Know-How Exchange : Strategy

Largest companies with sales above $100 million sounds like it is pretty much the Fortune 2000. The vast majority of these companies are public companies, so some of the higher level information (like question 1) can be estimated.

If you pull up the annual reports for companies, you will find their income statements. On the income statement, there should be a line called SG&A (which stands for Sales and General Administrative) or similar. Marketing costs are in this line, as are sales, administration, and other expenses that don't show up elsewhere. My guess is that marketing (which includes marketing salaries) would be less than 1/3rd of the SG&A costs.

I did a quick check of Microsoft and found that their 2003 sales where $32.2 billion and their sales and marketing (they put general and administrative in a different area) was $6.5 billion. This means they spend 20% of sales on sales and marketing expenses. P&G had 2003 sales of $43.4 billion and SG&A costs of about $13.4 billion, or about 30% of sales.

I worked for a B2B Fortune 500, and we always were shooting for an SG&A of 20%, as that was what well run companies were supposed to do, but we couldn't seem to get it below 30%. This pressure on costs sure affected our marketing dollars available.

Oh, BTL costs are a B2C thing. You asked what percentage of costs are used to target C-level (which would be a B2B thing). I think it is safe to say that 0% of BTL costs are aimed toward C-level people. The C-level sale is much more of a relationship activity (which would involve sales expenses) than a true marketing expense.

This can be extended out based on B2B versus B2C. B2B companies on average have lower marketing expenses, and higher sales expenses. B2B likely wouldn't have any BTL expenses.

B2C, they will likely have BTL expenses and higher proportional marketing expenses.

I've had a number of clients that match your specs, and the percentage of sales spent on marketing/sales varies considerably based on the strategy, industry, economic climate, etc.

Generally, marketing expense (not including sales) for B2B companies is in the 4-7% range, though I've seen it higher and lower. Sales expense is similarly variable, depending on the channels, distribution system, etc. I'd guess it ranges from 4-9%, though again I've seen it higher in some cases -- particularly when there are multiple distribution channels.

The two together are probably in the 10-15% range for most B2B companies. For B2C the numbers are generally higher -- more like 20-25% for Sales/Marketing -- again with some notable exceptions.

As for CEO-targeted costs, I don't know that anybody actually reports those. One client of mine includes that as part of the sales budget and strategy, and they spend approximately 20% of their Sales budget on C-level relationship building ... and that would be somewhere in the range of 1% of total sales -- though I don't think they actually measure/track it just that way.

(They always invite the C-level execs to their off-site meetings and symposia, have special presentations for CEOs, etc., but I don't think they actually calculate a perecentage spent on that audience. The 20% guess is mine.)

The thing you have to keep in mind is that the range is quite large, and that the strategy you're using will be the most important determinant of the marketing/sales spending (as a percentage of sales). To run a campaign like Intel's "Intel Inside" would obviously cost a lot more money, for example, than a more "quiet" and traditional B2B campaign, with ads in a few trade books and a simple website.

I've worked with Fortune 100s, Fortune 1000s, and dozens of smaller companies in both B2B and B2C, and I'd be happy to help with more information. The thing I would emphasize, though, is that marketing and sales spending are tied pretty closely to the objectives and strategies these companies were using -- not to their sales revenues. (The percentage-of-sales calculation was a result, not a target.)

Hope this helps. If you need/want more, contact me directly.

The figure Freddie quoted (22% on people, 78% on marketing other) is very consistent with my own experience in mid-size and larger companies (e.g., $100-1,000 million in sales). I'd have estimated 20-25% on people/benefits.

In B2C companies, the number is often a little lower, because the working media costs are typically higher than in B2B. And it's obviously different in companies with a direct sales force versus a rep network.

Interestingly, sales support (often a Marketing function) tends to be a little greater when there's a rep network. Perhaps sales management takes care of many of the support functions when the sales force is entirely in-house. (Speculation, not researched.)

Hope this helps.

Since you are urgently looking for info, you might want to check out a few of our past questions which deal with marketing to CEOs. For example:

https://www.marketingprofs.com/ea/qst_question.asp?qstID=1874
https://www.marketingprofs.com/ea/qst_question.asp?qstID=2227
https://www.marketingprofs.com/ea/qst_question.asp?qstID=3055

and especially:
https://www.marketingprofs.com/ea/qst_question.asp?qstID=3235#22328

In response to your later question... I remembered an earlier thread here that I responded to.  In it, I wrote:

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If your client is targeting company A, then they should do some news searching on company A's primary competitors (companies B, C and D).  Let's say that company B just issued a press release about breaking records in quarterly revenue... your client can fax a copy of that press item to the CFO at company A with a note, "I'd like to talk with you about beating B at their game."  Or let's say that company C just announced a new product or expansion into a new geographic region.  Same approach: Fax the news with a handwritten note promising to follow up with ideas for strategic help.

I use Google's "news alert" feature (still in beta, I think) to send me emails on key competitors and industry players.  There are similar service, I'm sure you know.
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If you want to see the whole Q&A conversation, it's here:
How to market to senior financial professionals

By the way, I'm glad my advice from way, way back in June was useful to you!  It's amazing how much value members can find when they look through the archives...

- Shelley