How much do the top Fortune 500 CEO’s budget for marketing in today’s Digital World?
Most Fortune 500 companies typically spend about 5% – 10% of expected gross revenues and 25 -45% of that is being spent in the Digital realm. If you are introducing a new line, a new service,expanding or re-branding a position, it takes about an additional 12% – 16% in marketing investment. This is on top of your baseline of a minimum 5% – 10%. If you take away from your base to contribute to your new product launch, Not increasing your base to Re-brand,Launch a New Line or Expand you will end up hurting your overall brand to benefit a specific product instead of increase Brand Awareness.
The question of how much to spend depends on your brand power and position in the industry you compete in. A brief overview:
Elite brands – They are icons within the category. They invest substantially into marketing which contributes to their market space position. This group gets the most bang for the buck because every dollar they spend is in solidifying their position and brand. They don’t have to spend money on “catch-up” marketing (marketing to close the gap or catch up with a leading competitor) since they are really competing against themselves.
Above average brands – They have significant power, but must invest in marketing heavily just to keep their market position because of the downward pressure of the Elite brands. This group must invest even more if they want to make any gains on the category leaders.
Below average brands – This group has nothing to lose. They are either new brands or a brand that have been neglected. A small investment in marketing makes a big difference because they don’t have anywhere to go but up. They exert pressure up and force everyone above them to adjust their marketing budget because they are trying to advance and applying pressure from below.
Average brands – This is the most vulnerable group. They are neither gaining or declining. They are literally in the middle of the road. As with most things in the middle of the road, they are roadkill. They feel the squeeze from Above Average brands pushing down on them and Below Average brands exerting upward pressure trying to increase their position. Eventually they become irrelevant or disappear all together.
Knowing where you are in brand power will help determine how much marketing investment that will help you achieve your goals.
Minimum base 5% -10% of last years Gross Revenue is a good place to start.
What to spend it on?
In 2015 it is recommended to spend at least 27% – 45% of that budget on Digital Media and Social Media Platforms with the balance spent on traditional platforms of the past.