U.S. businesses spent $51.7 billion last year to sell their products and services to other businesses, concludes a landmark Business Marketing study of 1995 marketing and communications spending.
The OutFront Marketing Research Study examines the scope of business-to-business marketing and communications-that which precedes consumer marketing. The study will appear in the June issue of Advertising Age's Business Marketing and in a June 10 supplement to Ad Age.
"This is the first attempt...to paint a picture of the [marketing and communications] budget of business-to-business," said Rich Powers, president of New York researcher Erdos & Morgan, which conducted the census. "This study finally sheds light on the [rest] of the iceberg."
The OutFront study shows marketing to other businesses is a significant chunk of the marketing and communications world, representing 59.9% of respondents' 1995 budgets. When projected nationwide, business-to-business was 37.4% of the estimated $138 billion in marketing and communications spending last year.
THE FIRST LOOK
"It will, probably because it's the first, raise some eyebrows in terms of looking at the business-to-business marketplace," Mr. Powers said. "It is the benchmark. There is nothing else [like it] that is out there."
The numbers paint a mosaic of how 25 industry groupings-chosen for their known business-to-business activity-pitch services and products through sales force management, advertising, direct marketing, sales promotion, trade shows, public relations, market research, premiums and incentives, and, increasingly, online.
The margin of error for overall numbers in the study as a whole is 5 percentage points. The 903 completed surveys represent a 9.56% response rate.
$4.6 MIL FOR BIZ-TO-BIZ
As a group, the average budget for total marketing and communications spending was $12 million. The average business-to-business budget was $4.6 million.
The services industry was by far the top business-to-business spender. Its $17.4 billion was more than double the $8.4 billion contributed by wholesale. The finance, insurance and real estate industry added another $6.3 billion. The three groupings account for 62.3% of all business-to-business marketing and communications dollars spent last year.
The OutFront study shows that 61.4% of respondents gauge marketing and communications effectiveness by sales. Sales reports are used far more often than the next most-mentioned method, proprietary research, 34.3%.
