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Read Professor Moorman’s analysis of key survey results.

Who Has the Biggest Marketing Budgets?

CMO Survey Results

Marketing budgets are rebounding. They are expected to increase 6.7% in the next twelve months according to the February 2014 edition of The CMO Survey. This is a sizable increase over projected increases of 4.3% in August 2013 and a massive boost over the 0.5% increase reported in February 2009. Bounce!

To put these figures in perspective, The CMO Survey reports that marketing budgets represent approximately 10.9% of overall firm budgets. These figures have hovered around this average since this question was first asked in February 2011. On the other hand, marketing budgets as a percent of firm revenues improved to 9.3% from 7.9% in 2013 indicating that marketing budget growth outpaced revenue growth. One question that survey users often ask about these figures is whether or not they include salaries for marketing employees. Analysis indicates that these marketing spend estimates include both employee and non-employee investments in marketing.

I examined all three marketing spending metrics across several firm and industry characteristics. These are summarized in Tables 1-3. As shown in Table 1 across these three indicators, B2C-Product companies have the largest marketing budgets (as a percent of budgets and revenues) and the largest expected growth in marketing budgets across the four economic sectors. I expected a large increase over the B2B companies which may be reaching customers with their own or their channel’s salesforce. However, I did not expect to find B2C-Product companies also dominating B2C-Service companies by 20-30% differences. Would love to hear from marketing leaders in this sector about this differential.

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As shown in Table 2, the smallest companies (less than $25 million) are expected to experience the biggest percentage change in marketing budgets in the next year (10.5%). These companies also spend substantially higher percentages of their company’s overall budgets (12.7%) and total revenues (13.9%) compared to larger companies. Perhaps this is because they are younger companies and must grow to survive or perhaps it is because they have big aspirations to dominate their markets. Regardless, larger companies may want to take note of these spending levels as these up-and-comers are often the same firms that will supplant current incumbents.


Finally, as shown in Table 3, companies that generate a higher percentage of their sales from the internet also expect to increase marketing spend by a higher percentage and spend more of their firms’ overall budgets and a higher percentage of their firms’ revenues. Although digital marketing is generally less expensive, these companies appear to be pouring marketing dollars into their operations. Like the young firms in Table 2, one theory is that these companies are spending against the massive opportunity they see in internet sales. A striking figure is that companies with no sales on the internet spend 6.2% of revenues on marketing while companies with >10% of their sales from the internet are spending three times this amount—a whopping 18.6% of their company revenues.