From the CEO’s Desk:
Annual Budgeting for Marketing + PR

As a communications agency owner, I’m often asked, “how much should organizations spend on their annual marketing communications?” The answer, while multifaceted, can be distilled into a consistent benchmark that has historically served as a strong guide.

Leaders, especially in times of uncertainty, appreciate clarity—simply. So, while there are myriad factors that influence budgeting—business goals, target audiences, industry nuances, company size, and platforms, to name a few—I often reference a time-tested range: 5–10% of total revenues. This serves as a foundational guide for most organizations.

Of course, there are exceptions. Some organizations may allocate more or less based on their industry, mission, size, or leadership’s perception of marketing and PR’s value. At FOVNDRY, we’ve observed unique budget drivers, such as specific policy, program, or product-based initiatives that can influence annual allocations.

Yet, the 5–10% benchmark remains a reliable starting point. Even as we brace for potential economic headwinds in 2024 and realize the potential of AI to streamline operations, this range remains pertinent. It offers flexibility—accommodating sector-specific nuances and other pivotal data points such as market growth rates, competitive landscape, and customer acquisition costs.

A recent CMO spend and strategy survey by Gartner provides a great snapshot. The survey, which I recently shared with a fellow executive, outlines average marketing budgets over the past five years. It offers insights into the evolving dynamics of budgeting, especially the integration of technology and tools. Notably, it captures the budgetary adjustments during the initial phase of the COVID pandemic and the subsequent slowdown in 2021.

In uncertain or challenging economic climates, it’s tempting to cut back on marketing and PR spending. However, maintaining or even increasing your budget can position your brand as a stable, reliable presence in the market. This can foster trust and loyalty among your audience, giving you a competitive edge when market dynamics shift and rebound.

A 2022 ROI Genome report by Analytic Partners, the leader in commercial mix analytics, underscores this sentiment. The report, which analyzed data from over 750 brands across 45 countries, showed that brands increasing their ad spend during a recession saw a 17% rise in sales and improved ROI. In contrast, those cutting ad budgets risked a 15% revenue loss.

In the rapidly evolving world of marketing and PR, it’s essential to remember that consistency and adaptability are key. While it’s crucial to have a foundational budget, it’s equally important to be agile, adjusting strategies based on real-time data and market feedback. This adaptability ensures that your brand remains relevant and resonant, maximizing the return on your investment. As we look ahead, it’s not just about the numbers but how effectively those numbers are put to work—driving meaningful engagement and tangible results.

For nearly 20 years, the team at FOVNDRY has guided our clients through the intricacies of budgeting and strategic communications. If you’re seeking insights or support as you plan for 2024, we’re here to help.