What is a digital marketing budget and what is it for?
The digital marketing budget is a document that details all the money the company intends to spend on marketing actions during a marketing period.
The budget must include the expenses necessary for the implementation of the various digital marketing strategies that we have defined for our business, such as search engine advertising, content creation, SEO And a long etcetera. The objective is to be able to prioritize the various expenses, to have good planning and to correctly assess the return on investment.
There are many reasons to create a digital marketing budget, such as:
Control the company’s marketing costs. The marketing budget allows you to easily break down your total costs and items and take action if your spending is more than you planned.
Set clear ROI goals for yourself. Spending in different areas will be distributed according to the priorities of the company and the results we hope to achieve, which will give us a much clearer view of how our marketing works.
Prioritize the budget for the various actions. As we will see later, there are many areas of spending that we can allocate the digital marketing budget to. Stopping to prepare the budget will help us to prioritize the expenses allocated to one or the other according to our objectives.
Evaluate the return on investment of each action. Having a complete breakdown of costs allows them to be compared later with the results of each action and to identify which areas are provide a higher return on investment.
Plan for the long term. The digital marketing budget refers to a specific period (generally a quarter or a year), so it makes us specify what actions we are going to take and better organize the work of the marketing department.
Have a history of references. Budgets from previous years can serve as a guide to assess results and make necessary changes without having to reschedule everything from scratch, in addition to helping us understand how the company’s marketing spend is evolving.
7 steps to create your digital marketing budget
1) Know your target audience
To meet the challenge of defining your budget, you must first know what your project looks like and who it is for.
If you haven’t already, now is the time to sit down and create your Buyer’s personality or ideal customer profile. You should also be very clear about what customer journey or customer journey. And finally, you need to assess the current state of your business digital presence.
With all this data, you will be able to better identify which channels and stocks you should invest in.
2) Make numbers
The first step in developing a digital marketing budget is to estimate the Income Gross for the period to be budgeted, based on past results and estimates from the marketing department.
About this amount, we will decide the percentage allocated to marketing, which will depend on the company’s situation. As a general rule, it is recommended that new businesses spend 12-20% of their gross income on marketing, while established businesses should spend 6-12%.
Finally, we would like to know what percentage of this investment we are going to devote to digital marketing and how much more traditional media. Here we have to assess what is the situation of our sector and of our company in particular; in some cases a considerable amount of money will still need to be allocated to traditional marketing, while other businesses are 100% digital.
3) Define a return percentage
Based on the predictions mentioned above, we need to know what benefits we hope to achieve with the various marketing actions to set specific goals. In this step, it can be very useful to review previous budgets to see which items we want to increase or decrease.
4) Define the objectives
The numbers we have defined in the previous sections will serve as a guide to precisely set short, medium and long term marketing goals.
When setting goals for myself, I always recommend using acronym “SMART”:
Specific (específicos): objectives must be detailed and concrete to be useful.
Measurable (medicable): In marketing, what cannot be measured does not exist.
Achievable (alcanzables): We need to set realistic goals that are challenging but not out of reach for our team.
Relevant (relevant): digital marketing goals should be relevant to the business and linked to its overall goals.
Limited in time (with deadline): The objectives must be defined in time and have a deadline for their achievement.
5) Determine the strategies
You already know what you want and where you are starting from, so now is the time to set the path for you to get the results you want.
In digital marketing, there are many possible strategies; In the next section, we explain some of the most common expenses and what their associated expenses are. In this step, we will assess the different options available to us and choose the ones that best meet the needs of our brand.
6) Estimate expenses
In this step, we will go into the matter, by developing a breakdown of estimated expenditure of each of the strategies. In the next section, we give some examples of the most common costs in the digital marketing budget.
This will be the time to adjust and distribute the amount allocated between the different posts, also taking into account any staff costs. Sometimes we may need to re-prioritize strategies and actions to fit within the available budget.
7) Allocate an amount to unforeseen events
Developing a marketing budget helps us plan for the long term, but we should never forget that there may be circumstances beyond our control (as 2020 has been careful to remind us …).
Therefore, the digital marketing budget should always include an amount intended for unforeseen eventsFor example, a public relations action to deal with a reputation crisis, an opportunity not to be missed, or additional training for your team in a new technology.
How to allocate the digital marketing budget
Finally, let’s take a quick look at the top 5 spending areas of a digital marketing budget and the possible costs of each.
1) website design
The web is the “hub” of our digital marketing strategy, so it makes sense that it is also one of the main areas of budget intervention.
In addition to the initial creation of your website, the digital marketing budget should include expenses such as domain, hosting or maintenance, as well as improvements in the design and creation of new sections or new content.
As for spending in this section, the domain is around € 10 per year and hosting is around € 100 per month, although it depends on capacity. It can cost around $ 500 to design a basic website, although it can go up a lot more depending on the personalization. We will also have to take into account the design of the visual elements of the web and the creation of texts.
2) Organic positioning (SEO)
Here, the expenses will be concentrated mainly in these sections:
Paid SEO tools, if needed.
Content creation (between 30 and 80 euros per article).
On page and off page referencing carried out by professionals (between 40 and 200 euros per hour).
3) Pay-per-click (PPC) advertising
In this section, we include both paid search engine advertising (SEM), like the social announcements and display advertisements. All of them are already helping to increase the visibility of your brand generate leads and conversions.
The digital marketing budget in this section can be very flexible. The minimum budgets for different PPC platforms are only a few dollars a day, but the more we download them, the faster we will get results.
4) Social media marketing
Social media marketing can be a great strategy to reach your target audience, encourage the commitment, create a community and attract visitors to your website.
Being an organic channel, social networks do not have a base cost, but we must have the resources to produce copies and images and assess if we want to use the services of a professional social network manager.
5) Email marketing
the email advertising It’s one of the channels with the highest ROI, so it’s a great idea to have it in your marketing budget.
When it comes to accounting for expenses, keep in mind that you will need email marketing software. If you are just starting out and have a limited number of contacts, you can find tools for 10-15 dollars per month or even free, but the costs increase as the database grows. You can also use the services of a copywriter to help you with the writing (between 30 and 150 euros per email).