One of the secrets to running a successful business is knowing how to budget. Strategic financial forecasting and planning will ensure that every aspect of your business has enough fuel to keep running for the next year.
The key phrase here is “every aspect”. This includes your digital marketing. The challenge, though, is to determine how much is enough. At the very least, you’d want a competitive range to match other companies.
According to a recent survey by Gartner, 78% of CMOs plan to increase their digital marketing budgets for upcoming years. In another report, this time by the Digital Marketing Institute, the number of organizations planning to increase their budget go up to as high as 95%.
These numbers are remarkable especially amidst the bankruptcies and economic struggles brought about by the global pandemic. You would think that most companies would rather keep as many resources static to avoid debt cycle, but most are allocating more into their marketing efforts.
Keep in mind, though, that more money doesn’t always translate to a better budget. Instead, the goal is to make the most of what you have. In this article, we will be sharing a quick guide on how to do just that. Excited? Then let’s get started!
Three Major Components of a Digital Marketing Budget Plan
A digital marketing plan can be broken down into three major aspects:
One of the aspects that you should prioritize when you’re creating a digital marketing budget plan is creating relevant content. It should resonate with your target demographic and provide value.
We understand how you might be tempted to prioritize other aspects. However, quality content serves as the foundation of any digital pursuit, including marketing. There is a reason behind the popular saying, “content is king”. That’s because the success and failure of your digital marketing efforts will be determined by the quality of content you put out.
Think about it. You won’t need a lot of complicated SEO tactics if online users seek out your content themselves. On the other hand, even the best optimization techniques will fall short if your content doesn’t rise up to your online visitor’s expectations.
Quality content also increases how much your online patrons share your content. This will make digital promotion significantly more efficient and affordable.
Search Engine Optimization
Unfortunately, even the best content can take some time to get noticed online. To give you an idea, according to Science Focus, there are 1.2 million terabytes of digital information being shared by Google, Facebook, Amazon, and Microsoft alone. This excludes other big servers like Dropbox and Barracuda, as well as the billions of active websites you’ll find on just about anything online these days.
Fortunately, you won’t have to compete with all the data out there一just those that share your niche.
This is where search engine optimization comes in. It will make sure that your content ranks high on related searches. It will also help establish your online presence, especially in converting netizens into regular online visitors.
Digital Promotion (content promotion and distribution)
Finally, you also need to set aside a part of your budget towards the promotion and distribution of your content. This last aspect of digital marketing further increases your online visibility. It also hastens and supports your SEO efforts.
Think of it this way. Creating quality content and waiting for your target audience to stumble upon it can take months or years to eventually get noticed. Combining it with solid SEO efforts can make it easier for people to discover your content. This will give your online traction a significant boost. Promoting and distributing your content online further widens the horizon and strengthens your digital marketing campaigns.
Do you see how the three aspects all play a crucial role in your digital marketing campaign? Thus, it is crucial to set aside a portion of your budget for each of them.
Set Your Timeframe
Now that you know the different elements that make up a digital marketing budget, we can move on to the first step of the planning process: setting your timeframe
A lot of companies draft their budgets annually, while others do so quarterly. Choose the timeframe that will prove more convenient to you. Don’t forget to consider your goals as well. This leads us to the next step.
Set Your Goals
Failing to set a specific goal is one of the most common mistakes that those who are fairly new to digital marketing make. It’s totally understandable. There are a lot of actionable steps that you can do in digital marketing and it is only natural to feel compelled to try every last one of them to see which one works best for you.
Doing so will be a waste of time and resources, though. First, it can take some time for digital marketing methods to take effect. Thus, trying multiple approaches at a time will only lead to much frustration and confusion. Second, this will stretch your resources too thin. It can even end up with everything inefficient and half-baked.
Instead, we highly recommend focusing on a single result. What do you want to achieve within the set timeframe? Do you want to increase the number of your social media followers? Are you looking to strengthen consumer loyalty? Do you want to improve your brand awareness? How about lead generation, conversion, or sales?
Each of these goals requires different courses of action that will then influence your budget planning in very specific ways.
Do Your Research
A digital marketing budget plan should not appear out of thin air. Instead, your projections must be based on actual data and research.
This step is significantly easier if:
- You have already set a digital marketing budget in the past.
- You have used online platforms and tools for your past marketing efforts.
They will give you a point of reference for the plan that you’re currently drafting. How much did you spend on digital marketing in the past? Was it enough? What were the results?
Most online marketing platforms and tools have analytics features. They will give you insight into the methods that worked best and those that didn’t.
Here’s a pro tip: Prioritize allocation based on your past successes.
Drafting a digital marketing budget for the first time? Use our hand website cost calculator. Then we recommend taking a look into the spending of your competitors and other similar businesses. Create a digital marketing RFP template from our article.
At the very least, you can base your allocation around the goals you want to achieve. You can research the average costs of your goals depending on your business’ industry and scale.
Make an Intelligent Projection
You should already have an idea of how much your digital marketing expenses will be by now, especially if you have followed all the steps we’ve shared with you so far. We recommend adding a buffer to give your budget some flexibility. It will also prevent unexpected expenses from messing up your budget too much.
Breakdown Your Budget
It’s time to list down all your planned expenses and break down your total projection among them. Don’t include your buffer. Think of it as an emergency fund that you can reach into to avoid delays, overspending, or debt.
Small businesses can record their financial plan in a journal. Logging your budget in a spreadsheet is more ideal, though, as it minimizes human error. Excel is a good choice if you want to keep your spreadsheet accessible via your computer at all times. It will also allow offline access.
On the other hand, Google Sheets is a better option for those who want to access their spreadsheet from any device. Don’t forget to sync your file after performing offline edits to keep things updated and accurate.
We also recommend looking into ready-made spreadsheet templates online to make your encoding more organized and convenient. They’re customizable and best of all, free.
Those who want their digital marketing efforts to be more streamlined can also consider paid platforms and tools. There are programs specifically dedicated to budgeting, but we suggest looking for a digital marketing platform with budgeting as an added feature. It will help to keep things in as few digital places as possible to keep your marketing efforts more manageable.
Manpower and Tools
You can further organize your budget according to the three main aspects we have shared earlier. Another way is to divide your expenses into two: manpower and tools.
Manpower refers to the labor required to turn your digital marketing plan into a reality. This includes your in-house marketing team and any freelancer you have outsourced.
Meanwhile, tools refer to the online platforms you need. This includes any digital marketing software, editorial calendars, and other paid tools.
Remember: it always helps to be as detailed as possible. Hence, don’t be afraid to create and combine budgeting categories if you think it will provide you the big picture of your financial strategy.
Plan How to Track Your Success
Some people would deem the fully encoded budgeting spreadsheet complete. All that is left to do now is enforce the plan you’ve worked so hard on. Might we suggest one last step, though?
You should plan how to track your success. This is easier to do with a digital platform equipped with analytical features. Most of these programs prepare a regular report that you can either download or send to your email.
Pay attention to the aspects that you have invested your budget on to monitor your progress. You can also create your own success criteria based on your goals.
For instance, suppose your goal is to increase your Instagram followers from 3k to 5k within three months. You can break down this goal into different milestones. You can aim to increase your followers to 3500 to 4000 in the first month, 4000 to 4500 in the second month, and finally, 5000 upon the third month.
Some goals may not have concrete numbers that you can base their success on. If so, then you can shift your focus towards your intended purpose or expected result.
For example, let’s say that your goal is to increase your online credibility. It’s an abstract goal that can be quite challenging to track. Hence, why don’t you translate it into a more concrete goal?
Ask yourself, what are the characteristics of a business with good online credibility? There are plenty, but one good sign is that it has a lot of positive reviews especially on third-party sites. So maybe a concrete goal would be to increase the number of your five-star feedback?
Return on Investment
Finally, don’t forget to track the most important metric of all. Return on investment (or ROI) can help determine the effectiveness of your budgeting plan and marketing strategy. You can compute it by calculating your expenses versus your profit.
Significantly positive results are a good sign that you have invested in the right marketing strategies. We sincerely hope that our budgeting guide will help you achieve these numbers. Good luck!