The average marketing budget ratio is 2.2% across all industries; meaning 2.2% of a company’s revenue is flagged for marketing. However, in tech, the ratio is at 13%, a significant increase over other industries and a trend we’ve been seeing for the last 3-5 years.
Marketing falls under the SG&A line item. sales or marketing salaries, commissions, advertising, direct and indirect selling expenses and costs not directly related to making a product or performing a service. SG&A includes the costs to sell and deliver products or services, in addition to the costs needed to manage the company, like consultant fees, insurance, supplies, rent, utilities and more.
The ratio for SG&A tells us whether marketing is growing or shrinking as usages of our loan database part of a company’s strategy. With a boost to 13% in tech companies, we know that this is an area where executives see budget increases as a priority. A higher percentage indicates market growth and confidence in the future.
2. Staff Growth
Another indicator of the growing importance of marketing is the marketing staff ratio. This KPI compares the number of marketing staff with the company’s overall staff. In 2016, marketing staff as a percentage of total staff was 1.5%. By 2018, that ratio climbed to almost 2.5%.
Tech leaders across the industry are reporting that they increased their staff budgets more than their program budgets in 2018. Some of the top jobs are product marketing and field marketing which has been consistent for years, but now you can add event marketing, marketing operations, creative, web, customer loyalty and advocacy staff jobs to the list.
The biggest categories to see increases in staff were advertising and events, but it’s worth noting that the way companies advertise is evolving thanks to an increase in data available. Thanks to technology like artificial intelligence and machine learning, marketers can now target the perfect customer.