: 9.1%
- Consumer services: 18.9%
- Education: 12%
- Energy: 8.3%
- Healthcare: 9%
- Manufacturing: 2.4%
- Mining/construction: 3.0%
- Service consulting: 7.5%
- Retail/wholesale: 4.4%
- Software, tech, biotech: 9.7%
- Transportation: 8.5%.
As it is obvious from the list, the biggest expenses fall to the service areas (all above 9% with the only exception of service consulting), whereas real industries such as manufacturing are all below 9%.
The money that is invested in this budget is distributed among the following channels:
- Direct marketing activities
- Social media
- Marketing and sales employees
- Other associated expenditures.
The distribution between advertising platforms in marketing
There is a number of marketing activities, which may largely vary across industries and ad networks but the standard set of activities is as follows:
- Social media marketing (SMM)
- Search engine optimization (SEO)
- Email marketing
- Display advertising
- Content marketing
- Direct mail
- Affiliate marketing
- Paid advertising in social media and guest posting
- Activity on forums and channels other from social media.
If there is a question in which exactly social media channels it is expedient to invest, then consider Facebook online advertising network, which, despite all shortcomings and latest scandals, still holds approximately 90% of the users of all social media. The second place of Instagram with 32% of users is expected to grow to 47% by 2020. Pinterest and Twitter now currently interest 33% of users each. Facebook is used by over than 65% of adults of developed countries with a strong Internet connection and it embraces users of all ages, including millennials and Generation Z.
Even more adults utilize YouTube – 73% use it regularly, which puts YouTube to second place from all search engines in the world. Its popularity rose from around 55% in 2012 to this number by the end of 2018. The same happens with the rest of all social media – Instagram, Pinterest, Snapchat, LinkedIn, Twitter, and WhatsApp. In 2012, each of them had from around 10% to 17% of the attraction of users. In late 2018, the minimal % was 22% and the maximal was 35% (with an average equal to 27%).
What surveys say
The surveyed owners of companies, as well as small and medium businesses in 2018, told that over 60% of them are planning to increase marketing budgets for Google Ads and Facebook. Instagram and Twitter were going to attract investments from 28% and 18% of respondents respectively. YouTube, despite its tremendous popularity in users, was going to be given money only by 38% of respondents. LinkedIn, the biggest professional network was marked only by 24%. Pinterest and Snapchat are in the tail of the list with 10% and 6% respectively.
Channels of traditional marketing (which include mostly offline advertising) tend to show a decrease in the percentage of acquired marketing budgets: throughout 2011-2018, they were constantly decreasing on 1%-3% on average each quarter. Budgets for online ads, unlike their predecessors, are constantly increasing (8%-15% each quarter), which means that business owners don’t feel that traditional commercial is valuable anymore. With more and more people getting online and with bigger informatization of population of Earth, traditional channels of marketing are likely to shrink to insignificant amounts in the nearest decades.
Pieces of advice to boost up your advertising effectiveness
- Know your ROI and adjust it based on the results of each marketing campaign.
- Don’t ignore web bots (responsible for more than 50% of modern Internet traffic).
- Don’t target too many keywords at a time.
- Use context targeting to capture the audience.
- Identify and conquer potential audience niches.
- Optimize your ads.
- Look for alternative advertising platforms.