Know-How Exchange : Advertising/PR

B2B requires less than B2C because the targets are more granular - better identified, easer to reach. You do not need saturation peak-time TV schedules to each the captains of industry - or even the Purchasing or IT Managers.

Golden Rules are always hard, but far more likely to be 2-3% of sales initially and less than 1% to maintain. Expenditure tends to be far more below the line than above, and might include incentives, buybacks of competitor equipment, trade-in subsidies and "soft dollar" expenditure such as funding expense-paid trips to see overseas installations.

All depends on the industry, product and level of novelty (innovation).

Hope this helps...

ChrisB

It depends. (Doesn't it always?) In this case it depends on your specific industry and your strategy.

A good generalization/average is probably in the 5% range, but I've seen everything from less than 1% up to 10%, or even more. Consider, for example, that you might be like Intel and you want to pull your product through with heavy end-user advertising, so that your direct (B2B) customers will feel they have no real choice but to buy/use your product. You might spend 10% of sales on advertising -- especially in the beginning.

Another good example of this was when DuPont introduced Stainmaster carpeting. DuPont only makes the nylon, and they sell it to carpet mills (B2B). Yet their strategy was to advertise to consumers so that the mills would feel they had to buy DuPont's nylon fiber in order to not be considered "deficient" (by consumers).

If you're using that strategy, you would probably need to spend a much higher amount (as a percentage of sales) than if you're just selling, say, muriatic acid to cleaning supply wholesalers.

In many, many cases, companies have found that they can charge 5-10% more if they have a strong brand identity, and they use advertising to build that identity. If they really can get a price premium of, say 7-8% of sales, then logically they should be willing to spend more than 5% of sales on brand advertising.

At the other extreme, if you are operating with a commodity mentality, and believe the only thing that matters is price, perhaps you can limit your advertising to a simple website (4 or 5 pages, with contact information, etc.) and an ad in the Yellow Pages.

Net: It depends.

I posted a detailed answer to a similar question here back in June. You might want to check out:

Marketing expenditures benchmark