Marketing: Should You Spend More or Spend Smarter?
In the ever-evolving landscape of marketing, businesses often grapple with a crucial question: Should they allocate more funds to their marketing efforts or focus on optimizing their existing resources? In this blog, we’ll delve into the key issues surrounding marketing expenditure and shed light on the strategies that can lead to more effective and efficient campaigns.
Does Spending More Money Mean Better Results?
Sometimes. However, it’s not just about how much you spend but rather how strategically you spend it. For instance, in direct mail campaigns, it is more cost-effective to target a specific audience based on their needs and behavior, rather than mailing to the entire database. This approach may come with a higher upfront data cost, but the return on investment (ROI) is likely to be significantly higher.
Trends in Marketing Spending in Recent Years
According to a Gartner survey, marketing budgets have increased to 9.5% of total company revenue in 2022, an increase from 6.4% in 2021. However, budgets are still lagging behind post-pandemic levels, which averaged 10.9% of company revenue between 2018 and 2020. HubSpot identified that mobile optimization will be even more important, and more companies will prioritize social responsibility. Aligned marketing and sales teams will win, and experiential marketing could even make a comeback. More brands will reportedly test out native ads as well.
Evaluating Competition and Diversifying Content
The more competitive your industry is, the more you’ll need to assess the value of ad spend. There may be instances where the cost of outbidding your competitors becomes unreasonable. Evaluating your strategy and exploring alternative approaches should be an ongoing part of your process.
According to Gartner, the US insurance industry is expected to spend over $12 billion on digital ad spending in 2023, which is a 15% increase from 2021. This figure is only for digital ad spending and does not include other marketing expenses. When factoring in individual ad bids or other types of marketing and advertising, it’s helpful to find your niche where competitors are not focusing rather than escalating beyond a healthy ROI in common places.
As companies put more of their eggs into the digital advertising basket they need to be mindful of ad fatigue. Bombarding an audience with the same ad repeatedly can lead to diminishing returns. Instead, diversifying ad content and testing different creatives will be a better way to maintain engagement.
Crafting a Marketing Budget
Creating a well-defined marketing budget that reflects your goals will help. Include a thorough analysis of your historical marketing performance and set clear objectives for the upcoming period. Allocate resources based on the channels and strategies that have proven to be most effective.
While there will always be new platforms and opportunities, it’s easy to spread your resources too thin. Instead, thoughtfully select a few key initiatives that align with your target audience and business objectives. By going deep into these chosen strategies, you’re more likely to see meaningful results.
Capitalizing on Marketing Dollars: How to Market Smarter
Long-term vs. Short-term Impact
It can be tough to strike a balance between short-term gains and long-term brand building. While immediate ROI is important, investing in initiatives that build brand equity and customer loyalty can lead to sustained success. A study by Binet and Field suggests that 60% of resources should go to long-term brand building and 40% to short-term sales activation. Companies with long-term strategies had 47% more top-line growth, 36% higher earnings, and added average marketing capitalization of $7 billion.
Don’t be afraid to venture into new marketing avenues. Allocate a portion of your budget to test out emerging trends and technologies. Either way, you’ll learn a lot and potentially uncover untapped markets.
In the age of data-driven marketing, precision is key. Leverage advanced targeting techniques to reach specific segments of your audience based on their behaviors and preferences. This approach is far more effective than broad strokes that attempt to reach a generic demographic.
Drive Your Decisions with Quality Data
It’s not just about how much you spend, but how you spend it. By adopting a strategic and data-driven approach, you can maximize the impact of your marketing dollars. Whether it’s through precise audience targeting, prudent budget allocation, or embracing new marketing channels, the key lies in finding the optimal balance between spending more and spending smarter.