The manufacturer as an example
In recent years, local manufacturing companies have experienced ups and downs. As a result, many of them were and still are using traditional marketing methods. The company’s sales representative are committed to the operation and continues to travel constantly to meet prospects, customers and ensure follow-ups. Obviously, the use of this internal process remains essential, but the fact remains that these B2B lead generation processes are less efficient, longer and more expensive. Not to mention that the internal team complains that their company looks awful online and is not up to date. The few content they have is shared on their website (if they have one) but remains outdated and doesn’t generate any leads.
The reaction of internal departments get noisy with time, innovation must occur. Manufacturers are wondering what an adequate marketing budget can look like and how to allocate part of their budget to digital marketing. Also, what are the main marketing channels that are most appropriate for the marketing of a manufacturing company?
The typical manufacturer
Based on recent surveys and studies in the United States, in 2018, the typical manufacturer spends between $3,000 and $5,000 per month on digital marketing. This makes an annual budget of approximately $36,000 to $60,000. This includes marketing services – strategy, web optimization, case studies, marketing campaign, Facebook and/or LinkedIn advertising campaigns, reports and analysis and email marketing. Inevitably, the majority must first replace their prehistoric websites before starting any digital marketing efforts.
A marketing budget is a budget envelope that includes an amount specifically allocated to the company’s marketing resources and efforts over a full year. That being said, a budget is set in order to respect it, but also in order to be used.
The ideal budget
In our last article, which talked about the subject of investment rather than marketing spending, we concluded that in order to maximize the potential of investment, it’s essential to be structured by having good action plan, as well as allocating the necessary resources according to the established objectives. Obviously, we know that there is no real end to the amount invested in marketing and that’s why we notice that many are afraid to invest. On the other hand, marketing is supposed to be essential to the company’s growth.
The 2% to 5 %
The perfect amount to invest is difficult to establish, but according to a BDC study, “B2B companies spend, on average, 2% to 5% of their revenues on marketing”. This includes the internal team as well as traditional and digital resources. If we take the example of a company with about 30 employees and a turnover of about $4,000,000. By calculating 2% of their income, which is the minimum percentage to invest in marketing, this gives us an amount of about $80,000/year to invest.
Another study that helps us determine a slightly more precise percentage of the amount to invest in marketing for manufacturers, is a CMO Survey study. The research shows that 3.2% of the revenues should be invested in marketing.
Inevitably, the next question to ask is: Do I need an internal person, such as a marketing manager or director? Indeed, this can be very relevant since this person will be able to easily manage projects internally and, above all, understand the company’s operations. As a result, one person will not be able to do everything to meet the company’s marketing requirements and objectives and that’s why investing in an external firm is a wise choice to make.
The marketing foundations
Obviously, before starting anything, having the foundations is fundamental in each company, especially before launching a marketing campaign. As a result, it’s only natural that the year you need to optimize your basics, your amount spent on marketing should increase.
The best example is the website. It is not just a simple showcase, it is the digital showcase available 24 hours a day, 7 days a week for your company, which showcases your products or services.
You will probably have to exceed your marketing budget by 5% to update your website once every three to five years. Therefore, basic marketing costs are generally not included in this 5%. Without a solid marketing base, your daily marketing activities will waver from “not very effective” to “waste of money”.
In general, the foundations in marketing includes:
- Brand identity
- Web design and development
Growth of the manufacturer
According to a study by IndustryWeek – Custom Research and Kronos, here are two strong statistics that clearly show the growth of the manufacturer in 2019-2020:
- While 90% of manufacturers expect an increase in revenues, more than 58% of in-between expect a strong increase of more than 5% over the next five years.
- More than 70% of manufacturers expect to increase the number of employees over the next five years.
These figures are the very proof that there is potential to be exploited and to do so, it is inevitable that we must invest; in an intelligent way. More specifically, aligning the budget with a well-developed strategy and an appropriate action plan is essential.
Don’t forget to look at your competitors, it’s almost certain that they will improve their online presence and use their website to generate more leads!
Return on investment (ROI)
Assessing the return on investment in marketing has never been really easy. Thanks to digital technology, it’s now much easier to obtain accurate results on advertising campaigns and automation. As a result, it is possible to determine the long-term and short-term ROI by analytical forecasts, as well as by the number of prospects and their average value.
An average value can then be assigned to new prospects, provided by the percentage of the conversion rate based on the value of the prospect. A predictable number of ROIs can then be established and monitored.
We conclude this article with this beautiful CMO Survey statistic: “Marketing budgets are expected to increase by 8.7% over the next year, reaching almost 8.9% in eight years from 2017. In comparison, the real increase of 6.3% over the past year has actually been achieved.
What do you think of your situation?