How Much of Your Budget Should Go Toward Digital Marketing?
by Kim Grant
Most online marketers would agree that developing an effective budget for your digital marketing efforts is just as much of an art as it is a science. After all, if you spend too little, your efforts will fall flat because you didn’t put enough “push” behind your marketing message. If you spend too much, you could possibly take resources away from other areas of your marketing plan that need attention.
So how much of your budget should go toward digital marketing? While it would be virtually impossible to name any specific numbers (because every business is different), below are some ideas to consider that will help you arrive at a solid budget estimate for your digital marketing efforts.
According to a survey published by Aabaco Small Business, digital marketing spend represents about 25 percent of the average marketing budget, and 2.5 percent of overall revenue (and it is rapidly increasing each year). Seventy-five percent of that digital marketing spend is allocated to activities and management. The major areas of digital marketing spend typically fall into these five categories (in descending order):
- Digital advertising
- Content development and maintenance
- Search engine marketing (SEO and PPC)
- Website development and maintenance
- Email marketing
Although the strategies and techniques of each business will be different, analyzing your budget in light of these five major categories can give you a general framework by which you can begin to make budget allocation decisions.
Tips to Help You Develop Your Digital Marketing Budget
- Be clear on your goals.
What exactly are you planning to gain from your digital marketing efforts? Do you want to increase sales, garner leads, build brand awareness, etc.? Without clearly defined marketing goals, it’s going to be very difficult to nail down what type of campaigns you’ll need to create, as well as how much you should spend on each marketing technique (PPC, banner ads, etc.).
- Gain clues from what has worked well thus far.
Look at last year’s numbers and see what strategies produced tangible results. Which marketing techniques were successful, and which ones basically flopped? What did your audience respond to the most? Take time to analyze the numbers from last year, such as email subscribers, leads, paying customers, sales, retweets, shares, etc., and use them to inform your budget allocation decisions for this year. Invest your resources in the efforts that have produced positive results, and cut off funding for ineffective tactics.
- Reserve some cash for trying out new techniques and strategies.
While going with what has proven to be successful is a given, there should always be some room in your marketing budget for experimentation. When you’re willing to allot a certain percentage of resources for trying new things, you open your business up to new opportunities and possibilities.
- Study industry trends.
Keeping tabs on what your competitors are up to is a valuable practice, and while copying their strategies is a no-go, you can still gain insight into what tactics seem to be working well for the competition. Are they succeeding with display advertising, SEO, PPC, social media, etc.? Determine how you can adapt the successful strategies to fit your own business, and make a note to avoid any marketing mistakes your competitors may be making.
- Calculate your budget estimate.
Once you have a good picture of where to invest your resources, you can use Leadgenix’s quick and easy digital marketing budget calculator to give you a decent estimate of how much money you should allocate to your digital marketing efforts.
Although the goals and resources of each business will be different, the tips outlined above can provide you with a good head start toward developing a reasonably accurate digital marketing budget. Just remember to center your efforts around your clearly defined marketing goals, and make every dollar count!