Tips for Balancing Your Digital Marketing Budget
One of the first priorities of the new year for most marketers is the issue of establishing and/or balancing a digital marketing budget. Whether it’s calculating your projected revenues or determining which advertising mediums deserve the most attention, there are many factors to consider when developing a marketing budget. Below are four key tips to keep in mind as you set your budgeting parameters.
1. Establish clear goals.
Before you break out the calculator and begin crunching any numbers, it’s absolutely imperative that you establish clear marketing goals for the new year. This will help you determine what tactics you will need to implement in order to get the job done. What do you want to accomplish? What marketing objectives, if achieved, would equal a “win” for your company? Answering these questions is the first step towards gaining clarity regarding your marketing goals. It is from this foundation that you will be able to determine where to channel your marketing dollars.
2. Identify your primary marketing channels.
Now that you have your “what” (i.e., your goals and objectives) in place, it’s time to discuss the “how.” Below are some of the most common digital marketing channels:
- Search Engine Optimization (SEO) – This is a medium-to-long-term strategy for most businesses, as it involves solidifying your company’s presence in the search engines by organic means (i.e., content marketing, link building, etc.). If you are working with a longer time frame to establish your online presence (e.g., six months or more), you can allocate a larger portion of your budget (roughly 30-40 percent) to SEO.
- Pay-Per-Click (PPC) – This is one of the most immediate ways to generate traffic to your website. With pay-per-click, you can set up an account and have live ads running in a matter of minutes. The obvious drawback is the greater up-front out-of-pocket costs, as well as the learning curve you will have to go experience to develop a solid ROI.
- Social Media – This takes quite a bit of time to establish and will require a significant investment of time if you plan to tackle this in-house. There are tons of great companies and consulting firms out there that can handle your social media promotion for you, but this puts more of a strain on your short-term cash flow, and may still take a while before you see any substantial results.
- Email Marketing – This method is considered to be one of the most cost-effective ways to drive leads and create sales due to its highly targeted nature. If the time frame for your marketing plan is six months or more, you should definitely consider allocating a portion of your budget (between 5-10 percent) to email marketing.
- Content Marketing – This primarily refers to blogging, but it can also take the form of offering free whitepapers or ebook downloads. Content is definitely king, and it’s important to dedicate a portion of your marketing budget to creating fresh content on a regular basis. It is generally recommended that you allocate roughly 5 percent of your overall marketing budget to content creation if the time frame for your marketing plan is six months or more.
3. Crunch the numbers.
The industry standard for a digital marketing budget is typically about 10 percent of the company’s projected annual revenue. Roughly 40-60 percent of this amount is dedicated to paying the people who will actually carry out the marketing program, while the remaining amount will pay for advertising spend and various marketing tools (e.g., software, etc.).
Below is a sample digital marketing budget based on a total marketing spend of $3,500 per month:
- Search Engine Optimization (SEO): $1,050 (30 percent of total)
- Pay-Per-Click (PPC): $1,400 (40 percent of total)
- Social Media: $525 (15 percent of total)
- Email Marketing: $350 (10 percent of total)
- Content Marketing: $175 (5 percent of total)
The amounts will vary based on which marketing methods you choose to prioritize; the important thing to remember is that abiding by a certain percentage of allocation for each method is the best way to keep yourself from spending your marketing dollars in an inefficient manner.
4. Track progress along the way.
If you establish good tracking systems and commit to being a data hound, it shouldn’t take long to figure out which marketing channels are producing the best results for your business. Once you’ve identified the most effective methods, it will be time to reallocate your spending percentages so that you can direct your resources towards the areas that produce the most favorable return on investment.