5 tips for allocating your digital marketing budget

It’s no secret that digital marketing is essential to the success of any modern business. By the end of 2023, it is expected that approximately 66.8% of all ad spend will be on digital platforms, with the majority going to search and display advertising.

But for businesses that want to win new customers online at a reasonable cost per acquisition, figuring out how to allocate a digital marketing budget wisely can be tricky. Between pay-per-click ads, SEO, native advertising, content marketing, and social media, brands have plenty of options to reach their target audience.

Unfortunately, many of these digital channels are getting more and more expensive. So how can your business determine where to best invest its digital marketing spend?

Being a good budget comes down to choosing the digital channels that drive qualified website traffic and generate the best return on ad spend. Here are some tips for finding out what those channels are and how to reach your target audience online at a price that’s right for your business.

How to allocate your digital marketing budget

1. Prioritize channels with higher conversion rates

The digital channels your business relies on will depend on many things. Your industry, target audience, brand awareness, existing prospect base, etc., will limit the choices your business has for profitable digital marketing.

Still, it’s useful to know which channels tend towards higher conversion rates when budgeting. The chains with the highest average B2C conversion rates are:

• Email marketing — 2.8%
• Social organic — 2.4%
• SEO—2.1%
• Paid social networks — 2.1%
• Affiliate Marketing – 2.0%

Email marketing and organic social media requires a strong email or subscriber list as well as a substantial social media following. If you’re a newer business that hasn’t quite developed these assets, other channels with lower conversion rates, like SEM (search engine marketing) or display ads, are still good. options to start generating clicks and revenue.

It’s important to note that some behavioral ads, such as retargeting ads, can increase conversion rates across multiple channels. Retargeting ads can increase engagements by 400%, so platforms like Facebook and Google Ads that have retargeting options are often worthy of a portion of your digital marketing budget.

But keep in mind that higher conversion rates don’t necessarily mean much if you’re paying an exorbitant amount to generate those clicks or sales in the first place. Return on ad spend is the most useful metric for determining which channels are right for your business.

2. Access the platforms your target audience actively uses

Effective budgeting also requires a clear understanding of your target audience and how they find products and services like yours. Before directing your marketing dollars to a platform, you need to make sure that your target audience is active there and that you can find them through the platform’s available targeting, be it search, interest, behavioral or contextual.

If you’re a newer brand or just unsure how new customers can find you, ask yourself the following questions:

• How did your current or past customers find you?
• Where do your competitors acquire their customers?
• Did your current or past customers find you on a mobile device or computer?
• What conversion action do you want your site visitors to take?

If your business doesn’t have strong analytics, answering these questions can be difficult. So, before launching a campaign, make sure your analytics are fully set up, whether it’s Google Analytics, Google Search Console (GSC), a CRM, or another attribution tool. and that you are ready to track which platforms are actually generating leads or sales.

The reality is that there are learning curves with advertising on any platform. Most likely, your initial campaigns will not be profitable. But once you start learning more about your audience’s online habits, you can use that information to make smarter, more informed decisions about which platforms can drive qualified traffic and are worth a second campaign. , a third campaign, etc.

3. Figure out what you’re willing (and not willing) to spend

Once you’ve figured out which channels you want to invest in, you need to decide what you’re willing (or not) to spend to reach your audience there.

Some channels are much more expensive than others. Organic social and SEO are pretty affordable, while PPC (pay-per-click) and paid social can get really expensive. The digital marketing space is incredibly competitive, and as a result, many brands end up paying too much to generate clicks for audiences unlikely to convert or make a purchase.

Figure out what you’re willing to spend ahead of time, then stick to your guns. I’ve had several clients absolutely blindsided by insane PPC costs for search terms in their industry who maxed out their digital marketing budget anyway by buying unqualified clicks. If you don’t optimize your PPC campaigns, you probably won’t be satisfied with the results.

For Google Ads campaigns, the Google Ads auction simulator can help you determine an appropriate price for your maximum bid. At some point, increasing your bid will only result in a minimal increase in traffic, which means that unless you have an unlimited budget, it won’t be worth the higher price.

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4. Balance your PPC budget with an SEO budget

While PPC campaigns can certainly help drive traffic to your website, those clicks can add up very quickly. SEO, on the other hand, is more time-consuming, but it can help you drive long-term traffic by ranking for relevant keywords in your industry niche at a fraction of the cost.

That said, the right PPC strategies can help inform your SEO. PPC can be a great way to prospect for keywords or search queries worth targeting through SEO content.

If specific keywords in your PPC campaigns are driving clicks that result in sales, lead submission forms, or demo bookings, your brand should try to rank organically for those keywords so you can own this long-term traffic at a fraction of the cost.

The reality is that SEO provides sustainable customer acquisition for your business in a way that PPC cannot. If you direct your entire digital marketing budget to PPC, you’re one crisis away from seeing your website traffic dry up. By balancing your PPC budget with SEO, you create the foundation for sustainable growth: consistent (and free!) website traffic.

5. Listen to the analytics and iterate, iterate, iterate

Once you have a clearer picture of your audience and start building a solid base of leads, you can use that data to spend smarter and target audiences more effectively across your favorite channels and platforms.

Here are some ways to leverage analytics in your future digital campaigns:

• Lookalike Hearings in Facebook ad campaigns
• Targeting by interests, demographics or behavior on social media platforms
• Google Ads retargeting or Facebook Pixel
• Segmented audiences and automated email marketing
• Related search terms and long tail keywords in Google Ads or SEO
• SEO monitoring and A/B testing Overview of GSC

Whatever platforms you use, make sure you have a mechanism in place that lets you know how much money you make versus how much you spend on certain platforms. In Google Analytics, the Goal Completion feature can help. And when calculating your ROAS (return on ad spend), you also need to be sure to determine which conversion actions have economic value.

For example, B2B brands do not necessarily generate sales when converting their traffic. Therefore, video views, demo bookings or live chats may still have some economic value in what is a longer and more complex sales funnel.

In general, always keep iterating on your targeting and optimizations. Leverage all the analytics from your previous campaigns in your next ones and make sure you use all the optimization features offered by your favorite platforms.

Over time, you will begin to understand where to direct your digital marketing budget and how to improve your ROAS to a scalable and sustainable number for your long-term business.

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