Marketing Expenditure in the CAD Industry

From the March 2004 issue of

Two years ago, CAD Spaghetti conducted a Web survey among its readers about marketing expenditure and trends in spending, both past and future. We decided to repeat the study two years on in order to see if readers' predictions came true, and indeed what they see to be key trends going further forward.

In this article, we will look at:

• the percentage of turnover devoted to marketing

• where marketing budgets are being spent

• how marketing spending has changed

Our sample was made up of 75 respondents involved in marketing to the CAD/CAM sector. The largest proportion of these were software development companies, and the remainder broke down as follows.

Two thirds of our respondents had shared responsibility for marketing in their company – the remainder were in sole charge. Almost half of all respondents had responsibility for marketing on a worldwide basis.

Respondents were asked what proportion of the company’s turnover is allocated to marketing. This has not altered greatly from two years ago, with 45% of both the 2002 and 2004 sample spending 2 to 5% on this function.

The marketing budget in actual monetary terms varies from company to company, with the majority having an overall budget of between £10,000 and £50,000. As most of the companies are CAD/CAM specialists, there is not a great difference between overall and specific marketing budgets – except for a stronger likelihood for CAD/CAM budgets to be 0, and for overall budgets to be £50,000 - £100,000.

So how is this money being spent? Respondents were asked what proportion of their current marketing budget is spent on six specific activities, and this chart compares the proportion spent on each activity.

The lowest amount of budget is spent on market research – almost half of respondents are spending no money on research, and a further third only spend between 1 to 5% of their budget on research.

Other low spending activities are non-Web advertising and public relations, where a third of respondents are spending no budget.

The most budget is spent on direct marketing – 12% of respondents spend more than 50% of their marketing budget on direct marketing, this being defined as targeted email, snail mail or telemarketing.

Interestingly, the amount of budget spent on website and/or Web advertising has not increased since last measured, as one might have suspected. In 2002, 9% of respondents spent over 25% of their budget in this area, and this only increases to 10% in 2004.

In the last survey, respondents were asked how they saw their spending in these six areas changing in the coming two years. The predictions were that spending on PR, Web activities and, particularly direct marketing, would increase, while spending on non-Web advertising and exhibitions was more likely to stay the same. Market research was equally stated to stay the same or increase.

In fact, spending on Web activities and particularly direct marketing increased while spending on non-Web advertising stayed the same as predicted. The spending on PR, however, stayed the same rather than increasing, and exhibition spending decreased rather than staying stable. Market research spening stayed the same.

Marketing budgets as a percentage of turnover have not increased greatly since measured two years ago, and the highest proportion of these budgets is still spent on direct marketing and exhibition activities. Thus with no additional money to play with, it is ever more imperative that direct marketing is targeted to as relevant an audience as possible. Although spending on exhibitions has decreased, it is still a core element of the CAD/CAM marketing mix, and again needs careful targeting to achieve maximum return on investment. Web activities have increased in the past two years, but are yet to overtake the more traditional methods of direct marketing and exhibition work.

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