Media Budget Ratio: How much should B2B companies spend on Media?

How much should you spend each year on media? In business publications, online, radio, even TV? For B2B marketers this can be quite a quandary. But thanks to B2B Magazine – they have compiled a list of the Top 100 B2B advertisers and how much they are spending on each. (link to full report)

But how can that help you?

Knowing how much the big boys spend on their media and the distribution of that media doesn’t really help me right now in budget season. But knowing how much they spend as a percent of their overall revenue can. Let me explain …

IDC coined a term – Marketing Budget Ratio – which is the percentage of marketing budget to overall revenues (also known as MBR). The MBR for most technology software and hardware firms (according to IDC) is typically 3-5%. In technology pure play services firms you typically see 1.5% (according to ITSMA) or even lower.

I have adapted that idea to create the Media Budget Ratio. This is the percentage of media spend to overall revenue. I took the B2B Magazine report and pulled out some data points. I chose IBM, Cisco and Accenture to match their media spend against their 2007 revenues. What I found was actually quite interesting (see chart below).

What it looks like is these few top B2B firms are spending about .2% of their revenues on pure media (note: no costs of marketing staff, marketing programs, field marketing, PR or ad production are included in these cost). You realize pretty quickly that there is great efficiency that large firms have when branding with traditional media. Take IBM at $195M – more than enough money to spend online, in airports, on TV etc. Accenture reportedly spends $60 just to promote the Tiger relationship that you see everywhere.

But what if you are only in the single Billions of dollars in total revenue? Perhaps with a $2-4Million dollar media spend – you might find it hard to compete with the big boys (which is frankly how I feel in my role). To me this chart while depressing is yet another wake up call for marketers to move aggressively into Social Media – where your customers and prospects can amplify your message for you!

15 comments to Media Budget Ratio: How much should B2B companies spend on Media?

  • Richard Krueger

    Good post! Does this include online media buys, such as search and display, as well as traditional media? Would be interesting to see the breakout of media by type.

  • Paul Dunay

    @ Richard

    The link in the post goes to a B2B Magazine listing of all the media spends for the top 100 B2B companies.

    there is a column on Internet – but I would hazard to say it is only display ads – not search or SEO

  • Dave Rockliff

    Wow Paul. This is a great post, and is truly appreciated with budget season at the forefront of my mind. I’ve always been curious how much of a marketing budget should be put towards media. I wonder whether the downturn in the economy will lower the media spending of these companies even further. Mitch Joel from Six Pixels of Seperation blog talked about the increase in digital marketing in this post of his http://www.twistimage.com/blog/archives/good-news-in-bad-times-for-digital-marketing/

  • Paul Dunay

    @ Dave

    I think they will most likely dial back their spending for next year but my point was at that level of spending who is gonna notice you spent $180M vs $195M

    For sure they will push more online and slide those dollars around into more effective channels.

  • Michael Gerard

    Good post Paul. Always a difficult process to develop an “apples to apples” comparison of marketing investment. Here are some quick #’s from our 6th annual Tech Marketing Benchmarks study just completed in September: (IT Services Companies only)

    – MBR: 0.5% to 1.1% (n=14 companies, average revenue of ~$1B)
    – 25% of program spend allocated to advertising [print, broadcast, corp. sponsorship]
    – 15% of program spend allocated to digital marketing [35% company web site, 34% display ads(lower for smaller companies), 10% email, 8% SEO, 6% search ads, 4% digital events). . and yes, this area will continue to grow in ’09

    Numbers aside, here are some other Key Performance Indicators to think about as part of your ’09 planning: PtoP (program spend as a % of total mktg. investment), program spend per mktg. staff, awareness building vs. demand generation investment. Glad to share some software and hardware data as well with folks. (mgerard@idc.com)

  • Paul Dunay

    @ Michael

    Great comment Michael thanks for adding so much to the conversation

  • Web Development Services

    PECS is Microsoft & ISO 9001 certified company that provide new media
    solutions all across the globe having sales office in UK and India. We
    provide solutions related Web Design & Development, SEO and Bespoke
    Software for all business domains.

  • Anonymous

    Paul,
    Interesting. Do remember that B2B – like all such spend rankings – uses Nielsen-like data, which are rate card estimates against primarily horizontal media. And a company such as IBM is buying at a serious discount (as much as 50% on print). B2B has little in terms of accurate trade press, custom pubs, or non-US markets. You’re right on key point – it’s hard to compete with them.

  • Bonnie Cameron Wells

    Thank you, Paul, for this useful information. I’m new to your blog, so maybe this has already been covered, but I’d like to know how B2B marketing organizations can best target their customers through social media. My business is in the high level executive education space, and I want to reach those HR decision makers and not waste spending against those who are not my target. Any direction would be helpful!

  • Paul Dunay

    @ Bonnie

    Bonnie – welcome to my blog and thank you so much for commenting

    I did cover that in this post

    http://buzzmarketingfortech.blogspot.com/2008/06/use-social-media-for-consideration-in.html

    but feel free to reach out to me if you need more detail

    p

  • David

    Hi Paul:

    Yeah i feel like you when reading this the budget charts.
    Buy tou are right the opportunity is to focus limited dollars (in my case are mexican pesos)in more BTL tactics rather than masive media.
    David

  • Anonymous

    Paul, MBR (Marketing Budget Ratio) can also be used to project the number of months it will take for one to recoup the investment of the marketing budget-

    Payback Period (months) = (Marketing Spend/ Projected Full year revenue from the marketing spend)* 12

  • Exclusive Movies

    good post, it depends on the kind of product being marketed.

  • […] actually tried to tackle this question a few times on my blog before. First was the post on the Media Budget Ratio (MBR) for a B2B company. Which prompted a question by Scott Zosel about how much should you […]

  • […] actually tried to tackle this question a few times on my blog before. First was the post on the Media Budget Ratio (MBR) for a B2B company. Which prompted a question by Scott Zosel about how much should you […]

Leave a Reply

 

 

 

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>