The digital revolution has blown open several channels for business growth. Nowadays, businesses can reach more people in more locations, anywhere in the world. Little wonder as much as 95% of companies have steadily increased their digital marketing budget in the past few years.

As profitable as digital marketing is, it gobbles up a sizable chunk of investment. And like every other resource businesses have, money is limited. You can’t always spend as much as you like anytime you want. Consequently, there’s the need to create a budget that ensures your money goes to the most important channels and yields decent returns.

At Stratwell, we believe that content marketing should be central to all your marketing efforts, as great content will help attract and convert your target audience. 

Digital Marketing Budget Allocation – How Much Should You Spend?

Figuring out how much you should spend on marketing will depend on several factors like how fast you’re looking to grow, your revenue, industry, niche, and competition. That said, there are a few reasonable hard and fast rules for allocating funds to marketing.

For instance, new companies looking to fast track their growth are advised to dedicate a minimum of between 12-20% of their total revenue to marketing. This percentage may go substantially higher depending on the industry and niche that you are in. On the other hand, established businesses interested in increasing their profit levels asked to put aside 6-12%.

Out of the money set aside for marketing, businesses usually dedicate as much as 45-50% of it to digital marketing. Similar to your overall budget for marketing, this is not a range that’s set in stone. Your needs and objectives will still go a long way in influencing how much of your marketing budget would go to digital marketing.

How to Structure a Digital Marketing Budget Plan

We have come up with a simple 5 step process to help you in preparing a marketing budget:

1. Know your Audience
2. Conduct Research
3. Outline your Marketing Goals
4. Determine Channels to Direct your Marketing Funds To
5. Measure Results, Learn and Pivot When Necessary

Know your Audience

Understanding your target audience or customers will help you in prioritizing the right platforms and strategies on your budget. If you’ve worked with actual customers, then consider the trends from past digital campaigns. Ask questions like what channels have your customers always preferred? How do they choose to interact with your brand? 

If you are just starting out in business, then to understand your target audience, you need to draw up a buyer persona. It’s a research-based representation of your ideal customer.

It will include vital details that will help inform you on how to engage, convert, and retain your ideal customers. Essential information you should be looking to uncover about your prospects include:

• Where you can find them online
• Their online habits and preferences
• How they interact with various platforms
• Their needs and pain points

Even after discovering your audience’s preferences, your goals will determine the platforms and processes you’ll ultimately invest in.

Conduct Research

Next up, you have to conduct some research, and this will span various sectors. You can begin with your competitors. Taking a look at where they are spending their marketing funds can give you an idea of the best outlets to invest in. But of course, you will still need to consider whatever insights you get in the context of your own situation and objectives. 

Getting to know what your competition is spending on is particularly important if you’re just starting out in business or digital marketing. However, if you’ve tried out digital marketing before, you can also consult your results to understand what worked and what didn’t. Your audit should include: 

• Checking the channels that produced the best results
• Identifying the outlets that underwhelmed
• Mapping out the strategies you used in the past and how well they performed

While auditing, question why specific strategies and channels worked out so well and why others did not. This way, you wouldn’t just adopt or discard tactics and digital outlets based on surface-level insights. But by asking the right questions, you can uncover details that will help you replicate past results or identify loopholes you’ll need to plug to experience success this time. 

Also, examine your previous methods and budgets in the light of current objectives. For example, that something worked out so well the last time doesn’t mean it should take as much portion of your budget this time except if you have the same targets. 

Outline your Marketing Goals

The shiny object syndrome affects many people in different ways, but business owners are especially susceptible to it. It’s easy for you to get distracted and begin to chase after the latest marketing trends and methods without considering how they can help you achieve your objectives. This could lead to you spreading your budget too thin among several marketing channels. 

However, outlining your goals can keep your budget focused and help you maximize your resources. So say you’ve decided that you want to drive more traffic to your website. This will inform what digital marketing outlets and measures you should prioritize while budgeting.

What’s more, with clear objectives, you can identify key performance indicators. These factors will be useful in measuring the results coming from each marketing outlet. And with this, you can determine what channels bring in the most returns and which ones you probably should focus less on.

In setting your goals, ask what you want for your business exactly. And don’t give superficial or generic objectives. Instead, narrow down your desire till you have something that’s genuinely actionable.

Are you looking at creating conversions straight away or building brand awareness or a following? Take such desires and make them specific, measurable, attainable, realistic, and time-bound (SMART).

Determine Channels to Direct your Marketing Funds To

Branding

In this sameness era and many options, only memorable brands stand out and stay top of mind. Such brands have a strong identity, and it takes money to build and maintain it. So if you have to, invest in visuals and other brand elements to make your brand recognizable. Always opt for quality graphic designs and marketing collaterals too.

Web Design and Optimization

Your website is your digital marketing hub. Ultimately, many other marketing outlets you use link back to it. As such, it requires your utmost attention in all regards, including a top spot on your list of digital marketing budgetary priorities.

If you’re just starting out, you will need to hire an excellent web developer or agency. Your target should be to build a website that works seamlessly, offers great user experience, and is optimized for search engines. If you already have a website that meets these criteria, you may still need to budget for audits, content creation, and optimization.

To read more on what to look out for when choosing an agency, check out our blog post here.

Search Engine Optimization

Being on the web doesn’t guarantee that your business will be seen by the audience that matters. Effective search engine optimization does that.

This would likely be a consistent feature of your digital marketing budget and rightly so. This is because search engines are constantly evolving and changing their rules and algorithm. What worked yesterday may be obsolete today or worse still, it may earn you a penalty that will harm whatever rank you’ve always held!

Therefore, the way to stay on top of the situation is to plan to spend on SEO as the need arises. This may include hiring an expert to work on the more technical aspects, paying professionals to write quality search engine optimized articles, etc.

Email Marketing

Email marketing adds a different spin to your marketing efforts. Your subscribers have given you permission to reach out to them when you want. They have opened the door for you to nurture a relationship that can become profitable for you in the long run. And by committing to email marketing, you can maximize that relationship. 

Your focus should be on getting the technology to create more personalized messages through data analysis. You might also want to invest in materials and fresh forms of valuable content.

Social Media Marketing

Like email marketing, social media marketing is a two-pronged tactic that allows you to initiate and nurture relationships with your audience and promote your products and services to them. The flip side to this is that even customers and prospects expect brands to have a social media presence. This means building one is almost non-negotiable if you want to effectively serve your customers.

You can only maximize social media when you blend in, and to do that, you would have to invest in quality content. You can also set some money aside for paid ads, depending on your objectives. 

PPC Marketing

Pay per click campaigns and other forms of paid ads can help you cut in line and grab attention if you are new to the business. As an established business, you can also use them to proactively promote old and new products and offers. 

Consider the advertising offers on search engines and social media. Then design a plan based on your goals and decide how much you will be willing to spend. Findings from your research and past results – if you have any – should inform you of what your budget for paid ads should look like.

Content Marketing: The Glue that Holds All Digital Marketing Strategies Together

If your website is the hub of your digital marketing efforts, then content marketing is the engine that drives it. And the pistons of this engine also propel most of the other digital marketing strategies.

Beginning on your website, you need quality content to attract leads. Nowadays, people stumble upon businesses on search engine result pages.

When web users search for answers to their questions, business websites that have those answers pop up and attract traffic. If the content on those sites is good enough, people are satisfied.

They are more likely to return and will perhaps offer their contact details for more valuable information. And just like that, the business earns promising leads. But it all begins with relevant and helpful content. 

Content also serves as the tool the business uses to guide leads down the sales funnel. With timely content, the company can address the concerns of different leads at varying stages of the buyer’s journey. This ensures prospects would not feel they have to look for answers elsewhere.

While other factors contribute to a website’s rank on SERPs, the primary deciding factor is content. Quality content prompts search engine crawlers to display a website as one of the top results when internet users run queries.

It’s also what attracts backlinks and improves a website’s authority. Content marketing is the backbone of search engine optimization.

Moving on from SEO, the success of your social media and email marketing efforts will also rely heavily on the standard of your content. People want value. They want to be educated, entertained and inspired. If your content does none of this, you will lose your audience’s interest, attention, and, ultimately, business. 

And don’t forget how content works hand in hand with PPC campaigns to lead to conversions. Paid ads can attract eyeballs and pull people into your sales funnel.

But it’s content that guides them through it and ultimately converts them into customers. It does this by keeping the visitors on your site long enough for them to trust you and consider your offers.

Measure Results, Learn and Pivot When Necessary

The purpose of a budget is to guide your spending and give you a sense of direction. It’s not to prevent you from changing your plans when the need arises.

So when you invest in a particular marketing strategy, learn from the results and use your insights to make informed decisions. If the strategy isn’t delivering as expected, review and analyze what has gone wrong and determine whether you should refine the strategy or spend your resources on other forms of marketing.

On the other hand, if you are generating impressive results from certain outlets, you can also reassess your budget and see how you can channel more funds to those outlets.

Get in Touch with us

Are you looking to invest into digital marketing or methods to improve the results of your current campaigns? Learn about what we do and schedule a free consultation with us. Our experts will help you devise a plan to build a solid foundation for your digital marketing efforts by giving content marketing the attention it deserves.

What is your experience with budgeting your marketing spend? Leave us a comment below!

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• 7 Factors to Consider When Choosing a Content Marketing Agency