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Budget Split, Revenue Band and Industry Definitions

June 21, 2018

Taking one of our benchmark surveys? The following definitions and examples should help you categorize your marketing spend to match SiriusDecisions' definitions. This information is relevant as input to benchmark analysis of your marketing budgets, as context for our biennial Tracking the True Costs of Marketing report, and as context for reviewing benchmark data on the SiriusDecisions Command Center™.

Marketing as a Percentage of Revenue

The annual budget allocation to the marketing function across marketing programs, personnel, systems/tools and outsourced services, which is intended to comprise the entire marketing budget (except for contra revenue derived from the costs of sales) and is expressed as a percentage of company revenue.

Overall Budget Allocation

The annual marketing budget is then allocated across the four areas outlined below.

  • Programs. All costs associated with specific marketing awareness, demand creation, sales enablement and market intelligence tactics and deliverables such as events (third-party or company controlled), meetings, content creation, list rentals, third-party telemarketing, keyword purchases, various types of advertisements, public relations, analyst relations, channel marketing, and market research programs. These costs include any spend required to complete the tactics including any travel and entertainment (T&E) attributed to a specific event, project or deliverable, as well as any project-based, short-term spend on external service providers or contractors that help implement a program.
  • Personnel. These costs include all marketing personnel salary, bonus and benefit expenses, as well as any non-program-specific T&E. If T&E cannot be associated with completion of a specific event or program, then it is considered non-program-specific and accounted for as part of personnel costs. The personnel category includes any spend on contractors that are long-term and/or engage on an ongoing basis and have responsibilities for specific areas.
  • Systems/tools. This category includes all costs associated with any systems, tools or platforms used by marketing staff. Examples include marketing automation platforms, marketing resource management systems, business intelligence tools, sales force automation systems (if used by marketing) and data quality or data management tools.
  • Outsourced services. These costs include marketing functions outsourced to an outside services provider or agency. This is not ad hoc project-based work, which falls under program costs, but retainer-based functional work such as outsourced public relations or creative project work.

Revenue Bands

Before 2018, the True Costs of Marketing data was categorized by five revenue bands. In 2018, the True Costs of Marketing data is categorized by seven bands, band zero through band six.

Key changes to the revenue bands for 2018 are:

  • New band zero. The Command Center maintains a new revenue band zero ($0-$10MM). This is the domain of startup organizations whose budgets vary dramatically. The True Costs of Marketing 2018 report does not include information on this group.
  • New band six. The True Costs of Marketing 2018 report and the Command Center introduce a new revenue band six (>$10.1B).

Industry Classification

To maintain consistency with past True Costs of Marketing reports, the 2018 report classifies companies as either a software organization or a non-software organization. The definitions of the traditional categories are:

  • Software organizations. Any software-oriented company, whether traditionally deployed (i.e. perpetual licensing and support) or with recurring revenue (software as a service).
  • Non-software organizations. All other companies, such as business or information services, hardware, IT services, financial services (e.g. insurance, banking), healthcare and advanced manufacturing.

The Command Center provides an expanded of classification of six industries:

  • Advanced manufacturing. Capital goods (e.g. aerospace and defense, electrical equipment, machinery) energy equipment and services.
  • Business services. Commercial services and supplies, media, professional services (e.g. HR and employment services, research and consulting services) commercial transportation (e.g. air freight and logistics, airlines, marine, road and rail, transportation infrastructure).
  • Financial services. Asset management, banks, capital markets, credit agencies, diversified financial services, insurance and real estate.
  • Healthcare. Health IT, medical device/diagnostics, analytical instruments, contract research organizations, health insurance (e.g. payers, health plans, HMOs), healthcare distributors, group purchasing organizations, healthcare equipment and services, healthcare services, laboratories, dialysis, outsourcing, pharmaceuticals, biotechnology, life sciences, and drug discovery and providers (e.g. hospitals, facilities, IDNs, long-term-care facilities).
  • Information technology. Semiconductors and semiconductor equipment, software (e.g. application software, systems software, internet software and services, IT services) and related services, technology hardware and equipment (e.g. computers and communications equipment, instruments and components, storage and peripherals), data processing and services, IT consulting, telecommunications and other services.
  • Other. All other industries not specified above.