Usually, the team leaders of the marketing department are responsible for setting a budget for digital marketing.
The marketing team is responsible for presenting a budget and explaining why certain activities are required.
Most brands spend 7-10% on marketing.
Around half of that money should be spent on digital advertising initiatives.
It’s important to remember that each company and industry has unique characteristics. Some companies must spend more on digital marketing or a significant percentage of their overall revenue.
Your marketing goals and priorities will affect your budget.
Before you start, you’ll want to understand what is expected of you and what standards are in place.
Consequences for an incorrect budget
Budget planning should be done as accurately as possible.
You could face several consequences if you make a mistake.
Your reputation as an effective leader is the first risk.
If you allocate the resources correctly to the campaigns and initiatives you wish to run, your teams and bosses will have different levels of trust in you.
If upper management believes you need to become more familiar with your budget, they may cut your department’s budget.
Not having enough budget to reach essential goals can also be a problem.
Suppose you want to increase your digital marketing efforts but need more budget to spend on ads that will last long enough to generate leads. In that case, you may end up overspending or miss out on some crucial opportunities.
Best Practices – How to allocate a budget for digital marketing
It is easy to understand the best practices of allocating budgets for digital marketing by using the formula above to determine the percentage of your overall revenue you wish to spend on digital strategies.
You must provide a detailed breakdown of your spending and activities.
Here are some top practices you should consider when deciding how much to allocate to digital marketing initiatives.
These tips will help you plan and strategize around budgetary issues and ensure your team and department thrive.
Outline Your Sales Funnel
Step back to see the bigger picture of your marketing funnel before diving into the numbers.
What are the key touchpoints along the way?
You can prioritize your investments by knowing how to attract customers and what they must know about the brand to convert.
List your operational costs.
Budgets cannot be negotiated on operational costs. These costs must be covered and set up before you can allocate a budget for other activities.
Operational costs include hosting costs, SaaS subscriptions, and platform costs.
Review the Results of Last Year or Quarter
You’ll also want to review the reports and metrics from previous quarters.
Did the campaigns meet your expectations? You may have reached your goals or received a return on investment for the initiatives.
You can add or remove specific activities if you know which ones worked.
List your goals
Allocating budgets for different activities depends on knowing your goals for the coming year.
What are you trying to achieve, and how much money do you need? You may be looking for conversions or sales.
Setting goals will help you determine which activities are best for your budget.
Drill down to the Details
Focusing on the details is essential after you have set your goals.
What are your goals, and how do you plan to reach them? Based on what has been proven, what activities will most effectively achieve your goals?
Your marketing plan will give you some direction on allocating your budget.
Choose the best channels for your business.
You can choose from various marketing channels but be active in some.
Choose the best channels for your business, and consider the operating costs.
Calculate the cost of marketing activities.
When you have decided which channels to target, you should look at the marketing costs within each channel.
Want to grow your social media presence? How much will it cost you to promote your posts and run ads? Be sure that your marketing efforts are aligned with your goals.
The Competition Scope
When deciding how much money to spend on digital marketing, your competitors are a valuable resource.
What marketing methods are they using? What marketing methods are they investing in?
You can learn from their marketing and advertisement strategies what campaigns and channels work best in your industry.
Create Your Marketing Plan
It’s time to create your Marketing Plan.
Plan your year-long or quarter-long initiatives by identifying your goals, the tools that will help you achieve them, and the channels you should focus on to reach your audience.
Estimate Your Budget
After you have created your marketing plan, you will need to estimate the costs for each activity.
Look at what you must do to achieve a reasonable return on investment and a remarkable ROI. Estimate the dollar amount for each step in the plan as accurately as possible, and then finalize your budget.
Take Every Decision Based On Data
Your budget will likely need to be presented to your organization’s upper management. It’s crucial to use precise data when making decisions.
Refrain from stating that you believe running advertisements will cost specific amounts. Instead, use research and data from previous campaigns to determine the exact costs of a successful campaign.
It will help you build trust in both your plan and leadership abilities.
Measure Results
You still need to monitor your spending and see the results closely.
What was the reason for your miscalculation? What was your reasoning for the mistake?
You can use the results to create the budget for next year.
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