Marketing costs are expenses that are attributable to selling to customers. This can include costs related to promotion, sales, pricing and distribution. Mature firms typically devote between 4% and 24% of their total budget to marketing. Startups can spend more or less depending on stage and strategy. The following are common examples of marketing costs.
Marketing OverheadThe all-in fixed costs of your marketing and sales teams including things like salary and rent for office space.Paying to reach an audience with a message in broadcast, digital and print media.
Sales IncentivesPerformance based pay for salespeople.
Partner CommissionsSales commissions paid out to partners.
Sponsorships The cost of sponsoring media influencers, events and other entities such as sports teams.
PromotionsThe cost of promotional activities such as a product launch event.
Media ProductionThe cost of producing marketing media such as a television commercial or social media post.
Consulting FeesFees for consulting and other services provided by marketing, creative and advertising agencies.
Marketing LocationsThe cost of marketing locations such as a product showroom.
EventsCosts related to holding or attending events such as an industry conference.
Marketing TechnologyExpenses for marketing related technology including hardware, software and services. For example, the monthly license fees for a marketing or sales automation platform.
Design & DevelopmentThe costs of designing and developing unique marketing technology or media such as a website.
Business TravelTravel costs related to any marketing or sales activity.
TrainingThe cost of training marketing and sales teams.
BrandingCosts related to branding such as redesigning a logo.The costs of displaying merchandise including things like promotional in-store displays.
DistributionDistribution can be viewed as marketing or operations. For example, a book seller may view the costs of warehousing their products with an ecommerce partner as a marketing cost.
Public RelationsThe costs of public relations including crisis communications may be viewed as a marketing cost or as a general corporate cost.
Menu CostsMenu costs are costs related to changing prices such as the signs required for a price promotion.
Promotional ItemsThe cost of promotional items such as a cup with your logo on it.
Direct MailThe cost of direct mail campaigns such as a catalog you send to customers.
Marketing CollateralThe cost of developing and creating promotional knowledge artifacts and media that are used in marketing and sales such as a product brochure or industry white paper.
Selling CostsAny expenses that are directly attributable to selling to a customer including things like travel.
Entertainment & GiftsThe cost of entertaining and giving small gifts to clients. This is a tax sensitive area such that these costs are at risk of being viewed as invalid or excessive. It is also a compliance intensive area particularly where a customer is a government e.g. the Foreign Corrupt Practices Act.
Customer Acquisition CostCustomer acquisition cost is the total marketing and sales cost attributable to a customer. This may be calculated for all customers or for individual accounts. It can also be examined for different segments.
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ReferencesMoorman, Christine, and T. A. Finch. "The CMO survey." World Market Watch LLC, Chapel Hill, NC (2017).
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