In digital marketing? Smile, ’cause your budget is only going to keep growing

If you’re rooted in the traditional advertising space, now might be a good time to avert your eyes. If however you’re in digital, then we suggest you read on because things are only going to get better.

According a survey by technology research house Gartner, digital marketing spending averaged one-quarter of the marketing budget in 2014. The survey found that of the 51% of companies who plan to increase their digital marketing budget in 2015, the average increase will be 17%.

Fuelling this growth, it says, is the use of programmatic media, which allows marketers to target the audience they want and automate bidding rules for ads based on the business value they deliver. Nevertheless, the survey suggested that in 2015, digital advertising will share its top ranking with mobile marketing.

While the survey did only encompass companies from a handful of developed nations — the US, Canada and the UK — it does bode well for the industry overall, especially given that the companies surveyed represent organizations with more than US$500-million in annual revenue across six industries: financial services, high-tech, manufacturing, media, retail and transportation, and hospitality.

The larger the company, says Gartner, the higher the marketing expense budget as a percentage of revenue — those with revenue of US$5-billion or more reported 11 per cent, compared with 9.2% for those with revenue between US$500-million and US$1-billion.

Marketing budgets as a percentage of revenue varied widely, with 46% spending less than nine percent of revenue, 24% spending between nine percent and 13% of revenue, and 30% spending more than 13% of revenue. The 50% of companies planning an increase report their average 2015 increase will be 10.4%. Of those, the ones that report outperforming competitors said their planned 2015 increase will be 13.6%.

“The amount of the marketing expense budget spent on customer experience in 2014 is remarkably consistent across all key survey demographics, averaging 18%,” says Jake Sorofman, research director at Gartner. “The survey also found that the highest marketing technology investment in 2014 is for customer experience. Customer experience is also considered by many companies to be the top innovation project, just edging out product innovation.”

Of course, it’s becoming increasingly difficult to separate digital and traditional marketing, with media that would usually group in the latter including elements of the former.

“The line between digital and traditional marketing continues to blur,” says Laura McLellan, research vice president at Gartner. She reckons “it’s less about digital marketing than marketing in a digital world. Hence, marketers manage a much more balanced and integrated marketing mix than in previous years, which were characterised by online and offline silos. The resulting digital experience moves customers toward a more self-service buying model, allowing reductions in sales budgets that were designed around older, physical models.”

Gartner also says that there are a couple of caveats to the results of its survey. For instance, while 68% of respondents said that their company had a separate digital marketing budget it’s actually quite difficult to gauge just how much companies are spending on digital marketing because the treatment of budgets varies by company. While some have a digital marketing budget in total (32%), others have one in detail (36%), and yet others that have incorporated digital marketing into each function of the marketing budget (23%) or none of the above (eight percent).