Working vs Non-Working Marketing Spend Ratio Comparison

Listen to This Article

How much do you spend on marketing? Do you need to consider the non-working vs. working marketing spend ratio? There are several ways to calculate your marketing spend, but one of the most common is to compare the amount of money you spend on producing content and the amount of money you spend on distribution. To do this, you must break down the non-working marketing spend into its different components. In this article, we’ll look at some of the most common examples.

Marketing Spend Ratio

Marketing teams should aim to increase the ratio of working to non-working marketing spend. The ratio should be as high as possible so that the majority of dollars go toward driving performance. However, this approach can be misleading, as it excludes many non-working costs.

For example, non-working costs may include legal, technology, agency, design, and distribution. Using this methodology can be misleading, but it is important to evaluate the mix of all marketing-related expenses to determine the best marketing ROI for a company.

YouTube player

The ideal working-to-non-working ratio is a minimum of one to four, although most clients have different definitions of what constitutes a working or non-working dollar. The ratio is often lower. Most marketing spend is non-working if the working portion is less than a quarter. In contrast, the non-working portion is usually much higher, at about 1:4.

The ratio of working-to-non-working marketing spend is a controversial topic that makes headlines in investor calls. Many companies cut their non-working spending, which leads to a reduction in their overall budget or reinvesting in media.

Despite these challenges, marketing leaders are increasingly concerned with demonstrating responsible use of their budgets. Non-working spend typically refers to the cost of producing and distributing marketing content.

In traditional advertising, the ratio of working-to-non-working spend is easy to track and was around fifteen to twenty percent. However, the advent of newer media and digital technologies has increased the percentage of non-working costs. In addition to media costs, people costs also eat into efficiency. The ratio of working-to-non-working spending can be useful for measuring how effectively a marketing budget is allocated.

Working Marketing Spend Ratio

The first step in improving this ratio is to understand the percentage of non-working expenses in the overall budget. Advertising accounts for 48% of total marketing spending, while non-working expenses make up only about 20%.

However, non-working expenses are becoming a larger percentage of the marketing budget. The percentage of non-working marketing spend varies between disciplines. Traditional advertising accounts for 50% of non-working expenditure, whereas brand publishing and social media each have 42%. These figures should be considered in light of the changing marketing landscape.

Another important factor to consider when determining working to non-working marketing spending is to define what constitutes a “working” or “non-working” marketing budget.

Working spend represents the portion of the marketing budget that’s dedicated to:

  1. Distribution,
  2. Optimization,
  3. And other non-working activities.

Identifying the Difference Between Non-Working And Working Marketing Spend

Most consultants have stated that determining a working to non-working ratio is a dangerous and outdated strategy. Those who use it understand that it can be difficult to measure success without a proper benchmark, as this will give marketers a clear idea of where they stand in the marketing budget battle.

Non-working Marketing Spend Ratio

Increasing amounts of venture capital and private equity are chasing traditional consumer product brands. These investors claim to have discovered an investment strategy that significantly reduces the non-working marketing spend. It sounds simple enough, right?

But how do you know if your investment strategy is working? The answer to this question depends on what the metrics are measuring. Non-working spend refers to all of the expenses associated with producing and distributing content, including legal and tech fees, agencies, design, and more.

Working spend is the amount of marketing budget allocated to distribution channels. This includes the optimization of marketing content.

Non-working marketing spend includes costs related to agency fees, assets, and other costs associated with developing content.

The working-to-non-working ratio helps marketers determine how effectively they are managing their marketing budget. This ratio helps determine whether a specific marketing strategy is working and which aspects need to be adjusted. A high ratio of working spend to non-working spend will help marketers identify which campaigns are working and which ones are not.

The difference between non-working and working marketing spend is important for marketers and ad agencies. A low non-working spend ratio ensures that most marketing dollars are used to produce quality content and drive performance. One big example was the announcement by Unilever’s CFO that the company had cut agency fees and commercial production costs to save $470 million in marketing in 2013.

Working vs Non-Working Marketing Spend Ratio Comparison
Working vs Non-Working Marketing Spend Ratio Comparison – Image by fancycrave1 from Pixabay

Working vs Non-working Marketing Spend Ratio

When measuring your company’s total marketing spend, one of the first questions to ask is how much you spend on working and non-working activities. If you spend a lot of time on paid search, you can assume that the other 75% of your budget will be spent on non-working activities, like SEO and social media. But this approach doesn’t account for the fact that some forms of advertising are no longer effective in terms of ROI. The following are five ways to improve your working vs non-working marketing spend ratio.

In the past, marketers allocated 80-85% of their budgets to working dollars, while the other 20% was devoted to non-working activities. Non-working activities include agency fees, production, content, research, and data, as well as marketing platforms. Those categories may be more important today than in years past. While this ratio may have worked well when the marketing industry was focused on interruptive, traditional marketing methods, it’s no longer as effective.

For these reasons, the working vs non-working marketing spend ratio is a topic of much debate in the marketing community. Many marketers will boast about cutting non-working expenses to optimize their investment in working impressions. But a growing percentage of advertisers say that non-working expenses aren’t their top priority, despite the benefits of these strategies. Moreover, some marketers focus on training their teams to be more efficient in their tasks.

The ratio of working to non-working marketing spend is a great way to gauge how efficiently your budget is being managed. The former represents the costs of creating marketing content and distributing it through various channels. Higher non-working spend is often attributed to newer, more expensive media. Non-working costs are also associated with people and technology costs, which drain efficiency. In the past, tracking the working vs non-working marketing spend ratio was relatively simple. Achieving a 15 or 20% ratio was considered good, but at the present, it’s no longer the case.