Now that 2018 is in the books it’s time to prepare for 2019 and set up your digital marketing budget for success. Just think of it as a way to plan ahead and make sure you’re allocating enough resources to accomplish what you need to accomplish.
Some things you’ll need to consider are how much to spend, which channels to optimize and where to make investments in new technology. Setting your budget correctly can mean the difference between success and failure. Follow the steps below and you’ll be in good shape for the upcoming fiscal year.
1) Be Reflective
It’s human nature to learn from our mistakes as well as our accomplishments. In order to know what you should be doing in the future it’s important to reflect back on last year and even the years before. What were the things that worked for each channel and what didn’t? If you’ve noticed that email blasts are effective for acquiring more customers, then you should allocate funds for more blasts, even if you have the funds for more expensive methods of contact.
Once you’re able to identify the areas that needed attention in the past and the one ones that worked to your advantage, you’ll be able to put together a successful digital marketing plan and achievable goals for the upcoming year.
When determining what steps to take, take a deep dive into each of your marketing channels by asking yourself:
What was the return of the channel?
- Was it profitable?
- How much profit did it provide?
- What was the return on investment?
How efficient was the process of the channel?
- Was the path to conversion simple?
- Can the process be optimized?
- If so, what areas should be addressed?
What role did this channel play in your overall marketing funnel?
- Did it provide a clear path to conversion?
- Was is a road block for customers?
- In what ways can you clear the path to conversion?
Once you identify what worked and what didn’t, it’s time to get organized about your current financial situation. When you’re working with estimates it’s impossible to create an accurate and realistic digital marketing budget.
It is vital to determine is how much money your company makes on a monthly basis and any variables that might exist. This is what’s referred to as reliable revenue.
Reliable revenue is pretty easy to calculate. For example: If your revenue ranges from $8,000 per month to $10,000 per month, your reliable revenue is $8,000 a month. Any amount over that amount is revenue that cannot be added to your budget because it’s not considered reliable and can change dramatically.
Subtract Your Expenses
Doing business costs money. Here are a few areas of expense to plan for:
Visitor acquisition costs
How much is it going to cost to acquire traffic? this is typically represented in a cost-per-click (or cpc model), or cost per thousand impressions (a cpm model), depending on the type of advertisement we’re buying and it’s the most common form of advertising expense. Some methods of visitor acquisition include; Paid Advertising: online advertising, videos, banner ads, email marketing, PPC, blogs and social media campaigns.
These costs can include graphic design, writing, photography and other expenses needed to create digital advertising.
These costs include all the expenses associated with building a website and maintaining it.
Testing & Optimization expenses
These include Industry or Competitive Market Research costs including testing, creative production and tracking. This can be in the form of in house employees, contract resources or consultants.
Once you have determined your reliable revenue any expense that your company needs to pay each month should be subtracted prior to creating a digital marketing budget. A realistic budget always focuses on the amount of income that exceeds your expenses, not the total revenue gained. This is referred to as your disposable income.
2) Be Specific
A company’s total marketing budget should usually be between 5% and 15% of its total revenue. Digital marketing should make up a substantial portion of your overall marketing budget. A general guideline to follow is 10%-50% of your total marketing budget should be allocated for digital expenses.
Now that you have determined the amount of your disposable income you should determine where to allocate the money. To do this effectively it’s paramount that you identify your goals and set them explicitly.
According to Neil Patel, a digital marketing pro and creator of the Quicksprout blog, “Marketing is strategic. To succeed, you need highly focused goals. You need a framework for a scalable, replicable framework. It doesn’t matter whether you’re a beginner or an advanced marketer — this fact will always hold true. If you run without direction, you’ll end up wasting two of your company’s most valuable assets: time and money.”
Here are some examples of goals that most successful companies seek to achieve for their digital marketing budget:
- Making more revenue
- Establishing customer acquisitions
- Growing a brand
- Building brand loyalists
Once you know the value of each individual channel it’s important to dig a little deeper and create a system to tie specific portions of your budget back to your core goals for the year.
Here’s what you’ll need to know:
What will make the upcoming year a success? Is it more money, more customers or building your brand recognition?
What do the leading indicators of success look like? What is that dollar amount? How many employees do you want to add specifically?
What needs to happen in Q1 and Q2 to set you up for continued success heading into Q3 and Q4? What you do in the beginning of the year greatly impacts what happens later. Determine what needs to be accomplished early to ensure success throughout the year.
Since we are on the topic of being specific let’s look into so some direct areas where you can allocate portions of your budget where you’ll get the best bang for your buck.
Make Your Presence Known
In digital advertising it’s vital to have exposure throughout all platforms. Your content and messaging needs to be on all devices all the time. Whether it’s organic, paid search, or social media advertising, make sure that your relevant content has the ability to reach any user at any time.
It’s important to remember that your website is your window to the world and your first impression for many potential customers. If you have not updated it in 3 years, it’s time to budget for a refresh.
Here are a few areas to address:
Safe and Secure
In today’s world wide web it’s important to have a (https) secure website. It’s a ranking factor for the search engines and users feel more confident engaging with secure sites.
Make Your Website Responsive
One thing often overlooked is the functionality or a website across platforms. Today people are using their mobile devices for business almost as much as they utilize their desktop computers. When you make your website responsive, it will be seamless and compatible across all digital device formats.
Meeting User Expectations
No matter where the potential customer enters your funnel it must meet user expectations. For example if you mention a Green Nike High Top Basketball Shoe in a PPC ad, there should be a Green Nike High Top Basketball Shoe on your landing page and the entire path to conversion should be relevant to the initial reason for engagement.
3) Be Flexible
While you can use all the information obtained from the previous years to develop a specific plan it’s important to remember that circumstances are constantly is a state of change and the areas you allocate your budget throughout the year must accommodate change as well. If you are managing resources in-house or working with an agency you should always be assessing where funds are going throughout the year and optimize your process accordingly to meet your goals.
In order to accomplish your goals you must develop a strategy and target each goal strategically.
Here are a few examples:
If you’re looking to drive revenue, concentrate on the following tactics:
- Increasing order size and quantity
- Converting first-time buyers into return customers
- Decreasing customer turnover
If you’re trying to grow your brand and develop brand loyalists, these are good tactics to follow:
- Increase your social media engagement
- Create and share engaging content
- Incentivize your customers to engage with your content
Remember your ultimate goal is to deliver relevant content to the right user at the ideal time so it’s important to make an investment in local search and SEO.
In addition to organic search, it’s also important to allocate appropriate funds for paid search, social media advertising and social content marketing. Set your digital media and PPC budget based on your goals. Broaden your scope with display advertising, remarketing and meta-search advertising.
Whenever you’re testing something it’s best to gather your data and study it. Most savvy marketers will use A/B or multi-variant testing methods to optimize all content and messaging. With A/B split testing, two or more versions of a page are created and the traffic is divided between them. The data can show you which version is outperforming the other and producing more conversions.
Multivariate testing involves creating different versions of individual elements shared across many pages. Because users are shown all possible combinations of elements randomly, multivariate testing requires a higher volume of traffic to produce significant results.
Remember, if something isn’t working, revise it. Then test it. Then repeat.