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.
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.
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.
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.
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.
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.
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.
The 70-20-10 rule is a popular budgeting framework:
This approach creates a balanced marketing plan that supports current efforts but also encourages innovation.
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.
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.
Determining the right budget allocation depends on several factors:
Tracking key performance indicators (KPIs) helps assess campaign success and optimize budget allocation. Some critical metrics include: