Not sure how to set a digital marketing budget? Let us clarify!

After all, what’s the point of planning implausible strategies to get more customers on the Internet if you have no budget available? That’s why digital marketing budget is essential to define and conduct actions that make the best use of your company’s funds.

 

A short-term cost? Digital marketing is not like that! It is an area of investment with return, which will guarantee your company an increase in notoriety, reputation, and credibility in the medium and long term. An increase that will convert into greater – much greater! – competitiveness and profitability. So, how much should you invest? Well, there is no ideal amount to distribute between branding, content marketing, SEO, social media management, advertising and email marketing, among other Internet strategies, so the conclusion is to read our article to understand how to set a digital marketing budget, agreed?

 

How important is a digital marketing budget?

Ensuring that your company’s money is well spent, on strategies with great return and not on actions that may cause losses. That’s basically the importance of a digital marketing budget. But the budget also serves to ensure a good financial management that indicates where, when and how the money is being applied, helping to regulate spending, to avoid actions without perspective, to optimize strategies and, as a result, to increase the profitability of your company.

 

How to define a digital marketing budget?

Are you already convinced that you really need to set a digital marketing budget for your business? There isn’t any other way? Well in this is extent article will help you understand and ensure your business generates plenty of results, grow and deserves every penny it can get. That’s precisely why we’re going to give you a step-by-step approach to setting a viable and effective digital marketing budget.

 

1. Set goals

Improve awareness and credibility? Gain traffic to the site? Generate more leads? Double conversions? Increase your customer base by 30%? Increase your online store sales by 25%? Regardless of the goals, the important thing is to have your marketing objectives well defined, so that you can create an action plan with the most appropriate channels and strategies to achieve them.

 

If you find it difficult to set goals, study your sales history and use this information to design goals.

 

– Golden tip!

Follow the 70, 20, 10 rule: spend 70% of the digital marketing budget on channels that have already had good results, 20% on channels with potential, and 10% on higher risk channels that may turn out to be a surprise!

 

2. Determine metrics

Once the objectives have been defined it is time to quantify the effectiveness of marketing actions, and for this you have to select some metrics, such as CAC (cost of customer acquisition), brand awareness (brand awareness), and of course ROI (Return on Investment), which allows you to quickly and effectively gauge the return on each action.

 

– Golden tip!

To calculate the ROI, subtract the number of gains obtained through digital marketing by the amount invested, and then divide the result by the same amount invested. Finally, since ROI is represented as a percentage, at the end of the account, multiply the value by 100.

 

The formula is as follows:

ROI = (earned value – investment) / investment

 

3. Break it down into categories

Now that you have your goals defined and the metrics well determined, it’s time to choose the actions and strategies by dividing the budget into categories with quotes. For example, you can invest X in branding, Y in content marketing, W in advertising campaigns, email marketing, social media, etc.

 

– Golden tip!

It is good to always consider a safety margin of 10 to 15% more in the amounts allocated to each category.

 

4. Distribute the budget

Next, you should distribute your digital marketing budget, placing greater emphasis on the channels and strategies that work best with your target audience.

 

A great way to figure out how much money you can invest in digital marketing strategies, is to first figure out the margin of each product or service, and then estimate the average revenue per sale made. Alternatively, you can use the average spend to deliver what you’ve promised to the customer, adding up all the amounts in the process (except marketing money!) and dividing by the number of sales. This way, you can arrive at the amount of margin your company receives per sale and then just figure out what part of that amount can be invested in digital marketing strategies.

 

– Golden tip!

There is a very simple rule here: if you want to increase your company’s sales, you need to invest more money in marketing. If you understand that you already sell enough, you should just maintain the amount you have invested.

 

5. Define the digital marketing budget

Next, cross-reference the previous information to define your company’s digital marketing budget. It is simple! Just multiply the number of sales you want for that period by the amount you can invest in each sale. The result, roughly speaking, is your digital marketing budget.

 

– Golden tip!

To ensure the viability of your proposal, you should analyse it together with the financial capacity, which has in its possession all the information about expenses with other sectors of the company.

 

6. Create an investment schedule

Has your digital marketing budget been given the green light? Great, now create an investment and return schedule to get a comprehensive and integrated view on when, where and how you will perform the defined actions, how much you will invest in each one and what is the expected return for each investment.

 

– Golden tip!

If you have difficulty in forecasting the value of each marketing action, use a daily budget equivalent to 50% of the average ticket of your product or service (average amount spent by your customers).

 

7. Monitor

Is there anymore other steps? Of course! The work does not end when you set a budget for your company’s digital marketing! You also need to monitor the budget daily, over time, to see if you have distributed the funds well or if any adjustments need to be made so you don’t miss any goals.

 

– Golden tip!

Hire a digital marketing company like Webfarus, with extensive experience in defining and monitoring digital marketing budgets for companies in various industries. Contact us!

luis horta marketing digital

Sobre Luís Horta

Luis é o fundador e CEO da Webfarus. É professor no Ensino Público Português há mais de 25 anos. Ajudou a criar e a desenvolver mais de 700 negócios em diferentes áreas, ao longo da sua carreira.

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