If you know us, you know we’re all about a well-defined marketing strategy. But to create and execute a marketing strategy, you need a digital marketing budget. And to do that, you need to decide how to allocate your marketing budget per channel efficiently and effectively. It’s the ultimate, yummy pie chart that can impact your ROI and how quickly your business achieves its goals.
But where do you start? If you’re trying to figure out how much should you spend on marketing, and how much you should spend on marketing per channel, this guide is here to help.
Where Should You Spend Your Digital Marketing Budget?
That Depends on Your Company Goals
If you have an unlimited budget, you can afford to spend on any and all marketing channels. However, if you don’t, then you need to be a bit more strategic about your marketing spend. To determine where to spend your money—and then how much—ask yourself the following questions.
1. Where is the majority of my audience hanging out online?
Marketing channels exist for a reason. They’re different silos you can weave together through cross-promotion to bring customers/clients/patients back to your website to complete a transaction or goal. There are A LOT of marketing channels these days. Albeit, you probably don’t need every single marketing channel to reach your target audiences effectively—just a few strategic choices.
To determine where your audience hangs out, you can do a brainstorm and/or an SEO audit. Ask your team where your ideal clientele exists digitally. Are they on social media? Where? Just on Instagram perhaps, or Pinterest, LinkedIn, YouTube, and Facebook too? Does your target demographic use mobile or desktop as their main mode of communication? That may lead you to determine an SMS marketing or traditional email marketing initiative. No matter if you conduct your audience audit manually or via a formal SEO audit, answer this question before you move on to the next.
2. Where is there an opportunity for more lead generation?
After you know where your target demographic flocks and their preferred means of communication, discuss if there’s a way to generate more leads from these channels. Look at what you already do on each channel. Is there room to grow your current efforts or restrategize entirely and expand your reach? Knowing the answer will help you spend your marketing budget per channel in a smarter way.
3. How should I invest when my marketing budget increases?
This entirely depends on how much you currently spend on marketing (it’s advised you spend 7–8% of your revenue on marketing), and your goals. Prioritize your company goals—we’re talking from social and engagement, financial, market share, and business size standpoints. That will help you answer this important business strategy question.
4. Where can I get the best ROI for money spent?
This is a super important question when setting a marketing budget!. Your business will get the best ROI on the most popular channels amongst your demographic. That being said, just because you start advertising on Instagram doesn’t mean you’ll get followers and customers there. You need a solid overall content marketing strategy to do so. However, you need to reserve marketing dollars to invest in the places in which your demographic clusters. It’s a much easier chicken and the egg scenario.
Budget Breakdown: Dividing Up Your Marketing Budget Per Channel:
General Marketing Budget vs. Content Marketing Budget
When reading this guide, remember that a content marketing budget is part of your overall marketing budget, which may contain branding, SEO, website design and development, and other non-content needs.
Most companies spend 7–8 percent and upwards of 12 percent of their gross revenue on marketing. So, say you have $100K to spend on marketing in 2021. You may need to save 20 percent of that for hard costs like website development and branding, and funnel the remaining 80 percent into your content marketing efforts. Kapeesh?
Also, remember that your annual marketing budget per channel shouldn’t be rigid. You should alter spend every year to address your goals and priorities. For instance, if your website is due for a massive overhaul, more of your marketing budget may go to that one year. If your website and branding are on point, you may have more reserves for ongoing content marketing on a monthly basis.
Regardless of what budget you start with and end up with, always break down your budget annually and by general marketing and content marketing. Doing so will help you spend your money wisely, strategically, and only on what you need to in order to reach your goals and improve ROI.
SMS and Email Marketing / 30% of your content marketing budget
Email marketing is one of the best channels to direct your marketing budget and every business—B2B and B2C. Why? Because email generates $38 in return for every $1 spent. That’s why we recommend most businesses set aside 30 percent of your content marketing budget for email marketing.
Email campaigns are effective for a variety of reasons, including the ability to communicate directly with your customer in their inbox, nurture and convert leads, and even reactive lapsed leads. As opposed to your customer having to randomly find your content on other platforms, email marketing allows you to control every part of the communication channel.
But, there’s always a but. Here it is: your email marketing efforts are only as good as the strategy you implement. You can’t expect to have a huge ROI in this channel (or any other) without having an effective strategy in place that you stick to. It’s important to educate yourself on the latest email campaign tactics and strategies so you don’t waste your time or money. We’ve published a great guide on how to create effective email drip campaigns to get you started.
SEO Blog and Video Content / 40% of your content marketing budget
You’ll find differing opinions here, but we have a content-first kind of philosophy when it comes to marketing. That’s why we recommend you reserve 40 percent of your content marketing budget for SEO blog and video content. That’s probably how you found this blog, and there’s a good chance it’s how customers, clients, and/or patients will find you.
You need to have enough budget to publish at least one blog per month—ideally, one per week. Video is the creme de la creme as far as SEO value content goes. Accompany every blog with a video—and use these videos on your website, emails, and social media accounts—for the most bang for your buck. Here are some guides to come up with better content strategy for your blogs and videos.
Social Media Marketing (SMM) / 30% of your content marketing budget
Unless you solely benefit from a referral network and word-of-mouth marketing, you should market your business on social media. Why? Because there are over 3.5 billion social media users worldwide, including 90.4% of Millennials, 77.5% of Generation X, and 48.2% of Baby Boomers. Plus, users spend an average of three hours per day on social networks. It’s a lifestyle and a means to connect with customers, patients, and clients everywhere.
Studies show that most businesses spend at least $1,000 on social media marketing each month—and anywhere from 15% to 25% of their total content marketing budgets on social media marketing. That’s why we split the difference and recommend you reserve 30 percent of your content marketing budget for social media. Here’s more information on how to divvy up your social media marketing budget per channel so you focus your efforts wisely.
General Marketing Essentials to Budget for in 2021
Email and SMS, social media marketing, and blog writing are all ongoing content marketing needs. But don’t forget to save some money for the foundational marketing necessities when you’re determining your marketing budget per channel. We’re talking about branding, advertising, SEO, and your website.
Website Budget / up to 90% of your marketing budget
Your website is the most important part of your marketing. If it needs massive updates, it may be worth dedicating nearly your entire marketing budget to address important issues. Why? Because 89 percent of customers will go to the competition after having a bad experience on a company website, and nearly 40 percent will leave a site if the content is unsightly. It’s a shallow world people, so your website needs to look and act the part.
So, how much does a website cost in 2021? That depends if you hire a website design freelancer, a digital marketing agency, or an employee. It also depends on whether you go for a full rebuild, website template, or simple UX and content tweaks. Here is a guide on how to hire a website developer and/or designer for any business. Make a sound decision here so you don’t wind up facing a massive headache or web dev catastrophe.
Branding Budget / Up to 50% of your marketing budget
Branding is super duper important. It’s the first impression people have with your company. It’s your voice, tone, and how you speak with your demographic. But how much does a logo cost in 2021? And more importantly, how much does branding cost for small businesses? As much as you have to throw at it. That doesn’t mean you should spend your entire budget on a pretty logo and kick ass brand book. It does, however, mean you should allocate some of your marketing budget to address outdated aesthetics or messaging that doesn’t speak to your demographic.
SEO (Search Engine Optimization) / 10–20% of your marketing budget
Once established, Search Engine Optimization (SEO) is an ongoing maintenance item you should budget for each year. Technical SEO comes in the form of an SEO audit and it’s complemented by strategic link building. Yes, website development and ongoing content marketing enhance your SEO. But for budget’s sake, we’re breaking down your SEO budget into the technical items to make it easier to organize.
SEO is so important for every business. It will help you improve your ranking in search engines. Doing so, will connect you with more customers and beat out the competition. For instance, it’s been found that moving up just one spot on Google’s search results can increase Click Through Rate (CTR) by over 30 percent! You ultimately want to be in the first three spots in searches. Why? Research shows the first three results receive 75.1% of all clicks for a given search.
That depends on the size of your company and budget, but small businesses tend to spend about 20% of their marketing budget on SEO. If you’re a large established brand, you may spend as little as 10% of your budget on this channel.
Social Media Advertising / 20% of your marketing budget
We always say you should match your organic social media marketing budget with your social media ads budget. That’s because social media advertising is an ROI gold mine for marketers, but it needs a consistent organic profile to bolster its validity. In short, you need to have an active presence and profile in order to build trust with the users you attract via social media ads.
If you’re more of a bandwagon person, then look no further than these stats to substantiate this marketing allocation: Social ads spending increased 20 percent in 2020 from 2019—up to $43 billion. It’s only going up every year. This is in large part due to the fact that social media is “pay-to-play.” A.K.A., you need to spend on ads to get into newsfeeds. You can do this over time via organic social media, but it’s becoming more difficult. Ads will fast track your way into relevant users’ newsfeeds and close sales.
Pay Per Click Advertising (PPC) / 10% of your budget
PPC is a marketing channel that has the potential to provide high ROI if implemented well. A conservative estimate of the effectiveness of this strategy shows companies make an average of $2 for every $1 spent on PPC. PPC costs. Decide if you’re ready to invest in PPC. Consider the fact you’ll need landing pages too to factor into the equation.
PPC allows businesses to target increasingly granular audiences based on demographics. You can narrow the field of your efforts to targeting your ideal customers with an effective PPC strategy. Facebook, Instagram, and Google Ads are all platforms where you can leverage great targeting to find new leads and increase revenue potential. If you’re curious about learning more if PPC is right for your business, we have some great content to help you learn what PPC is and how it can benefit you.
Holy sh*t that was a lot of numbers and info…
Hopefully, your eyes haven’t glazed over and now you know how much you should spend on each marketing channel in 2021. Having a clear marketing strategy and a solid plan for where your marketing dollars are spent will make your business more profitable. If you need help, we’re here to consult or take the reins to get you headed in the right direction. We’d be happy to provide you with a free consultation to help you grow your business.