Budgeting for Success

Highlights from the 2017 Marketing Budget Benchmark Study

A business can learn a lot by looking at its peers. My firm’s research division, the Hinge Research Institute, recently collaborated with the Association for Accounting Marketing (AAM) to conduct a benchmarking study exploring firms’ marketing budgets and organic growth. In this post, I want to share some of the interesting data we collected as one part of the study — a comparison of the marketing spends of High-Growth and Low-Growth firms (the fastest growing 20% and the slowest growing 20%, respectively).

A total of 84 accounting firms completed the survey. As Figures 1 and 2 show, respondents included small, medium and large firms (in terms of revenue) in rural as well as metropolitan markets. Almost half of participants (49.4%) were members of AAM. Across all firms, marketing spending averaged 2.92% of firm revenues (excluding compensation) and 4.58% (including compensation).

 

Figure 3 shows the 10 largest marketing expenses (excluding compensation) for accounting firms. An interesting finding emerged when we asked which marketing expenses generated the greatest return on effort (ROE). As Figure 4 shows, of the four expense categories that were seen as delivering the greatest ROE, only two — outside consultants/agencies and website/SEO — even ranked among the top 10 expense categories.

 

 

 

 

Different marketing approaches

Our study also looked at how the financial performance and marketing expenses of High-Growth firms differed from those of Low-Growth firms. Figure 5 provides more financial detail about the differences between these two groups.

Figures 6 and 7, meanwhile, show that High-Growth firms tend to have very different marketing tactics and strategies than Low-Growth firms. First, they tend to invest more heavily in newer marketing areas and technologies, including online advertising, content creation, and marketing automation (such as Marketo, HubSpot, and others).

 

Different marketing approaches

Our study also looked at how the financial performance and marketing expenses of High-Growth firms differed from those of Low-Growth firms. Figure 5 provides more financial detail about the differences between these two groups.

Figures 6 and 7, meanwhile, show that High-Growth firms tend to have very different marketing tactics and strategies than Low-Growth firms. First, they tend to invest more heavily in newer marketing areas and technologies, including online advertising, content creation, and marketing automation (such as Marketo, HubSpot, and others).

 

 

 

 

What conclusions can one draw?

Perhaps the most basic conclusion is that although High-Growth firms spend only a little more of their revenue on marketing (1.95%) vs. their Low-Growth counterparts (1.82%), they spend it very differently. Where High-Growth firms tend to embrace newer marketing venues and technologies, Low-Growth firms tend to downplay such investments.

There are probably many reasons for these dramatically different approaches to marketing. But the bottom line is that it may be worthwhile for your firm to consider adopting some of the strategies embraced by leaders in the industry. I invite you to learn more by seeing the Overall Budgeting Benchmarks section of the study (AAM members can download it at no cost here).

 

Lee W. Frederiksen, Ph.D., is Managing Partner at Hinge, the leading branding and marketing firm for the professional services. Hinge conducts groundbreaking research into high-growth firms and offers a complete suite of services for firms that want to become more visible and grow.

 

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