How to Allocate Your Budget for Digital Marketing and Advertising
When it comes to planning your digital advertising budget, I have one piece of advice to offer you that you might not expect from a marketing agency:
Think of your end goal first.
Of course, you want to get the best return on investment (ROI) for your limited advertising dollars. And we hear from many business owners who instinctively think they need to spread their advertising budget across as many channels and platforms as possible in order to do that.
However, each channel serves a different purpose. Is it a lead generation campaign, or are you trying to build awareness? Do you want to drive fundraising or boost your organic web traffic? Whatever it is, think of your goal before you decide which or how many channels to use. There are plenty of times when “less is more” is the smartest advertising strategy.
A digital marketing budget plan ensures all marketing investments are aligned with your business goals and strategic priorities. It helps you stay organized, measure marketing activities, and prevent unnecessary overspending.
Now, let’s dive into how you do it.
What Exactly Are You Trying to Achieve?
As mentioned above, we always start at the end. What specifically is your main takeaway from the campaign? Do you want to collect email addresses? Do you want to make a sale? Are you opening a new location? Any of these things play into how much you should spend and where.
Below are a few examples of the types of campaigns we typically promote.
Brand Awareness
- Increase Visibility: Making sure your brand is seen by a wider audience
- Improve Brand Recognition: Helping people remember your brand and what it stands for
- Build Brand Association: Connecting your brand with specific values or ideas
Engagement
- Boost Interaction: Encouraging likes, shares, and comments on social media
- Increase Time on Site: Getting visitors to spend more time on your website
- Improve Content Consumption: Driving views, downloads, or listens to your content
Website Traffic
- Drive Visits: Getting more people to click through to your website
- Improve Traffic Quality: Attracting visitors who are genuinely interested in your offerings
Lead Generation
- Collect Contact Information: Gathering emails or other details from potential customers
- Increase Inquiries: Driving more questions and requests for information
- Generate Qualified Leads: Attracting leads who are more likely to become customers
Sales & Conversions
- Increase Online Sales: Driving purchases through your website or other digital channels
- Improve Conversion Rates: Turning website visitors or leads into paying customers
- Increase Offline Sales: Driving in-store visits or phone orders through digital campaigns
Advertising on Fewer Channels Can Make a Bigger Impact
Now that we know your goal, we can talk about which channels and tactics will make the most significant impact.
If you only have $5,000 a month or less to spend on digital advertising and are in a competitive industry, don’t try to spread those dollars across Google, Facebook, TikTok, Instagram, and LinkedIn.
Once that money is divided up, your budgets for each of those channels will be relatively small, and you’ll run through that money fast. In the process, you’ll dilute the impact you could have had if you had concentrated your efforts and your budget on just one of those channels.
For example, if your goal is to have your potential customers download an e-book of your best tips and tricks for your business, then our recommendation would probably be to advertise only on Meta or LinkedIn. Some initial target research would help us determine where your potential clients spend the most time looking for that kind of advice.
We often find that the best approach, especially for small and mid-sized businesses with tight advertising budgets, is to focus on no more than two channels so you have a way to compare performance.
In the example above, we would measure how many eBooks were downloaded and which platform they were downloaded from. Then we would optimize toward the best performer.
Get Advice from a Digital Advertising Expert
If you’re consulting with a digital marketing team, ask them what they recommend you should plan to spend at a minimum per platform to see results. They should be able to forecast traffic results using your data and benchmarks for platforms like Google, Meta, display ads, etc.
At our agency, we don’t just tell you what you want to hear to sell you on a digital marketing strategy. We have an extensive process to show you why we’re recommending specific channels, to explain what tactic(s) we’re employing with those channels, and to forecast what you can reasonably expect for your key performance indicators (KPIs).
For example, paid search (i.e. Google) is usually the easiest way to convert new customers. But if market research shows that your brand or product isn’t in a very competitive space, it may mean that no one will be actively searching for what you have to offer. So, we need to use other online marketing platforms (i.e., Meta) to build awareness and gain momentum.
The best advice we can give is to ensure you have a solid strategy focused on your most valuable target audience and a campaign that is hyper-focused on your highest potential to reach your goal. In turn, that should result in your best return on investment.
Main Takeaways
Do your research. Ask questions. Understand your customer journey. Talk to experts. Make sure you know when it makes the most sense to invest in search advertising.
FAQs about Budgets for Digital Marketing
What Is Budget Allocation in Digital Marketing?
Budget allocation refers to how you distribute your digital marketing budget across various channels and strategies. It involves deciding how much to invest in marketing efforts like paid ads, content marketing, social media ads, email marketing, influencer collaborations, and other tactics. Successful budget allocation ensures you’re maximizing ROI while reaching your marketing goals.
How Do Business Goals Impact Your Digital Marketing Budget Allocation?
Your business goals are the foundation for creating a digital marketing budget. If you’re focusing on customer acquisition or increasing website traffic, you might allocate more to pay-per-click (PPC) campaigns or search engine optimization (SEO). On the other hand, if brand awareness is your priority, you may want to invest more in content creation and social media marketing. Clear goals guide your decision-making and ensure your marketing spend aligns with your objectives.
What Is the 70-20-10 Rule for Marketing Budgets?
The 70-20-10 rule is a popular budgeting framework:
- 70% of marketing spend is allocated to proven, core marketing activities like digital marketing campaigns, email marketing, or ad spend through platforms like Google Ads.
- 20% goes to new initiatives, like testing emerging marketing channels or exploring marketing automation and CRM integrations.
- 10% is focused on experimental ideas or industry trends that could lead to breakthrough growth.
This approach creates a balanced marketing plan that supports current efforts but also encourages innovation.
How Do I Calculate My Digital Marketing Budget?
To calculate your digital marketing budget, you’ll first need to define your total revenue or annual marketing spend as a percentage of it. For small businesses, marketing budgets generally range from 6% to 12% of total revenue. Calculate the budget based on your marketing objectives, then break it down across specific marketing initiatives or channels such as content marketing, social media advertising, and PPC.
What Is an Effective Marketing Strategy vs. a Marketing Plan?
A marketing strategy defines the “why” behind your marketing efforts. It outlines your goals, target audience, and the approaches you’ll use to achieve your objectives.
A marketing plan, on the other hand, focuses on the “how” and “what.” It’s the tactical roadmap that translates the strategy into actionable steps, such as budgeting, choosing specific marketing activities, and setting deadlines.
How Do I Determine the Right Budget Allocation for Different Marketing Channels?
Determining the right budget allocation depends on several factors:
- Your audience’s preferred platforms: Research consumer behavior to identify where your audience spends the majority of their time online.
- Your campaign goals: For example, allocate more to PPC or Google Ads if you want to drive conversions, or focus on social media platforms for brand awareness.
- Cost per channel: Use analytics tools to assess how much specific channels typically cost to run marketing campaigns effectively.
- ROI data: Analyze past campaign performance or industry-specific case studies to know which channels typically yield the best results.
What Are the Key Metrics to Track in Your Digital Marketing Campaigns?
Tracking key performance indicators (KPIs) helps assess campaign success and optimize budget allocation. Some critical metrics include:
- Cost-per-click (CPC) and cost-per-acquisition (CPA)
- Return on ad spend (ROAS)
- Lead conversion rate
- Website traffic and bounce rate
- Time-on-site and page views
- Email open rates and click-through rates (CTR)