Allocating Your Digital Marketing Budget: 7 Things to Consider
In the fast-paced world of digital media, companies and startups are racing to get their brands noticed by consumers globally.
Effective communication has become easier and increasingly convenient in recent years as the widespread adoption of technology and the internet now allows businesses to connect directly with potential customers and build a loyal fan base. throughout the process.
On the one hand, we see how businesses of almost any size these days have an allocated digital marketing budget and strategy. While this is a crucial aspect for them to ensure that they can stay competitive against their direct competitors, it also increases the level of expertise required to achieve the best desired results.
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Having a digital marketing strategy can seem worthless if there is no financial capital that can help drive results and build expertise as the business grows. Market experts suggest that B2C companies tend to spend around 13.6% of their revenue on their marketing budget, while B2B organizations only spend 6.7% of their revenue on their marketing budgets.
The percentage assigned to a marketing budget and strategy will largely depend on the type of business and the industry in which it operates. In addition, the people in charge of marketing will also have an impact on the share of annual income to devote to driving a meaningful marketing strategy and managing the funds allocated to each project.
As a small business owner, setting up your digital marketing budget can seem daunting. But if you can master the tedious planning and structuring, you’ll easily know exactly how much resources and financial capital are needed to establish the right marketing budget for your business.
Let’s take a look at seven things to consider when allocating your digital marketing budget.
Understand the sales funnel
The sales funnel, often referred to as the sales cycle, is the process a potential customer goes through before making a final purchase or sale. Every business will have a different sales funnel, and it will often be different for every customer as well.
While it’s not possible to set up an individual marketing strategy or budget for every type of customer, it’s best to understand the sales cycle a customer will go through before becoming a paying customer. Throughout the cycle, it’s important to include digital marketing tools and resources such as free materials, videos, blogs, and other media as part of the retention process.
Have marketing goals
Having a strong digital marketing team and a budget that can help catapult your business into the next frontier, it can seem pointless and redundant to have all of this without having clear marketing goals.
Marketing goals may look different for every business, but early on before allocating funds, think about what you want to achieve and what kind of financial resources will be needed to achieve it.
Each quarter, as part of the marketing strategy, work on defining your marketing objectives with your team members, as this will give you a clear picture of where you are heading and what your business needs to achieve. to succeed.
Evaluate previous strategies
As you build your new budget, take the time to look back at previous marketing efforts to see how you can improve in the future.
Evaluating your previous strategies will shed light on several questions such as:
- What worked and what financial capital was available at the time?
- How did I resolve previous issues, and was it necessary to increase spending?
- Which channels have been more successful than others?
- How much did I spend on digital ads and did it give me the return I was aiming for?
If you notice that certain tactics have worked for you in the past, there is a small chance that they will work for you again. Just be sure to take the time to test these strategies before fully committing to them.
Consider Content Marketing Costs
Content marketing is one of the most effective ways to retain customers while keeping them engaged. Statistics suggest that companies spend an average of 46% of their marketing budget on creating engaging content.
Although publishing content online is free, the cost of paying freelancers and creatives to regularly generate new content is what quickly begins to strain marketing budgets.
While it’s possible to hire an in-house creative to complete these tasks, business owners and entrepreneurs will need to consider the difference between hiring a full-time employee or paying a freelancer. In addition to that, it should also be important to consider how much freelancers charge for specific jobs and what their time frame is until delivery.
Consider different options
With a variety of communication channels available, businesses often find themselves with the difficult task of choosing a digital product that can be used to effectively advertise their business.
Not all platforms or digital tools will work the same way, and depending on the type of product or service you are looking to promote, that does not mean that every platform will work the same way every time. time. You will also need to consider the target audience, if they use these types of platforms and how they interact with the content made available to them.
Consider how you will use each platform for different products or services, as this will help you determine the financial capital needed to drive content creation and digital ad spend.
Distribute according to a formula
Once you have a marketing strategy in place, you can start working with the 70-20-10 rule when allocating money to your strategies.
The breakdown is as follows:
- 70% – should be allocated to marketing strategies that work for your business and marketing goals.
- 20% – should be spent on creating new strategies and developing new marketing tactics that can help your business grow.
- 10% – is for experimental digital marketing, which is used to test new strategies for the future.
Experts suggest that you give more priority to digital marketing strategies that have been successful in the past, as this will help give you a clear indication of how much to allocate to these types of strategies. It is quite obvious that you should allocate less money to strategies that have been less successful or have failed and given you minimal returns in the past.
Additional expenses
With the majority of the budget now allocated to an overall marketing objective, it’s time to start factoring in additional marketing expenses such as website management, paid search, paid social media ads, Google Ads, paid keywords, graphic design costs, content creation costs. , and video creation.
Of these, it’s important to consider how much you’ll spend on each to understand what the final costs will be. For best results, research experts in your area to see how much they will charge for individual cases and projects, which can then be used as an average figure in the final marketing budget.
Final Thoughts
Establishing a marketing budget, even if it is a small budget for startups and small businesses, can seem like a daunting task, especially if you are unsure of the financial capital needed to boost marketing efforts.
In short, it’s important to consider your marketing budget against overall marketing goals, looking at what you want to achieve and how your marketing strategies will drive more traffic and overall sales.
Once you have a clear idea of where your marketing strategy is going, you’ll soon start to find it much easier to allocate the right amount of money for each segment of the budget. Be open to making changes if needed, and during the first half, remember to overcompensate a bit, as this will help you plan and save better in the future.
