Between the proliferation of mobile-shopping habits and the new consumer restrictions imposed by COVID-19, digital marketing has grown more critical than ever for modern-day business success. Unfortunately, many small-to-midsize companies struggle to create marketing budgets that properly support their needs and objectives.
Since one size definitely does not fit all in the world of marketing budgets, it pays to focus on key considerations that can help you narrow your marketing focus and customize your plans accordingly. Think about the following three factors when planning your marketing budget.
1. Percentage of Revenue
Before you can calculate your digital marketing budget, you must set your overall marketing budget. The easiest way to determine this number is as a percentage of your gross revenue.
Established businesses with healthy revenues and promising growth rates may need to assign no more than twelve percent, and possibly as little as five percent, of their overall budget to marketing. If your business has yet to establish itself or wants to grow rapidly, you may need to devote up to 20 percent of your overall revenue to marketing.
Digital marketing takes up a healthy chunk of today’s marketing budgets. Small businesses allocated an average of 42 percent of their overall marketing budgets to digital marketing in 2019, boosting that number to an anticipated 45 percent by the end of 2020.
Using this logic, a company generating $1 million in revenues may devote five percent ($50,000) to marketing, with 45 percent ($22,500) going to digital marketing. A company that puts 10 percent of their $500,000 annual revenue into marketing (and 45 percent of that budget into digital marketing) would end up with the exact same $22,500 digital marketing budget.
2. Platform and Channel Choices
Your digital marketing budget must provide the necessary funding for the array of platforms and channels that you plan to use. Many businesses use a selection of key social media channels, landing pages, and other inbound marketing devices to feed prospective customers to their website, which acts as their central digital marketing hub.
Don’t forget about paid marketing and advertising campaigns. You must balance your efforts in this area between the selection of relevant keywords and cost-per-click or cost-per-impression numbers. Your social media channels and website pages also require careful search engine optimization.
Setting your company up with every social media channel that tickles your fancy will stretch your digital marketing budget unnecessarily while failing to yield consistently fruitful results. You need to find out which channels appeal to your target audience the most and focus on mining those channels to the fullest.
Once you have some data as to how each of these platforms and channels performs for you, make use of the Pareto Principle. Per this principle, you should focus on the 20 percent of your efforts that account for 80 percent of your digital marketing ROI. Pull your funding for the less successful efforts and redirect it toward these top performers.
3. Content Creation and Alignment
Much of the money you budget for your digital marketing campaigns will go toward the writers, designers, editors, and other professionals who create ongoing streams of content. Well-crafted videos, blog posts, landing pages, permanent website content, marketing emails, and other content grab the attention of buyers and Google alike.
You may find it both easier and more cost effective to either hire freelancers or engage the continuing services of a digital marketing agency than to maintain an in-house creative team. Agencies in particular have developed a longstanding rapport with their artists, ensuring efficient, timely, on-message content creation.
One particularly daunting challenge involves maintaining clear, consistent brand messaging across all of your marketing channels. You may need to budget for the training and management of your in-house or freelance teams to ensure this consistency. This is another time when a turnkey marketing agency can come to your rescue.
The experts at ROI Advisory Solutions can discuss these and other considerations with you, providing you with the marketing services that make the most sense for your business. Contact us today and put our services to work.