A well-designed digital marketing strategy can propel a company’s growth trajectory, but the potential for wasteful spending is high without effective budget management.
Understanding how to manage your digital marketing budget is not just an advantage but a necessity in today’s digital age.
Ensure every dollar spent contributes to your company’s success with this helpful digital marketing management guide for budgeting.
In this article we’ll cover:
• Why Budget Planning and Digital Marketing Management Is Important
• How Much Should Be Allocated for Digital Marketing?
• How To Create a Digital Marketing Strategy (Without Going Over Budget)
• Where To Invest Your Marketing Dollars
Why Budget Planning and Digital Marketing Management Is Important
A marketing budget provides direction to digital marketing efforts, ensuring all resources are properly leveraged for maximum results. Businesses can identify the best channels and tactics to implement while staying within budget parameters.
It also allows for accurate forecasting of returns, which provides the ability to assess the impact of past campaigns and anticipate future outcomes that can make or break any digital marketing endeavor.
Additionally, budget planning ensures digital marketing efforts remain sustainable. Companies must be aware of their financial capabilities and adjust their spending accordingly. Establishing a budget that is flexible enough to accommodate changes in the market can help businesses stay on track and remain competitive.
How Much Should Be Allocated for Digital Marketing?
The shift in consumer behavior towards online platforms necessitates a thorough evaluation of how much should be invested in digital marketing efforts. Factors such as business size, revenue and growth goals should be considered when setting a digital marketing budget.
According to a CMO survey by Gartner, advertising accounts for 21% of marketing budgets, with two-thirds allocated to a digital marketing plan. Much of this budget is dedicated to content marketing, including blog posts, social media updates, case studies, eBooks, infographics and videos.
Remember, though, that every budget is different per company and industry. Some may stick to that range, while others invest more in digital marketing.
Successful companies like Bottomline Technologies, Salesforce, MindBody and Oracle, for instance, spend over 20 to 50% of their revenue on marketing!
Simply put, there’s no magic number, but unless you’re a giant tech company like Apple – don’t spend less than 10% on your digital marketing strategy.
With that said, consider your marketing goals and prioritize accordingly when setting a budget. Understanding industry standards will help you make informed decisions and allocate resources effectively.
Up Next: Learn how to create a digital marketing budget that works for your business.
How To Create a Digital Marketing Strategy (Without Going Over Budget)
Creating a digital marketing budget can take time and effort, especially for small businesses with limited resources. Here’s how to create a digital marketing strategy while sticking to your budget:
1. Evaluate the Previous Year/Quarter’s Performance
Examine budget reports from previous quarters and years. Assess the success of the campaigns: Did they achieve marketing goals or generate a return on investment? By identifying effective and ineffective digital marketing management strategies, you can selectively incorporate or remove specific activities.
2. Establish Marketing Objectives
Knowing your marketing goals provides structure to your digital marketing plan and budget. Establish SMART (Specific, Measurable, Achievable, Realistic and Time-Oriented) goals before allocating resources. Aim to answer questions like:
• What is the key objective of the digital marketing campaign?
• How will you measure success?
• What results do you expect to achieve in what timeframe?
• What are your key performance indicators (KPI)?
• How much are you willing to invest in the campaign?
Note that objectives should be revisited throughout the year and adjusted if necessary. Monitor performance regularly, analyzing data points like website visits, conversions, bounce rate, etc.
3. Compile a List of Operational Expenses
Operational costs are the non-negotiables of every brand strategy. These recurring expenses should be prioritized to determine the remaining budget available for other marketing investments.
A marketing plan example of operational costs includes website hosting fees, SaaS subscriptions, platform costs, taxes or other expenses that keep your business running.
4. Select the Optimal Digital Platforms for Your Business
There are numerous marketing channels available, but your brand doesn’t have to be present in all of them. Instead, choose the channels that align best with your business objectives and consider the associated costs for each.
Select wisely to optimize your digital marketing strategy and maximize your results. Identifying where your target audience spends time online is one way to determine which channels work best for your business.
Say your target audience is primarily Gen Zs; you may focus on social media platforms like Instagram and Twitter instead of Facebook, which caters more to an older demographic.
5. Calculate Marketing Expenditure
You’ve identified which channels to focus on in your digital marketing plan; now, it’s time to determine the cost of marketing initiatives within those channels.
If you’re running paid ads, calculate your projected annual costs, such as click-through rates, CPC (cost per click) and CPA (cost per acquisition). If investing in a content marketing strategy, estimate costs for creating or curating images, videos and articles.
Developing a budget that works within these parameters helps ensure you don’t overspend throughout the year.
6. Allocate Funds for Testing and Miscellaneous Expenses
The digital marketing sphere constantly evolves, so it’s important to stay agile.
Even with meticulous planning and analysis, the reality is that launching a campaign always holds an element of surprise. Even the most well-designed and thoughtful campaign can fall flat, while a single ad can unexpectedly go viral.
To navigate unforeseen outcomes, it is crucial to continuously test the performance of each channel, comparing estimations and assumptions with their actual impact on the business. Key factors to measure for a comprehensive evaluation include cost per acquisition (CPA) and lifetime value (LTV).
Additionally, allocating funds for unexpected costs that may crop up during the campaign will ensure your budget remains balanced. These expenses can be anything from web hosting fees to legal considerations.
That said, ensure you have a contingency plan to avoid getting off track even if unexpected costs arise.
7. Estimate Budget Based on Data Analysis
When presenting your budget to upper management or leadership, providing clear and substantiated data for every decision is crucial.
Avoid simply stating your assumptions about advertising costs; instead, rely on research, studies and past data to demonstrate the exact expenses of a successful ad campaign. This approach fosters trust in your plan and showcases your leadership skills.
If you are unsure how to allocate your budget, consider following the 70-20-10 digital marketing plan template as a guideline:
• Allocate 70% of your budget to proven strategies
• Allocate 20% of your budget to new strategies aimed at growth
• Allocate 10% of your budget to experimental strategies
Marketing Plan Example for Budgeting
Let’s say you have a brand strategy budget of $10,000; this digital marketing strategy example from HubSpot outlines how you can effectively allocate the money:
• $7,000 for a CRM or preferred software, successful PPC marketing strategy and social media marketing
• $2,000 for marketing a new product, feature or service under testing
• $1,000 for testing new sponsored content
Again, this is just a marketing plan example for budgeting purposes; you can always adjust the numbers to fit your own budget and business needs better or follow this digital marketing strategy example.
8. Monitor and Adjust Your Budget Regularly
Your digital marketing budget isn’t set in stone; you should review it often, paying attention to changes in performance as well as new opportunities or challenges related to the changing marketplace.
Revise your budget accordingly and stay ahead of potential issues by making necessary adjustments when needed. This enables you to determine if your objectives have been achieved and adjust spending for optimum performance.
Where To Invest Your Marketing Dollars
Not sure where to allocate your budget? Here’s a digital marketing strategy example list of where to invest your marketing dollars:
1. Search Engine Optimization (SEO): An SEO marketing strategy is integral to any successful brand strategy as it helps ensure people find your website or content easily online. Consider hiring a reputable firm to help you get the most out of your SEO marketing strategy investment.
2. Social Media Marketing: Use social media marketing to reach potential customers, drive traffic to your website and build loyalty with existing customers. Invest in creating high-quality content that resonates with your target audience and post it frequently on your company’s social channels.
3. Content Marketing Strategy: Craft informative, engaging content to attract your target audience. Consider creating a blog to host educational or entertaining pieces to draw visitors to your website.
4. Email Marketing Strategy: Email your customers with updates and special offers to stay top of mind. Additionally, consider email automation software to send personalized messages based on customer behavior or preferences.
5. Pay-Per-Click (PPC) Advertising: A PPC marketing strategy targets customers on specific search terms with ads that appear in search engine results. This is a great way to reach potential customers actively searching for products or services related to yours.
6. Analytics and Tracking: Track and measure the performance of your digital marketing initiatives to gain insights into what is and isn’t working. Regularly review analytics data to learn how customers are interacting with your website or content. Then, adjust strategies to reach your desired goals.
Master the Art of Budget Management With Thrive
Budget allocation is an essential skill for effective leadership and ensuring the success of your marketing teams. A well-balanced budget empowers your teams to achieve their goals without the risk of overspending.
To satisfy upper management and employees, following best practices when planning a budget is crucial. Leveraging digital tools or a digital marketing plan template will also provide valuable support as you develop a comprehensive yearly or quarterly budget.
Thrive, a premier digital marketing agency, excels at crafting personalized plans to optimize your budget and effectively manage your digital marketing campaigns. With our extensive 10-year expertise, entrusting us with your campaigns ensures peace of mind as we expertly manage your budget and achieve desired results.
Whether you want to revamp your web design, email marketing strategy or SEO marketing strategy, our experts will assess your campaigns to identify cost savings potential. We’ll then propose a realistic digital marketing plan template with reasonable timelines and budget options.
Contact us today to see how we can help grow your business with budget planning and campaign management.
