Are You Keeping Up With Your Competitors’ Marketing Budgets?

Jan 10, 2020

STATE OF ONLINE MARKETING 2020

Marketing, it's an important part of your business and essential to bringing in new customers.  But do you allocate enough or too much of your budget towards it each year? 

Are you keeping up with competitors or other similar local businesses across the country?

We just released our State of Local Online Marketing 2020 report and found some very interesting statistics about the marketing budgets of local businesses like yours.

MARKETING BUDGETS

The Small Business Administration recommends that businesses doing less than $5 million in revenue per year spend around 7-8% of their total revenue on marketing. 

But recommendations will range from 5-20% depending on who you talk to, the stage of your business and what industry you're in.

We wanted to find out if local businesses are sticking to those rules of thumb or spending more (or less) than expected. 

Turns out that only 28% of the local businesses we surveyed are allocating 5-9% of their total revenue to marketing. 

29% of businesses are budgeting less than 5% and another 28% are allocating 10% or more. 

When we dig into the data a bit deeper, we see that the majority of businesses who don't feel they are successful at all compared to their competitors are allocating less than 5% of their budgets to marketing.   

There are likely many factors that contribute to the success (or lack thereof) of these businesses but low spending on marketing is almost certainly on the list. 

HOW ARE THEY SPENDING THEIR BUDGETS?

Now that we know what marketing budgets look like, what are businesses spending that money on?

Marketing covers a broad range of activities from email to social media to SEO and even retention. 

We asked local businesses how they're spending their 2020 marketing budgets and 99% said they're spending the same or more in 2020 on online and social media marketing

Only 1% of businesses are planning to spend less on online marketing this year.

SPECIFIC MARKETING TACTICS

When we take a closer look at what buckets within online marketing they're using, we find that 93% of businesses are planning to spend the same or more on paid advertising via social media, local websites or blogs.

Of those, 33% plan to spend more on paid ads.

98% of local businesses are planning to spend the same or more compared to their 2019 budgets on growing their organic social media efforts.

Of those, 42% plan to spend more on organic social media marketing.

Again, 98% say they plan to spend the same or more on referral marketing with 47% of respondents planning to spend more in 2020 than they did in 2019.

WHAT DOES THIS MEAN FOR YOUR LOCAL BUSINESS?

The biggest takeaway is that the majority of local businesses are going all-in on digital marketing.  If you're not already incorporating digital marketing into your 2020 mix, then you'd better get started. 

Many experts say that organic social media reach is dead, but local businesses don't seem to have gotten that memo.  They're still spending the same or more on organic social media efforts. 

Social media is definitely a key to online marketing success and having an organic plan in place is necessary to meet your prospects when they're on the local customer journey.

Referral marketing seems to be a hot topic for 2020 and businesses are seeing the benefit of using their existing customers to help with their marketing. 

That's smart.  Having loyal customers refer your business is one of the best ways to acquire new customers. Investing in more resources to drive referrals is likely a very wise move for local businesses.

How do you stack up with our surveyed businesses?  

Are you ready to hit 2020 equipped to compete with local competitors and have a successful, cost-effective marketing strategy?

Now you've got the inside peek at what others are doing – get out there and make big things happen in your business this year.

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