Digital Marketing Budgets On The Rise

by Mark Walsh, Mar 13, 2013, 4:57 PM

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Annual digital marketing budgets, on average, amounted to 2.5% of a company’s revenue in 2012 and will grow 9% this year. The majority of companies spend between 10% and 50% of their marketing budget on digital efforts, with an average of 25%.

That spending covers expenses including personnel costs, contract labor, search, Web site design, content creation and management, and social and mobile marketing. The Gartner study points out, however, that digital marketing spend is becoming more difficult to estimate as digital and traditional techniques merge.

For a fifth of companies, digital has already been incorporated into each function within marketing broadly, with budgets no longer broken out separately. “We expect this trend to continue growth as areas such as second-screen TV, social TV and QR codes integrate with traditional channels,” stated the report.

Advertising accounts for the largest share of digital marketing budgets at 12.5%, followed by content creation and management account (11.6%), and search marketing (10.7%). The emergence of the second category reflects increased emphasis on content marketing through media such as blogs, social networking and customer forums.

Still, the survey suggests the corporate Web site will not necessarily be displaced by a brand's presence on social media. Companies cited maintenance of their own sites, as well as advertising, as the top digital activities toward marketing success, followed by social media marketing and content creation.

When it comes to getting outside help, the study found that digital marketers typically outsource a third or more of their work to an agency or digital services provider. Companies, on average, outsource half of their search marketing -- the highest proportion of any activity. Social marketing, by contrast, is more often kept in-house. Only 27% outsourced the company blog, and about a third (34%) went outside for help in managing their presence on Facebook, Twitter and other social sites.

To help fund digital efforts, 28% of marketers overall say they have shifted money from their traditional ad budget. High-tech companies are most likely to take this approach, which may partly result from a desire for increased efficiency. Two in five companies say they are realizing savings from digital marketing compared to traditional methods.

“Reinvesting savings into digital marketing activities is a smart move. And it's a relatively new activity in a corporate culture where technology has primarily been used in recent years to cut costs,” according to Gartner.

The findings were based on a survey conducted in November and December of more than 250 marketers from U.S.-based companies with more than $500 million in annual revenue, across six industries (financial services and insurance, high-tech, manufacturing, media, retail and health care). 

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