How Much Should B2B Companies Invest in Digital Marketing?

Many B2B marketing companies are still struggling with whether they should invest in digital marketing. Those that have gotten on the bandwagon are facing the challenge of determining exactly how much should be spent. Columnist Dale Hursh has tried resolving this query, trying to provide a framework which will help B2B marketers set the ideal digital spend. He is also the CEO of a B2B digital marketing agency with 17 years of experience in this field.

Determine your B2B digital marketing budget
 
Hursh tells us that there is no perfect answer to how much you should spend on digital marketing. It will all vary as different activities of the business and how much and where it wants to expand. Still, there are a few critical steps that can help you incorporate digital into your marketing mix the right way.

•What role will digital play in your marketing mix?
Most B2B companies do not have a proper mind-set of implementing digital and resist to sell their products or services online.
•What type of product are you selling? Does it need to be promoted online?
•There might be a need to promote your business online but its not happening, either because of lack of knowledge or no budget for e-commerce.
•How complicated is your sales cycle?

Many companies work with SaaS (Software as a service) firms, where there is a possibility of high investments and risky partnerships.

According to CMO survey (figure shown below), it can be determined that B2B firms spend 6 to 9% of their overall revenues on marketing and it is different for both, product and service-oriented businesses.

So, our advise is that you should thoroughly view what type of business you are so that the spending scale can vary accordingly. Product-centric enterprises are at the higher-end, and those focused on providing services are generally, at the lower-end.

If we take some simple, standardized products as examples, and testing them - like a server, storage array or a high-priced proxy part is purchased online – Digital will undoubtedly play a vital role in the integrated marketing mix of the company, and there can be a jump in the entire digital spend from perhaps, 35% to a 75%.

So, for the same firm if we devise a fair digital marketing budget, it will be as follows:

•    Annual revenues: 50 Million
•    Investment in Marketing: 8%
•    Digital marketing budget should be re-allocated between a 35 to 70%, approximately.
•    Annual digital marketing budget would then be:
•    $50M x .08 x (.35-.75) = $1.4–$3M

Furthermore, CEO Hursh says that through his experience, he has seen top B2B companies with expert digital marketing programs struggle in attaining ROI because of lack of resources and organization. They can articulate from two main reasons:

Department specialization – Each resource should understand their responsibilities and do them well. Timelines should be met, and also ensure that requests are catered on time.
Finance allocation – A small step, which is the real secret to success in digital marketing is good research. B2B marketing companies need to allot sufficient amounts of finances for extracting useful data, to achieve improved ROI.