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Real Talk:

What Is Realistic Digital
Marketing Pricing?

There’s no such thing as a participation trophy in digital marketing. Success is determined by the quality of your playbook and—like any other competitive sport—that playbook means squat if you don’t have solid players to carry it out. But 67 percent of B2B marketers admit they do not currently or plan to have a content marketing strategy (what we view as the backbone of digital marketing) within the next 12 months. Why? Because their team is too small, their time is stretched too thin, and their organization doesn’t see it as a priority.

Odd, considering that content marketing, the basis for inbound marketing, has a lower up-front cost (62 percent less than outbound marketing), produces 3x more leads and provides deeper long-term benefits than paid search.

But with half of marketers still not tracking ROI—good luck convincing C-Suite to invest, let alone cut a bigger check. Just how much does a winning content strategy cost? The obnoxious answer is, it depends.

How large is your organization? In what industry do you operate? What are your marketing goals? What are your sales goals? How engaged is your audience? This interrogation is why the “how much” question often gets a vague answer; it’s impossible to give a definitive figure without knowing all the facts.

Luckily, market leaders like Gartner and Content Marketing Institute have conducted research that provides us with a keyhole glimpse into the spending behaviors of top marketing executives across the nation. Here’s how their marketing books balance out:

Average National Marketing Percentages

According to Gartner, organizations currently spend about 11.3 percent of their total annual revenue on marketing. The Content Marketing Institute dug a little deeper and found the average percentage of the total marketing budget that goes to content marketing, and how budget size impacts success:

  • Content Marketing Performance
  • % of total annual marketing budget
Content Marketing Performance
Poor Performance
% of total annual marketing budget
14%
Content Marketing Performance
Average Performance
% of total annual marketing budget
26%
Content Marketing Performance
Successful Performance
% of total annual marketing budget
40%

To put these percentages into perspective, let’s say you are the CMO for TopTechOhio, Inc., a mid-size B2B SaaS provider with annual revenue of $100 million. Your yearly marketing budgets might look something like this:

Total annual marketing budget
$11,300,000
Cost to support an average content strategy
$2,938,000
Cost to support a successful content strategy
$4,520,000

Next, let’s look at a breakdown of the percent of the total marketing budget marketing leaders are spending on specific content marketing activities, and what the actual cost would look like for a company like TopTechOhio, who is determined to run a successful content marketing strategy.

  • Content Marketing Activities
  • National Average Percent of Marketing Budget
  • TopTechOhio’s Content Marketing Cost
Content Marketing Activities
Paid Media Distribution
National Average Percent of Marketing Budget
25%
TopTechOhio’s Content Marketing Cost
$2,825,000
Content Marketing Activities
Marketing Technology
National Average Percent of Marketing Budget
22%
TopTechOhio’s Content Marketing Cost
$2,486,000
Content Marketing Activities
Analytics
National Average Percent of Marketing Budget
9.2%
TopTechOhio’s Content Marketing Cost
$1,039,600
Content Marketing Activities
Website
National Average Percent of Marketing Budget
8.8%
TopTechOhio’s Content Marketing Cost
$994,400
Content Marketing Activities
Social Media Marketing
National Average Percent of Marketing Budget
8.3%
TopTechOhio’s Content Marketing Cost
$937,900
Content Marketing Activities
Content Creation/Mgmt.
National Average Percent of Marketing Budget
7.4%
TopTechOhio’s Content Marketing Cost
$836,200
Content Marketing Activities
Email Marketing
National Average Percent of Marketing Budget
6.3%
TopTechOhio’s Content Marketing Cost
$711,900
Content Marketing Activities
Brand Building
National Average Percent of Marketing Budget
8.4%
TopTechOhio’s Content Marketing Cost
$949,200
Content Marketing Activities
Marketing Outsourcing
National Average Percent of Marketing Budget
5%
TopTechOhio’s Content Marketing Cost
$565,000
Content Marketing Activities
Annual Marketing Budget:
National Average Percent of Marketing Budget
TopTechOhio’s Content Marketing Cost
$11,300,000
Source: Gartner’s 2017-2018 CMO Spend Survey and CMO Highlights and Insights 2018 Report

If TopTechOhio follows the national average spending behavior for these marketing activities, all of which are essential to a successful overall content strategy, they will spend roughly $10,396,949 (92 percent of total marketing funds), which puts them wildly out of budget, especially considering that this financial breakdown does not include the cost of in-house labor.

In-House vs. Outsourced Agency Spending

Contrary to popular belief, a CMO cannot just hire a content writer and watch the leads pour generously through the funnel. A writer is one of several all-star players needed on the content marketing bench. If you were to hire the entire content marketing team, here’s what the average salary breakdown might look like (based on information from Payscale). Keep in mind; these figures do not include training, benefits, PTO, etc.

  • Content Marketing Title
  • Average Salary
Content Marketing Title
Managing Editor
Average Salary
$72,000 - $103,000
Content Marketing Title
Content Strategist
Average Salary
$60,000 - $101,000
Content Marketing Title
Marketing Analytics Leader
Average Salary
$53,000 - $78,000
Content Marketing Title
Copywriter
Average Salary
$49,000 - $74,000
Content Marketing Title
Graphic Designer
Average Salary
$43,000 - $61,000

The sum of these salaries is $369,000 - $554,000; almost 5 percent of the total annual marketing budget. If you look again at the content marketing activities in Table 2, you’ll notice this percentage and cost aligns closely with the cost most marketers are spending on outsourced activities. Smart move! But we’ll get to that.

Agency Partnerships

Fifty-six percent of marketing leaders outsource at least one segment of their content marketing strategy (CMI 2018 Benchmarks, Budgets, and Trends). Not surprisingly, the top activities they outsource include content creation and content promotion/distribution; the likes of which require the collaborative expertise of all the mid- to high-level employees listed above.

Generally, a reputable inbound marketing agency will run you between $100,000 and $500,000 annually (the same as the cost of hiring just two or three of the above full-time employees) plus an additional budget for paid media advertising. If we used the salary averages and spending behaviors outlined in Tables 2 and 3 above, here’s what the value of this agency partnership might look like:

  • Services Included In Most Annual Agency Costs
  • Estimated Value
Services Included In Most Annual Agency Costs
Content Strategy & Distribution
  • Brand building
  • Editorial calendar creation
  • Distribution planning
  • Distribution owned/earned channels

(e.g., website or social media networks)

Note: Paid media budgets are typically treated as a separate cost from the total cost of an agency partnership.

Estimated Value
$2,116,100
Services Included In Most Annual Agency Costs
Content Creation
  • Email communications
  • Monthly blog posts
  • Supporting website copy
  • Distribution of owned/earned channels
  • Large quarterly content (eBook/Whitepaper)
  • Design 
Estimated Value
$1,600,100
Services Included In Most Annual Agency Costs
Website Support
  • Landing page design/ development
  • Website integrations
Estimated Value
$994,400
Services Included In Most Annual Agency Costs
SEO
  • Keyword analysis
  • Strategy development 

(including tags, CTAs, link building, etc.)

Estimated Value
$53,500
Services Included In Most Annual Agency Costs
Marketing Analytics
  • Target marketing
  • Customer profiling
  • Analytics technology
  • Data aggregation/ analysis
Estimated Value
$1,039,600

True Cost of Agency Services (labor included)

$5,803,700

Annual Cost of Agency Partnership (median)

- $250,000

Value of an Inbound Agency Partnership

= $5,553,700

In this scenario, the rough estimated value (not cost) of a marketing agency partnership is $5,553,700. Remember, the estimated cost for TopTechOhio to run a successful content marketing campaign is $4,520,000.

When people say a marketing agency partnership is worth a million bucks, they aren’t kidding! TopTechOhio would significantly maximize its budget by working with an agency and free up enough funds for a sizable paid media budget. Outsourcing content marketing also allows organizations to dramatically reduce spending on marketing technology, training and development, and in-house labor, which frees up even more of the budget for expanding marketing efforts and producing rich media content like videos and other valuable marketing assets.

Moving Forward:

Budget Trends & Predictions

1. We are seeing a major uptick in the amount of spending on analytics.

The problem remains that more than half of marketers are not tracking (or able to track) ROI. They can demonstrate how content marketing has increased audience engagement and lead acquisition but still struggle to prove how content marketing has increased sales and decreased Customer Acquisition Cost (CAC). As a result, marketing budgets continue to shrink. Gartner predicts marketing analytics spending will increase from 9.2 percent to about 17.3 percent over the next three years as CMOs focus on Reach-Cost-Quality (RCQ) analysis to align media investment decisions with customer journeys and desired business outcomes; ultimately, to prove Marketing Return on Investment (MROI).

2. There has been a significant decline in martech spending.

The verdict is still out for this year, but CMOs spent 15 percent less on marketing technology last year. This could be due to budget pinching (line items that make up almost a quarter of the total budget will be the first to get downsized). This decline could also be because the overwhelming demand for technology, the vast selection of solutions, and the slow learning curve have resulted in poor outcomes for marketing teams. Or, as illustrated above, the decline is a reflection of more and more CMOs relying on partnerships with martech capabilities to lower overhead costs.

3. Outsource partnerships are the standard model for marketing success.

The value and expertise organizations like TopTechOhio gain by partnering with an outside agency is the competitive advantage that puts them on top of the market. Gartner recommends conducting an audit to determine what the gaps are in your current marketing model based on the strategic goals and objectives of the organization. Once a gap analysis is performed, align with an agency partner to counterbalance your strengths and weaknesses.

Now that you see the value of an inbound marketing partnership, schedule a consultation with one of our digital marketing experts today. 
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