The Idea Behind Digital Marketing Cost
To truly understand the cost of you digital marketing initiatives, we should first understand the factors that might drive the price.In general, an effective strategy should covers:- Doing various research from market research, competitive analysis, A/B testing, buyer persona research, and many more
- Finding the right, valuable information for your marketing activities
- Attract your prospects by developing a well-planned content marketing. This covers your social media channels, blog, sales pages, lead generation devices, and others to name a few
- The execution of your strategy, covering all the aforementioned things above
- Monitoring your campaign(s), various testings, and executing various tweakings when they are necessary
- Do it the hard way and learn the skills yourself. This approach will require a lot of time and money, but will be a great long-term investment
- Invest on the right person (or the right team). This is generally the most affordable approach, but might require a long time
- Outsource your efforts, or invest on paid options that can replace the marketing initiative(s)
- Content marketing is a powerful lead generation device, but not everyone can do it properly and it will require a relatively long time. Instead, we can invest on paid advertising to generate leads
- Market research can also take a long time to accomplish, but instead we can purchase a research report or outsource to a research agency
- Since we don’t have the expertise to develop an optimized website, we hire a specialist to do the job
How Much Should You Be Spending On Digital Marketing?
First, let us define the term ‘marketing budget’ clearly. Your marketing budget refers to all costs for marketing activities, including but not limited to promotions and advertising, public relations, SEO costs, social media marketing, sponsorships, influencer marketing,and anything else that falls to this category.If you are outsourcing all of your marketing strategy in an all-in-one package, the cost will be your marketing budget. Yet, if you are hiring an in-house team, generally the cost will be tied into your human resources cost.So. how much should your marketing budget be? According to the U.S. Small Business Administration,, small businesses making under $5 million a year should spend 7-8% of revenues for marketing, while bigger businesses making above that number should spend no more than 5%. The revenue here can be actual and projected, but there can be many other factors that can alter this number.For example, newer businesses will need a higher marketing budget to introduce their brand. Also, some industries and/or niches will require a higher marketing budget: generally, the more common/easier to produce your product is, the more you should spend on marketing.So, you should spend at least 2-5% of your gross revenue on marketing. Newer businesses might need more, and can spend up to 20% of their total gross revenue. On the other hand, the recommended maximum for established businesses is 12%.Marketing Infrastructure Pricing
There can be exceptions to the above rule: when you are investing on infrastructures and marketing foundations. This cost will occur when you just start the business, and probably every few years when you are updating some of them. For example, we should keep our website up-to-date with today’s standard, both performance-wise and design wise.When this cost occurs, you will most likely exceed your usual marketing budget, and it is perfectly fine. In most cases, your marketing infrastructures will consist of:- Your brand
- Your marketing strategy and tied-in information (information from marketing research, competitive analysis, etc.)
- Website design and maintenance
- Digital marketing tools (link to guide)
- And other things with similar nature
How To Optimize Your Digital Marketing Cost
Now that we’ve understood the right amount of digital marketing budget according to your revenue, and the importance of having the correct infrastructure, here we will discuss how to optimize your budget, and especially where to spend it.There are a few key areas to discuss here, and let us begin with the first one.1. Clarify Your Goals
The first step toward developing a marketing budget is determining clear marketing goals for the year. All your goals should have predefined success measures (KPI). The more specific your goals are, the easier it will be to measure your progress through various metrics.Also, although it’s not directly related to optimizing costs, it is wise to make sure your goals are realistic enough to achieve. Having goals that are too massive to achieve might hinder the morale of your team, as they miss that sense of achievement. To tackle this issue, you can break down those big goals into smaller, more realistic milestones.Here are some common marketing goals, and how to measure them:- Increase leads generated by the website. This goal can be measured by website traffic. If you want leads from specific locations, you can use geographic data
- Business growth in general, measured by total generated leads and revenue in sales
- Increase brand awareness, measured by total mentions and engagements
- Acquiring new customers, can be measured by tracking conversions from newly generated leads
- Growing market share, measured by your sales revenue compared by the industry’s total revenues
- Improving customer relationships and satisfactions, measured by the number of good reviews, churn rate, and social media engagements among others
2. Check and Re-Check Your Infrastructure
The next step here is to examine your marketing infrastructures, which we have briefly discussed above. As we have mentioned, if your infrastructures are working properly, you can save a lot of money in marketing spendings.Different businesses might require different marketing infrastructures, and different areas to optimize. Yet, here are some key considerations and questions to answer:- Your branding and design should be up-to-date with the current standards. Also, your brand should properly identify your company to consistently generate similar brand image across all channels and media
- How is the state of your website? The easiest way to assess this is to look at your competitors’ sites. A simple Google search will show your top competitors according to your target keywords
- Across all channels, are you providing clear paths for conversions and lead acquisitions? Make sure all ?
- Last but not least, do you have a clear, measurable marketing strategy?
3. Spend Your Budget
With your goals set, your infrastructures in place, and success measures ready, it’s time to allocate your marketing budget according to your goals.First things first, your first priority should be the weaknesses in your infrastructures, which we have discussed above. As we have stated, these weaknesses can cause further leakage in your spending, so we should address them first.Remember that more often than not, spending on your infrastructures will be done with fundings outside your existing marketing budget. So, if you have decided on say, 7% of your total revenue as your marketing budget, you can still use all of it for day-to-day marketing spendings.Remember that your infrastructures will only be useful when you have ongoing marketing activities. For example, a super-optimized site that can convert visitors really well won’t have much use if you don’t have any activities to drive traffic like content marketing or advertising.How should you spend your budget? There are many factors that can affect this decision from your business model, industry, and competitive situation among others. Yet, there are 5 key areas to focus on:1. Your Brand Strategy
This area includes items like:- Brand strategy and design
- Outsource consulting
- Website, landing pages, microsite developments and maintenances
- SEO