It’s projected that in 2020, almost half of all marketing budgets will be dedicated to the digital sphere.
But what does that mean? How much is allocated for marketing budgets?
Well, the U.S. Small Business Administration says that businesses spend anywhere from 1% to 12% of their total revenues on marketing. How much they spend seems to depend on what industries they’re in.
Okay, you’re annoyed now and we get it. You just want a simple answer to a simple question.
You just want to know how much your digital marketing budget should be.
We’ve got you covered. Just keep reading.
What is Digital Marketing?
When you think marketing, it’s likely you think of the more traditional techniques used to find customers or leads. You likely think of what’s known as “offsite marketing.”
The Goodyear Blimp.
While these are still effective, the world is changing. It’s moving online. In fact, it’s been doing that for quite some time now.
The internet is ubiquitous. According to the Pew Research Center, 81% of Americans get online at least once a day. More than half of those claim to be on the internet “constantly.” And, according to that same report, internet usage continues to grow among the population.
So What Does That Mean?
It means that more people get their information from the internet. It means that now instead of trying to call their house in hopes that they’re there to pick up, you know where they are.
Digital marketing is, essentially, taking advantage of this fact.
That is, you already know where your potential customers are, so all you have to do now is get your message across to them in an appealing way. Any method you could use to achieve this is digital marketing – search engine ads, emails, blogs, social media, anything. It’s that simple.
The point is that you’re not hunting down leads and prospects as you would with offsite marketing; rather, you’re trying to entice them to hunt you.
And that’s the key.
Now let’s move on to what you have to know about setting your budget.
7 Tips for Setting the Perfect Digital Marketing Budget
1. Define Your Purpose
Ask yourself: what do you want your digital marketing campaign to achieve?
Do you want to boost brand awareness?
Foster brand loyalty?
Or is your goal simply increasing revenues and widening your customer base?
Hell, it could be a mixture of these three or something else altogether. The point is you have to know what your end-goal is in order to know map out how to get there.
One of the biggest mistakes you can make in business is to try everything at once. Don’t spread yourself too thin. That’s a surefire way to lose money and see no results.
Clearly define your purpose.
2. Learn From the Past
If you’ve been in business for a while, you’ve had your ups and downs.
Look back at them. How’d you achieve the ups? What went wrong during the “down” times?
You might find patterns you didn’t notice before.
If you’re a start-up, or not old enough a business to have had patterns emerge, or even if you’re an established, long-standing business, you should check out your top competitors and their history.
Analyze them carefully. What are they doing right? What could you emulate? What could you do better?
The point is this: once you’ve done your analysis, allocate money to those strategies that have been proven to work and move money away from strategies that don’t bring results.
3. Get With the Times
Trends come and go, but as a business owner, it would behoove you to keep track of them all.
Remember, businesses that survive and thrive over time are the businesses that can adapt to change.
Again, check out what your competitors doing right. Are you lagging behind them in any area? Are they popular on social media? Do they rank well on search engines? Is their website prettier than yours, or more hip, or more informative?
What about industry news – what’s the forecast for your product or service?
What are people saying about your product or service? Maybe there are common complaints that consumers have about your industry that you can solve.
Find the answers to these questions and adapt, adapt, adapt.
4. Get Ahead of the Times
Just imagine if you caught on to the power of search engine optimization before anyone else did.
Just imagine if you were the first to notice the potential of email campaigns.
You’d be a very rich person, wouldn’t you?
That’s why it’s important to keep track not just of industry trends, but digital marketing trends too. Things change rapidly in the technological sphere; hot products and services today may be old news by tomorrow.
Try to stay ahead of the curve. Constantly check for any new developments that you might want to get an early start on.
5. Decide on Platforms
Your choice of platforms depends on what industry you’re in. If you’re going to be putting out blog content, you may want to invest in WordPress, for example.
This will require a bit more in-depth research on your part. Look at what platforms and software your competitors use. If they’re all using different things, you’ll have to choose using your own judgment. Remember to peruse consumer reviews when deciding.
6. Have a Plan for Output
Map out your content.
Determine what your customers – or potential customers – would want or respond to. Is it web content? Newsletters? Instructional videos? Product videos?
Figure it out and make outlines, create a publishing schedule, and estimate how much everything will cost not just to make, but to bring to the customer.
7. Do the Math
And now you’re ready to commit to a dollar amount.
If you do all of the above, you should have concrete goals in mind. You should know what strategies you’re going to pursue, what platforms you’re going to be using, and what your output will look like.
You will, of course, have to make changes as the year progresses – that’s just life and business.
But it’s a good starting point.
Now all you have to do add all the estimated costs up and compare them to your revenue. Remember, your marketing budget should be up to 12% of your revenue. It could go as low as 1%, depending on your industry. Your digital marketing budget should be about half of that.
It’s really that simple.
There’s no right amount to spend on a digital marketing budget.
The goal is to figure out how much you should invest. Take the advice above and proceed cautiously. Monitor your results like a hawk.
Be prepared to make changes if necessary.
Remember: adapt adapt adapt. Always be ready to adapt.
And that’s all there is to it. If you need more help with planning your digital marketing campaign, or just want some advice, be sure to check out our services.