What Percentage of Revenue should go towards Your Marketing Budget?
One question we hear fairly often from clients doing Online Local Search Optimization is: “How much does the average company spend on advertising and marketing as a percentage of revenue?”
We find that this differs based on the overall revenues brought in by the company. We’ve seen debatable information on this and so many times find reports that say a quick ‘rule of thumb’ is somewhere between 7 and 10% of gross sales. Further research shows a fairly large difference between a business that has greater than $100 million in revenue versus those bringing in less than $100 million.
The best we could find that might assist you in this area is that Companies with $100 million in revenue or more, tend to allocate an average of 13.8% of revenue to marketing. This leaves companies under that revenue threshold (which is more than likely you and most of the other small business here in the Rio Rancho and Albuquerque area) allocating an average of 8.7% of total revenues. Overall, a typical average for all companies regardless of size to consider would be 9% of revenue being spent on marketing.
Of course it is always up to the individual business owner and we have seen some higher and some lower but primarily companies with high profit margins on their product or service benefit greater by applying a larger budget to their advertising and marketing expenses.
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