Digital Marketing is arguably the most effective way for businesses to reach customers in today’s online world. For businesses of all sizes, connecting through Facebook, Google and other online platforms is more important than ever.
One of the challenges when starting your digital marketing journey (and for many who have been at it for a while!), is the question of budget. i.e. how much should a small business budget for their digital marketing?
While there is no “one-size-fits-all” answer – the following article provides a simple guide to help you allocate a digital marketing budget with confidence!
Step 1: Know Your Goals – And How You Will Measure Them
Ask yourself: what are you trying to achieve from digital marketing? Increase your brand awareness, build your email contact list, sell more on your eCommerce site … or something else entirely? Write down the goals, and order them by importance.
Then, for each goal you have defined, think about the metrics you will use to measure progress. There are many metrics to choose from, for example:
|Brand Awareness||Number of page views, unique visitors, reach, engagement, impressions|
|Build Email Contact List||New leads, cost per acquisition|
|eCommerce||Return on Ad Spend (ROAS), Conversion Rate, Revenue|
Choose a few meaningful metrics that bring meaning to how you are tracking against your goals. Tip: don’t get overly worried about just one metric, and don’t get bogged down in ‘analysis paralysis’ by picking too many.
Step 2: Select The Best Channels To Achieve Your Goals
Today, there are many channels and platforms to choose from for your digital marketing – and the list is always growing. Each channel is different and has its own advantages, and it is important to choose a strategy that is best for you, based on your industry, target demographics and goals.
Choosing the right platform is especially important when you are working to a smaller budget; it’s better to find success on a smaller number of channels than “spreading yourself too thin” across many channels without the budget to see results.
Other considerations when defining your channel strategy:
- What are your timeframes?
Some channels and strategies take longer to return results, and some provide results very quickly. For example, optimising your website to improve your visibility in Google search results (Search Engine Optimisation, or SEO) is a key foundation for your digital strategy. However, it generally takes time to see results. Conversely, paid media campaigns (i.e. ads on Google / Facebook) return results quickly, but may not deliver the same longer term benefits. Understanding your timeframes can greatly inform your channel strategy.
- What demographic are you targeting?
Platforms may be more effective for you depending on your target demographic. This is a complex area and it’s worth talking to an expert, but as an example consider the age of your target demographic – and then consider the average age of users on Tik Tok, Snapchat, Twitter and Facebook.
- At what point in the “Marketing Funnel” are you targeting customers?
The marketing funnel is the journey a customer goes through to purchase/enquire with your business: from Awareness, to Consideration, and finally, Conversion. If you’re targeting customers at the “top” of the funnel (i.e. building awareness) you will need a different strategy compared to working at the bottom of the funnel (i.e. trying to drive more actions / conversions).
- What are your competitors doing?
It is critical to know what your competitors are doing, as it will have a direct impact on how cost-effective each channel will be for you. As platforms become more popular and/or if a major competitor of yours is advertising heavily on them, they become more competitive and the cost of ads can go up significantly. Depending on your goals, you may be better off using channels that help you find a marketing niche that your competitors have overlooked.
The right channel strategy is an important step in designing campaigns that will allow your budget to go further, and ultimately help you achieve your goals.
Step 3: Bring It All Together – Estimate Your Budget
With your goals, metrics and channel strategy defined: you are now ready to bring it together and get specific on your budget allocation.
For each channel you have chosen, go through and calculate how much you need to spend to hit the metrics you identified. This can be estimated using existing insights available on the cost of traffic, clicks, etc.
For example, you may have defined a goal of having more people visit your site. The corresponding metric you have chosen is Website Users, and Google “Pay Per Click” Ads (PPC) as the channel. If your goal was 40 new users per week, and the average “cost per click” (CPC) for your industry is $4, then you will want to set your PPC budget to $160 per week.
Apply a similar process to each of your chosen channels, and you will start to see a meaningful budget come together, tied directly to your measurable goals.
Step 4: Monitor, Review & Improve
This approach will give you a solid starting point, however, there are many variables here, and the digital marketing space changes quickly. Start small, observe what works, measure, experiment, and iteratively work out what budget and approach works best for you across different channels.
We Hope This Helps!
This article provides a simple approach to setting a digital marketing budget, built around your goals. We hope this helps you find a starting point in setting a meaningful budget.
If you need help with setting your budget, and want to get the most out of it, consider talking to one of the experts here at Springboard Digital. We’ve helped hundreds of clients through this process, and can build a tailored solution for your needs! Click HERE to find out more about our digital marketing services.