Don’t Waste a Penny: How to Allocate Your Digital Marketing Budget

When you’ve been in digital marketing as long as I have, you tend to notice when brands are making mistakes with their strategy. A lot of brands believe they must be using all available marketing channels to be successful, but in doing so, find they don’t have the budget to properly manage and execute campaigns at that scale. As a result, they’re simply stretched too thin, and running poor to mediocre at best campaigns on a wide scale, when they’d be far better served running absolutely stellar campaigns on fewer channels.

Not all channels are relevant to all brand audiences, and not all channels will support your marketing objectives. That’s why it’s important to continuously revisit your marketing goals, and keep a close eye on data to see how well you’re achieving those goals. It means developing multiple strategies to accomplish goals, and remaining fluid and flexible enough to make changes based on the data you’re seeing, so you can improve your ROI.

A large part of developing any digital marketing strategy for any goal is knowing where and how you invest your money. While I obviously can’t give you a cut and dry approach that works every time for everyone, I hope to guide you so you can be smarter with your money – especially if it’s limited – to help you earn more profit to reinvest back into your business and fuel growth.

 

Assess Your Target Audience and Goals

Your demographics will determine the methods you’ll use to reach your audience. For example, if you’re trying to target an audience of younger people, you wouldn’t want to spend a lot of money on popup ads on various websites, for the simple fact that the majority of your audience will be using ad blockers.At the same time, if you’re targeting an older audience, certain social channels like Snapchat won’t be as effective – and an audience of men means Pinterest isn’t a good choice, either. If you’re spending time and money on places where your audience can’t be found in volume, then you’re doing it wrong.

Now, think about your goals – because this won’t necessarily affect the total spend, but it may mean you spend more in certain places than others.

Common digital marketing goals typically fall into one of two categories:

  • Increasing brand awareness – growing your social media following, increasing social engagement, getting more content views, shares, or downloads
  • Increasing sales – higher conversions for first-time buyers, increasing averageorder value (AOV), increasing customer retention percentage

 

Determine the Channels to Best Reach That Audience

Email marketing is a great channel for most audiences – because everyone uses email. It is, however, a hard one to break into.

You want to invest in social media, but there are countless channels to be involved in – and depending on your demographics, certain channels are better ignored.

 

Key Areas to Invest In

  • Email Marketing: For every $1 you spend on email marketing, you can expect an average return of $38. One study shows people are twice as likely to sign up for your email list than they are to interact with you on Facebook.
  • Content MarketingThis will likely take up the majority of your digital marketing budget, and can be hard to allocated based on the approach you choose. You’ll need money to pay content creators for the creation of content – whether it’s written, images, or video. You’ll need money to pay for the tools you use to make it easier, and social media and data experts to help you push the content. Content marketing costs 62% less than outbound marketing, but generates 3x the leads.
  • Social Media Marketing (SMM): You’ll need to grow your social presence, which means spending time creating content specifically for your social channels and running ads on Facebook and other platforms.
  • Search Engine Optimization (SEO): People can’t see your content if they can’t find it. Investing in SEO can help you bring in organic traffic from searchers looking for what you have to offer.

If you have past campaigns to analyze, take the time to learn from the data. How much money did you spend in each of these areas? What was your return on investment? Did you, or did you not reach your goals? How close were you to achieving the goal? How far did you exceed your goal? Have you sustained that follower growth or lost some since the conclusion of the campaign? This information will help you as you determine what to allocate where for the next round of campaigns.

 

How Much Money Do You Have?

It’s up to you how much money to dedicate to your total marketing budget. For bootstrapped and small businesses, this can be a meager sum compared to medium businesses and especially enterprises. But, no matter the amount, here’s a good guideline to follow: spend anywhere between five and 15% of your total revenue. As your revenue grows, you can invest more back into the business to keep the momentum going.

Notice I said total marketing budget. You’ll want to reserve a portion of that budget for conventional marketing methods, so your digital marketing budget is only part of it. Of course, because of how popular and relatively affordable it is compared to non-digital options, you’ll want to spend the bulk of that budget digitally. Generally speaking, spend up to half of that budget on total digital marketing – breaking it down into smaller segments over those four key areas.

 

What You Should Spend and Where You Should Spend It

Every business is different, so instead of assigning hard numbers for everyone to follow, if you don’t know exactly what you need, I recommend using the 70/20/10 rule. 70% of your budget goes to things you already know are effective. 20% of your budget goes to experimentation, mostly on what you’re confident is a safe bet. While you’re not completely sure the investments will pay off, it’s reasonable to believe they are a good option. Use the remaining 10% of your budget to do whatever you want. Have a crazy idea that could result in a high ROI, but could also bomb? This is where you allocate the funds to give it a try and see what happens. Play around with the numbers until you find what works best for you, using this as your starting guideline.

 

What Tools Will You Need?

Another important part of budgeting lies in making sure you have the funds for the tools you need to make your job easier. That’s not to say you can’t use free versions of tools that come with free forever plans, but trying to do everything manually will cost you time – and we all know time is money.

At the least, I recommend using a social media management platform, but you’ll also need something for email marketing to handle your lists, autoresponders, and so on. You may also want to invest in other automation tools, or customer relationship management platforms, depending on your needs and what you’re already using. The good thing is, there are highly effective tools available at various price points so you can find something that works for your budget.

 

Digital Marketing is Ongoing

Until your business either changes hands or shuts its doors and you don’t have to worry about it anymore, everything will remain an ongoing process. Take the time to review your budget and progress every month, if not more often. Do a more comprehensive review annually. Your budget should be allocated to areas that will make the biggest impact, and those areas may change as your business grows.

SEO virtuoso, CEO @Sachs Marketing Group. Focused on being of service to business owners - helping to better position them in the eyes of their audiences.

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