Many companies understand the value and high ROI potential associated with content marketing programs. However, being able to fit such a program into an overall budget takes more than just guessing. In fact, most companies struggle to effectively determine the size and scope of their content marketing budget.
To correctly determine the right budget, you have to take a disciplined approach. Start by understanding how other companies in your industry or of your size are allocating their budgets, and use it as a guideline.
Essentially, the smaller your company and the more competitive your industry is, the higher the percentage of your overall marketing budget you should allocate for content marketing.
How much of my marketing budget should I allocate for content marketing?
It’s a question that many heads of marketing are asking right now, and the answer is different between B2B and B2C companies. This article will focus on the B2B landscape. We also break down company size as follows: small companies have <$2 million in annual revenue; mid-sized companies have $2-$500 million; and enterprise-class companies have >$500 million.
At this point, we are seeing companies allocating up to 40% of their overall marketing budget towards content marketing, which includes creation, staffing, amplification and the purchase of related technologies and services. While that number may seem high, it does vary depending on the type of organization.
The smaller your organization is, the closer to 40% you will be. For larger companies, like enterprise-class corporations, it will be closer to 10-15%. The reason for the difference in budget percentage allocations between small and big companies has to do with the speed by which each can adapt to a changing environment. Larger companies tend to have longer decision-making times than smaller companies. Importantly, larger companies may have long-standing marketing programs that have consistently performed at an internal ROI threshold acceptable to the company. While they may not invest more in those legacy programs, they are much less likely to reduce spending on them in favor of a newer, higher-ROI program.
What is your competition doing?
To further narrow down how big your content marketing budget should be, you should take a look at your specific industry and determine how stiff the competition is or how saturated it is in terms of the number of competitors. If your competition is emphasizing their content marketing, they are likely seeing beneficial results and are now scaling up to prevent you from gaining traction or market share.
What is worse is that they’re also creating a barrier of entry for you. If your competition dominates the market for too long, you’re essentially giving up the entire online market to your competition. That’s something no company ever wants to go through.
Ultimately, you need to step up your content marketing spend. Every month that goes by that you don’t have a growing content marketing presence is another month that you’re losing market share and customers.
Does the size of my content marketing budget affect the program’s performance?
Initially, no. Eventually, yes. The reason for this apparent contradiction is that content marketing programs take anywhere from 6 to 18 months (depending on your competitive environment) to gain traction. If you’re in a highly competitive area, 18 months is a reasonable amount of time before you finally start taking market share away from your competition.
However, for most companies, it’s 6 to 12 months. During that period of time, your program still needs to be accountable. It’s just that you are measuring the program in a different way. You’re going to be using top-of-funnel metrics to measure performance versus bottom funnel. Bottom-funnel metrics include the following:
- Bottom-funnel metrics
Until a company gets traction, they often underspend as a % of budget. This is a critical mistake. Doing so can end up dramatically lengthening the amount of time it takes to gain traction.
The bottom line
When you’re allocating your content marketing budget, a safe estimate is between 10% and 40% of your overall marketing budget.
If your company makes $2 million or less in revenue, realistically, you’re going to assign close to 40% of your budget on content marketing. If your revenue exceeds $100 million, you’re going to be much closer to 10-15%.
At Tempesta Media, we can help you achieve quality content at scale, helping you maximize your content marketing without overextending your budget.
If you have a content marketing program, or are planning one, download our ebook: 100 mistakes businesses make when starting, optimizing and scaling content marketing programs. Learn from the mistakes of hundreds of other companies. 100 mistakes walks you through common and uncommon challenges that they faced with their content marketing programs.