The one question we almost always get when onboarding a new client is, “How much should I spend on my digital marketing?”
Good question. Most agencies happily answer this question with big numbers, pressing their clients to do a lot of advertising with long-term commitments. Makes sense – it means bigger commissions. The better decision is driven by three things:
- Your marketing budget or in the case of a new business, your business plan.
- Available cash to invest in marketing and business growth.
Taking a closer look at number three, performance, how can you decide what level to invest in marketing if you don’t know which marketing channels are performing? You can’t. This is why at AdEdge, we prefer to start small, identifying top performing marketing channels and within each channel, which keywords, ads, placements, creative, calls to action are driving the best performance per dollar. With this data, we can then make intelligent recommendations about where and how to accelerate investment. It’s basic, “horse before the cart” stuff. “Ready, aim, fire”, not “Ready, fire, aim.” You get it.
According to the U.S. Small Business Association, many small businesses don’t allocate enough money to marketing, or they spend their marketing dollars haphazardly. By taking a few simple steps, you can establish a marketing strategy, an overall marketing budget, and assign specific dollars to spend wisely on your digital plan.
Define Your Goals: If You Don’t Know Where You are Going, Most Roads Will Lead Nowhere.
Every business is unique and needs a personalized marketing plan. Knowing your goals is the first step when determining how much to spend. Your marketing goals may include:
- Defining your target audiences
- Boosting your brand visibility
- Generating leads
- Nurturing and converting new prospects to actual sales
- Building a loyal customer base
- Drive traffic to your business website
- Build a social media presence that drives engagement and awareness
Create a Budget: Your Goals and Revenues Will Guide Your Marketing Spend
For small businesses, a good rule of thumb to follow is to spend 7-8% of annual revenues on marketing with B2C companies spending more than B2B companies. In the initial stages of building a brand, many businesses will commit 20% of their sales on marketing in order to establish a presence in their marketplace.
To help create the right budget, take time to review your business expenses and revenues. Also, get a better understanding of the digital marketing environment. Your goal is to create an affordable digital marketing strategy that maintains a healthy balance between brand investment, performance marketing, and overall cash flow. A digital marketing budget should account for the key channels to promote your brand:
- Search Engine Optimization
- Social Media
- Paid Search
- Creative for Ad Campaigns
- Content Marketing
- Video Marketing
The beauty of digital marketing is that it is highly measurable. Your budgeting decisions will be based on performance data, ensuring your marketing expenses generate tangible results. The numbers can be adjusted accordingly throughout the year.
Here are a few straightforward steps to take to improve your marketing:
- Check on your competitors: Identify your biggest competitors in your industry. What is their audience reach, what is their business size, which platforms are they using to market their products, and consider what they may be spending on their overall marketing?
- Define your audience and identify where they spend time online.
- Research keywords for your business and incorporate into your advertising to boost your ranking on search engine results
- Analyze your previous campaigns: Revisit the data (goals, channels, spend, results) from your previous marketing successes and failures.
- Test, track performance, and make adjustments.
Don’t Suffer in Silence. Request Your Free Digital Marketing Health Checkup from AdEdge
Are you a new business looking to step into the digital marketing world? Are you unclear on which digital marketing channels will reach your audience? Do you know how your overall marketing is performing every month? Is the marketing agency you have partnered with not delivering the results your business needs? AdEdge can guide you.
With a highly qualified marketing team, we will take time to review your marketing frustrations and respond with solutions that fit your goals. The AdEdge team will focus on digital marketing strategies that work and end your suffering. Our goal is to enable you to confidently grow while effectively managing your budget. Contact us today to learn more about managing digital marketing budgets and performance.