Marketing budget plans can be intimidating to nail down. With so many mediums to invest in, especially in the digital world, finding the right balance can take time and insight. How much should you be putting into traditional mediums vs. digital mediums? How do you decide what mediums belong in your digital marketing budget?
While your business is different from the business next door, we’ll break down some things that are helpful for all companies to consider while building your digital marketing and advertising budget.
Establishing Your Digital Marketing Budget Plan
To get started, consider your overall business goals and strategy for the year. Once you have an idea of what you want your business to achieve in the next 12 months, you’ll be able to narrow down the tactics you can use to get there, along with the money needed to carry them out.
Your strategy and goals will also help guide you as you consider what mediums to pay for advertising on, and which ones to use organically. Tried and true mediums should have more money behind them, while new mediums can be tested with smaller investments or built organically before being backed with your hard earned marketing budget.
When establishing your strategy, ask yourself the following questions:
- Where are you in your marketing journey? Are you just starting out or do you already have a physical and / or digital presence?
- What are your goals and how will you know if you’ve achieved them?
- What messaging will you focus on at what time? Is there seasonality of your business to consider?
- Who is your target audience?
- What actions do you want your target audience to take?
- What has worked for you in the past? What hasn’t?
Without a strategy to guide you, you won’t know what’s working and whether or not your money is being spent in the right places. It’s also recommended that you focus on 1-2 main goals for the year and you allocate marketing dollars to help achieve those goals. If you have too many goals you’re looking to achieve, chances are that you’ll spread your marketing spend too thin across many different platforms, and some may not provide you with the best ROI.
Traditional vs. Digital
Once your strategy is established, your overall marketing budget and goals can help you break down a healthy split between traditional mediums (TV, traditional radio, out-of-home, print) and digital mediums (SEO, PPC, social, email, internet radio / streaming). With digital audiences growing rapidly, about 50% of your marketing budget should be allocated to digital channels, if those tactics strongly align with your business goals.
Digital marketing tactics have significant advantages, including:
- The ability to track users through their digital journey
- Data and reporting options that give insights into ad performance
- Smaller investments than with some traditional mediums
- Audience targeting that helps your message reach qualified customers
- Flexibility to change messaging and creative frequently to test and react to results
While there are advantages to both traditional and digital mediums, striking a balance between the two can reach your potential customers at different points throughout their daily life and throughout the customer journey.
While crafting your marketing and advertising budget and selecting the right medium for your company, a big question that will come into play will be “who will do the work?” Your team’s workload and capabilities can determine what you keep in house and what you outsource to a marketing agency, which will in turn affect how much you need to budget towards each medium.
Keeping It In-House
For marketing teams with a robust set of skills and experience, keeping work in-house may be the ideal solution. In-house teams often know your brand best, and can craft messages that match your voice without the time and research needed by an agency. They are also close by for quick communication.
However, rarely do in-house teams cover every skill set. Someone may dabble in SEO or social media, but they may also be your graphic designer. Time can be spread thin, with shifting projects and priorities depending on the day.
If your team can handle aspects of your marketing strategy, it can be more budget-friendly than hiring an agency. However, adding more marketing employees to your team just to handle specific aspects of your marketing span can be more expensive, after factoring in salary, benefits, and technology needs.
Working with a Trusted Marketing Agency
Marketing agencies are often made up of experts, specialized in different digital marketing fields. They can work as an extension of your team and lend their expertise to guide your marketing strategies.
Not only do marketing agencies have specialized teams to help power your marketing efforts, they also have key software and tools that may be too expensive for your company to utilize on your own. Since agencies work with a plethora of clients, they’re able to use the tools across multiple accounts and pass the benefits along to the companies they work with.
Agency fees are pre-set and can be discussed prior to the work being completed. You’ll know what to expect and can set expectations with the agency you are working with. They’ll make the most of the budgets you give them, and have more buying power than small businesses themselves. When working with an agency, be sure to budget for any fees and labor costs that they have.
Finding the Right Mediums For You
The right mix of mediums is unique to your business and industry. Knowing your target audience can be a big factor in deciding the platforms that are best for you. Where does your audience go for entertainment and information? How does their media consumption align with your business? With your goals and audience in mind, consider each of these tactics for your digital marketing budget.
Search engine optimization can help increase the quality and quantity of your web traffic organically by tailoring your website content and keywords to answer the questions people are searching for. Increasing traffic can help boost leads and sales over time.
The main costs associated with SEO revolve around the cost of labor and any platform or tools you need to work with.
Content can also help bring people to your website organically and through paid distribution. Like SEO, content helps answer the questions people are searching for. It can educate or entertain potential customers while increasing their awareness of your brand and building your reputation.
The costs associated with content marketing are the cost of someone writing content for your company. Once you have shiny, new content, you can also pay to distribute it on social media platforms via social advertising, which is relatively inexpensive.
Pay-per-click advertising helps bring people to your website with strategically-written ads, typically on search engines. Companies are charged for their ads based on the number of clicks they receive, making it a cost-effective way to bring people to your site. All things considered, it’s a great way to increase traffic in a shorter amount of time than it would for more organic, long-lasting marketing methods.
PPC also has advantages associated with audience building and refining with in-platform tools. This helps to deliver your ads to those who may be most interested and likely to act, based on specific interests, demographics, and locations.
The costs associated with PPC can vary, and can be based on the marketing and advertising budget you allow for this tactic and the keywords you choose to advertise for.
Social media marketing can be a powerful tool for content distribution and advertising. Different platforms connect with different audiences. Audiences can be refined further with in-platform tools that make it possible to serve ads to people with specific interests or demographics, or in specified locations.
Understanding the capabilities and general user profile of each platform is key to picking the right ones for your company:
- Facebook is the most popular platform based on usership, with 183 million users in the United States. The majority of its users are over the age of 18. Facebook gives advertisers the ability to refine their audience by a large variety of factors, making it a strong advertising platform.
- Instagram is an extremely visual platform that is popular with a younger demographic than Facebook, with the majority of its users falling under 49 years old. While it’s less widely used than Facebook, it still boasts 116 million users in the U.S. Since it’s owned by Facebook, Instagram also allows advertisers to serve their ads to specific audiences based on a number of factors.
- Pinterest focuses on inspirational visual content, and is popular across all age groups. It’s U.S. usership is smaller at 87 million. Pinterest allows you to target specific age groups, locations and genders, along with popular user interests and keywords users search.
- LinkedIn is a professional social media network that is popular with people over 30 years old. Its focus on business and networking makes it a strong platform for B2B advertising. Advertisers are able to target their ads to people based on industry, job title, location, seniority, and education, and receive advanced reporting and data on who is viewing and clicking on your ads.
Social media ad costs also vary by platform, but are generally flexible. Working with an agency is helpful in establishing how to get the most out of your social media spend.
Email marketing helps your business connect with customers, future and current, through newsletters and automated email messages based on customer behavior. It’s a great way to stay in touch with people interested in your brand.
Automated email messages connect with your audience at the right time during their customer journey, from when they sign up to receive emails to after they purchase. They help keep your brand top of mind and capture your customer’s attention at key moments.
The main cost associated with email marketing is the cost of the platform you are using to send emails. Many platforms work on a monthly subscription basis.
As more people listen to music through digital streaming services and less through their car radios, the bigger role internet radio plays in the digital marketing world. Internet radio allows you to target specific audiences, geographic areas, and industries with brand awareness messages that encourage action. What separates internet radio from traditional radio is the ability to direct people to specific landing pages through accompanying banner ads. This helps provide data for tracking and analyzing your efforts.
Costs to keep in mind are the ad placements themselves with prices varying depending on location and audience size, and the cost to produce the ad.
The world of digital marketing is always changing and growing. Consider setting aside money to test the waters or take advantage of an opportunity that pops up throughout the year. Opportunities may include press release distribution for an important event or announcement, video creation, and ad placement on virtual platforms.
Balancing the Digital Marketing Budget
Finally, with strategy, goals, total budget, and mediums in mind, you can begin to allocate funds to their respective tactics. This is where you should also look at what has worked for you in the past versus what you want to try.
Most of your digital marketing budget should be invested in the tactics that worked best for you in the past and align with your goals. These will be the strongest for you moving into the new year.
A smaller portion of your digital marketing budget can be allocated for tactics you want to try. These tactics should also align with your goals, but may be new to the marketing world or to your company. Be sure to keep an eye on these campaigns as you run them to gauge success and make adjustments.
Having some flexibility in your digital marketing budget can also be helpful. If one of those new tactics works well, you can invest more money over the year. You may also be faced with a new opportunity to promote an event or sale that wasn’t planned at the beginning of the year. That flexibility will prevent you from feeling stretched or stressed by tactics that may need funds down the line.
Learning and Growing
Your first (or even your fifth) digital marketing budget might not be perfect, but with time and attention to detail, you’ll be able to tweak and refine your budgeting skills. As you evaluate tactics throughout the year, make notes of what is working and any fund shifts to make next year’s budgeting season smoother than the last.