As a digital agency, one question a lot of brands frequently ask when they meet with our team at Blue Fountain Media is, “How much should I spend on digital marketing?" The truth is that there is no easy way to answer that question. Because your brand is unique, the demands on your marketing dollars will be too. What works for one company may be completely wrong for another one. What a company in one industry can achieve with a relatively small investment may cost thousands more for a company in a different vertical. Your company's marketing budget should be tailored to meet your particular needs, and it should be designed with the specifics of your business in mind.
While it's tough to determine what your exact budget should be, there are some helpful steps you can take to develop a marketing budget that works for your business.
1. Set goals.
Your first step should always be to get a clear understanding of your biggest challenges as a brand. Are you a new business that needs to develop more brand visibility? Have you been around for a few years and have a loyal customer base, but are struggling to convert new leads? Are you finding it difficult to attract repeat customers? Each of these challenges is unique and each of the businesses facing them will have separate goals. The goals you set are key to informing where your marketing budget is invested because each marketing channel or initiative will support your objectives differently.
2. Do your homework.
You can't determine how to allocate your budget if you don't have a good sense of the digital marketing landscape, particularly as it pertains to your industry. How can you know how much money you need to invest in, say, paid search if you don't have an estimate around how much the bids on keywords relating to your business will cost? Here are some areas of research to consider:
- Previous campaigns: Successes, failures and key learnings
- Competitive research: Where your competitors are investing their marketing dollars
- Content: What content exists on topics related to your brand's expertise and what content is missing?
- Influencers relevant to your brand: Who are the influencers in your brand's space and what might it cost to work with one of them?
- Keyword research: What keyword themes are most important and relevant to your brand and how expensive are they to bid on?
The answers you find when you begin digging into these questions can help you to determine where key areas of opportunity lie and how much you can expect to spend in each of those areas.
3. Know what you can spend.
Without some guidance from the business side on a ballpark budget, it's incredibly difficult for a marketing team (internal or agency) to make informed recommendations on how your money should be allocated. From the marketing perspective, it's often far better to know how much the brand can afford to spend so we can think critically about how to make the most of that budget.
4. Go forth and allocate.
In order to allocate your budget, it can be useful to create a list of all the different channels, tactics and strategies available to you. For example, your list might include:
- Content creation
- Content promotion
- Social media marketing
- Email marketing
- Paid search
- Display advertising
- Website optimization/conversion rate optimization
- Mobile marketing
- Online public relations
Look at the list you come up with and consider whether any of the channels or strategies included do not serve to support your goals. You can strike those from the list. From there, prioritize each channel based on how effective it will be in helping you achieve your objectives. Then consider allocating the largest chunk of your budget to the channel that aligns most closely with your business objectives—the one that's No. 1 on the list you just created. From there you can move down the list, allocating to each channel based on priority.
Don't forget to set some money aside to support emergency requests, surprise events or last-minute initiatives.
Developing a Budget for Your Digital Marketing
Determining a digital-marketing budget can be overwhelming if you don't have the tools or know-how to approach the process strategically. The important thing is to not throw darts at the wall and hope everything turns out OK. But you already know that! Take on your next budget with confidence by 1) setting goals 2) doing the requisite research 3) establishing what you can afford to spend and 4) allocating to channels that support your goals.