Mackenzie | October 12, 2021 | Evenbound
The manufacturing industry is notorious for being one of the lowest spending industries when it comes to marketing.
The Evenbound team works primarily with B2B manufacturers and construction companies, so this doesn't come much as a surprise to me. Likely, you get the majority of your leads through word-of-mouth referrals, tradeshows, and industry associations. If you have a channel sales distribution method, you probably also rely heavily on your channel partners to draw in new business. All of this is to say, there used to be a reason you didn't spend that much on marketing. But if you look at the numbers today, how is your manufacturing company stacking up against industry standards for marketing spend?
While the rest of the world — and by that, I mean marketing departments across industries — spends an average of 11% of their company's total budget, or 6.9% of annual revenue on marketing, according to HubSpot, manufacturers only spend around 6.9% of their annual budget or 2.7% of their annual revenue on marketing. Those numbers come from a CMO Survey completed in 2018, and they're pretty dismal for manufacturers. That's a very slim margin of your annual revenue to spend on marketing.
Another source, Web Strategies, found that pre-COVID, manufacturers spent around 5% of revenue, and 4.1% of their overall budget on marketing. That's a little better, but what's most interesting is that post-COVID, Web Strategies found that manufacturers were spending around 8.41% of revenue and 6.91% of their overall budget on marketing. So it's clear that manufacturers are finally starting to see the benefits that marketing can deliver.
While these numbers are by no means comprehensive, they do give you a starting point to feel out how much your manufacturing company should be spending on marketing. Now, let's talk about why you need to spend on marketing, and why it's even more important as you gear up for 2022.
Now, because you're a critical reader, you're probably thinking, "well of course they want me to spend more on marketing in 2022, they're a marketing company."
And sure, the more you spend on marketing, the better I do. But there's a much bigger reason that manufacturers are going to need to focus more strategically on marketing than ever before. That reason is competition.
In 2020, when factories were shut down, production came to a halt, and everyone was sent home, what did we all do? Yeah. We made a beeline right for the web. And Netflix binging and Tik-Toking aside, working professionals' only lifeline to the outside world with the web.
Engineers turned to the internet to solve their production and supply chain issues. Consumers hit eCommerce harder than ever. And all of that contributed to a serious shift in the way that manufacturing and industrial companies do business.
Not only did manufacturers who were stuck at home start pouring their tradeshow budgets into things like their website, their social media presence, and email marketing (read: more competition for you), but industry professionals got used to solving their problems online, rather than over the phone or in person.
That same study completed by HubSpot we referenced earlier has a lot of insightful statistics that identify why you should be spending more on marketing in 2022:
What's the context behind all of those numbers?
Your ideal customer is looking for you online first.
On average, engineers are doing the majority of their research online. "Research" means they're looking at the first 5 suppliers that come up online, and they'll look at your website first.
They'll use your site to vet you and the other top suppliers thoroughly before they decide which ones they want to speak to. And when they do fill out a form or make contact with your team, they expect their phone call or email to be returned within 24 hours. All of that adds up to a lot more marketing effort on your part.
To meet those online-focused consumers, your manufacturing company needs to put effort into content development, website design and development, and bolstering your digital presence. And you have to do it all in competition with every other manufacturer who is just now realizing that digital marketing is actually important. In 2022, the manufacturing companies that:
are the manufacturing companies who will win business. That starts with right-sizing your manufacturing company's marketing budget.
There are a few ways to determine how much you should spend on marketing in the upcoming year, but for all of them, you're going to need a solid understanding of your manufacturing company's goals for the year.
One of the easiest ways to calculate your 2022 marketing budget is to know your customer acquisition cost. With that number, you can easily work backward from your 2022 sales goals to determine exactly how much you need to spend to acquire the right number of new clients in the next year.
If you don't know your customer acquisition cost, you can still assess how much to spend on marketing in 2022 based on your sales goals, but you'll have to do a little more guessing than with the customer acquisition cost model.
We know that, on average, manufacturers in a post-COVID world are spending somewhere around 7-8% of their total revenue on marketing. That's a good place to start. Most manufacturers haven't made this jump yet, and are still spending just 1-5% of their annual sales on marketing. If this is your manufacturing company's first foray into a digital marketing initiative, you might consider bumping that number up by just two percent in 2022.
Make sure you're allocating your budget strategically to digital marketing techniques you know can produce the right results and the marketing ROI you're looking for. When you infuse your marketing strategy with a little extra capital, you'll start to see the bump you need to compete with others in your industry.
For most of us, from manufacturing to marketing, Q4 is a time for planning. We sit down with our leadership team and we carve out a little time to get specific about our goals for the next year.
For manufacturers especially, this year's planning session should take time to focus on marketing efforts. Your competitors are marketing differently, and your buyers are engaging with you differently.
If you're having a hard time getting a handle on your manufacturing company's marketing budget, talk to the Evenbound team. We work with B2B and industrial manufacturers every day, and we'd be happy to answer any questions you have, from planning your marketing budget to developing a full-scale digital marketing plan for your manufacturing company.