With Q4 in full swing, it’s time for your clients to plan their marketing budget for next year. But where should they should be spending their money? Figuring out where to spend advertising dollars can be a daunting task, but thanks to the latest CMO Survey, there are new insights into where advertisers are spending and what is on the horizon for 2022.
How are businesses setting a marketing budget?
Though it differs from company to company, most businesses set their marketing budget from the previous year’s expenses, according to the CMO Survey. The categories that best describe how companies set their marketing budget, based on the survey, were:
- 41.1% — marketing budget is set on a yearly basis based on previous year’s expenses and adjusted during the year if needed
- 27.9% — budgets are built from scratch every year based on new needs and objectives
- 21.1% — budgets are set as a percentage of projected revenue
- 10% — budgets are revisited and, if needed, reset every month or quarter depending on objectives
Helping establish your advertiser’s marketing budget will go a long way toward building trust and credibility with them. To help with this task is AdMall’s AudienceSCAN profiles, powered by SalesFuel. Having the research available to show an audience’s purchase intent for the next year could help you focus directly on the 28% of businesses that are building a new marketing budget every year.
Market Spending Growth
According to the CMO survey, overall 2021 marketing spending increased by 5.2% over the last year and is expected to grow next year by 13.4%. On top of that, digital marketing spending increased by 15.8% over the last year and is expected to grow at a slightly weaker rate of 14.7%. Consistent with these rates, 58% of marketing budgets are now spent on digital marketing activities. In the next year, businesses will increase total marketing budgets as follows:
- B2B Product ‑11.4%
- B2B Services — 16.9%
- B2C Product — 11.7%
- B2C Services — 13.4%
“Traditional advertising spending increased for the first time in a decade with expected growth at 1.4% for the next year,” wrote CMO. “Marketing expenses as a percent of company revenue declined for the first time since 2017 but climbed as a percent of company budget. Given marketing budgets grew by 5.2% in the last year, evidence suggests that revenue climbed more in the same time frame, driving down marketing expenses as a percent of company revenues.”
When it comes to making the case for marketing spending, CMO asked respondents what the most common, and less common, behaviors were for marketing leaders in their organization.
- Marketing builds a business case based on how marketing spending is aligned with business priorities and strategies
- Marketing sets reasonable expectations about how marketing spending will influence returns
- Marketing explains its hypothesis about the impact of marketing spending
- Marketing builds a business case for marketing spending based on financial returns
- Marketing can show the impact of marketing on intermediate KPOs on the way to financial returns
- Marketing runs experiments to make the case for the impact of marketing spending
Be sure to share these strategies with your clients.
What to tell your clients?
When dealing with a marketing budget, working with reliable research is what will set you apart. Between the CMO survey showing how a company plans to set their budget and the AudienceSCAN profiles that will show where customers will spend, you can assure your clients that you know what you’re talking about. And more importantly, you can build a rapport as you assist them every year when it's time to set their marketing budget. Consumers are ready to spend a record amount on holiday purchases and with spending expected to increase next year, your clients shouldn’t be afraid to be bold in 2022.
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