The Creativ Brief: Marketing Spend Best Practices
Image by Cole de Brito
Marketing investment. How much is too much? How much is enough?
A good rule of thumb across industries is allocating a fixed percentage of company revenue to marketing. The percentage you select will vary depending on business objectives and strategies.
Fixed percentage marketing investments allow you to scale spend consistently as your company grows. Your absolute marketing spend will increase as your revenue increases and conversely shrink if revenues fall.
A Gartner study surveying 400+ CMOs looked at marketing spends across consumer industries. These spends ranged from 5-11% of total gross revenue, with financial services, travel, and hospitality occupying the higher end of that range.
For business to business, a study from BDC bank surveying over 1,400 B2B businesses found the range to be 2-5% of total gross revenue.
Pre-revenue startups with an MVP can attribute a certain percentage of funds raised to marketing and then scale marketing in line with revenue growth as the firm gains market traction.
Market penetration and growth relies on a continued investment in advertising.
3 Stories Dominating Media and Tech Headlines
Twitch Will Pay Out 70% of Subscription Revenue to Qualifying Streamers Under New ‘Partner Plus’ Program. The new program will launch in October and will pay streamers 70% of subscription revenue for those who qualify. To qualify, Twitch Partners must maintain a sub count of at least 350 recurring paid subscriptions for three consecutive months.
Why it matters: According to the Amazon owned company, Twitch has paid out more than $1 billion to streamers in 2022 and continues to grow exponentially.
Twitter looks to reassure anxious advertisers at Cannes. Twitter has started a new "request for proposal" (RFP) process soliciting applications from businesses looking for potential partnerships. The company will consider new services from ad tech companies such as ZEFR, Integral Ad Science (IAS), DoubleVerify and Unitary to give advertisers more flexibility and control over the kind of content their ads appear next to.
Why it Matters: Marketing leaders met in Cannes, France this week for an annual festival celebrating advertising and creativity. Twitter recently hired NBCUniversal advertising vet Linda Yaccarino as its new CEO to help stabilize and grow revenue following a turbulent year after Elon Musk’s acquisition of the company.
Streaming Shocker: Warner Bros. Discovery In Talks To License HBO Original Series To Netflix Some of your favorite HBO shows may be coming to Netflix soon. Warner Bros. Discovery is currently in talks with Netflix to license some of their catalog in a non-exclusive deal, allowing the licensed shows to be streamed on both Max and Netflix.
Why it Matters: HBO shows have been licensed to streamers in the past, with shows like The Sopranos and The Wire appearing on Amazon Prime Video. This potential deal comes as Warner Bros. Discovery has recently rebranded its HBO Max streaming service as Max.
Stat of the Week - Marketing Spends
Marketers have had to do more with less in the past couple of years, as budgets declined during the pandemic, but things are looking up.
According to a recent CMO survey from Gartner, 70% of CMOs have seen their budgets increase in 2022, at an average of 9.5% of overall revenue, compared to 6.4% in 2021.
While the numbers are increasing, they have not yet hit pre-pandemic numbers which hovered closer to 11%.
One Fun Thing - Creativ Strategies in Cannes
We organized three executive leadership panels throughout the festival in support of our clients.
Some highlights include:
Panel at the Wall Street Journal with the CMO of 11:11, CMO of Eos Brands, Head of Creator Marketing at Tiktok, and CEO of THE FIFTH Oliver Lewis
Brand Innovators Panel moderated by Managing Director of THE FIFTH, Head of Global Music at Tiktok, CMO of 11:11 Media, and Globla VP of Marketing at Ugg.
THE FIFTH Yacht Brunch and Panel at Sea moderated by the Managing Editor of Digiday with the CEO of THE FIFTH, Global Head of Music at Tiktok, CMO of 11:11 Media, and the CEO of MilkPEP.
