Forrester recently completed its annual Marketing Organizations and Investments Survey, asking 864 B2B marketing executives how much they're planning to spend this year and how it will be allocated. We found that budgets are increasing by an overall average of 6.8%, just barely outpacing last year's 6.7% growth rate. That's not terribly surprising, but digging into the data, I found a few surprises between last year and this year.
- Last year, there was a wide range of percentage changes across industries, ranging from a 17% increase for high-tech services to a 3% cut for pharma. This year, the range narrowed, with high-tech services still leading the way with a 9% increase and pharma still at the bottom with a 2% increase.
- Similarly, when we looked at marketing budgets as a percentage of revenue, the wide gap across industries from last year also narrowed this year with a high of 3% in finance and insurance to a low of 2.3% in manufacturing.
Ok, that's good to see, and is a good indicator that companies across all sectors are feeling more bullish about investing in marketing now to fuel revenue growth. But the biggest surprise came when looking at the data by company size:
- Last year, as you'd expect, smaller companies led the recovery by accelerating marketing investments by 17%, while the largest companies increased by less than 1%. Now that we're in the second year of budget growth, the gap is shrinking, as the largest companies are growing budgets by 6.8% compared to 7.8% for the smaller ones.
- The expected company size pattern actually reversed when looking at marketing spend as a percentage of revenue, with the larger companies over 5,000 employees investing 2.8% of their revenue in marketing, while the smaller companies are only investing 2.1% of revenue.
So larger companies are increasing investment at nearly the same rate as smaller companies, and are investing a greater percentage of revenue than the smaller companies. How do we explain that? Well, digging deeper, we found that:
- Larger companies are increasing investment in lead nurturing, while smaller companies are decreasing. Smaller companies that have a sharper focus on generating leads for the sales team turned to lead nurturing earlier than big companies, and many of them have content assets and programs in place for nurturing, whereas larger companies are now embracing this area.
- Larger companies are also making bigger investments in marketing operations than smaller companies. Over the last few years, we've seen larger companies become more decentralized in their marketing, pushing resources into business units or regions. As this leads to more inefficiencies and redundancies, these companies are now centralizing certain functions to gain economies of scale, and marketing operations is often the place where shared services are placed.
As a marketing leader, don't just assume that your marketing budgets will continue to increase. The pressure is on you more than ever to get better at measuring marketing results and quantifying impact on revenue, so you can confidently explain to your CEO and CFO what they're getting for their investment in marketing. What do you think will happen to your budget in 2013?