One of the most important questions any business must ask itself is: How much should I spend on digital marketing? With all the recurring expenses it takes to run a business, it is important to have key marketing tactics working for you and not against you. When it’s time for a company to invest in digital marketing, they’re usually playing catchup against the competition and struggle because they don’t know how much to spend to make an impact in their market.
Altitude Agency wants to explore why it’s important to focus on how much a business should spend on digital marketing in order to dominate your niche online.
How Much Should a Small Business Spend on Digital Marketing?
Digital and print marketing dollars should have a return on investment (ROI), no matter how small the impact is. Ask yourself: Do you have a specific way to track these dollars? What is your current ROI? Working with a digital marketing company can lay out an effective digital marketing campaign. Using these goal tracking resources on your campaign is the key to business growth and online success.
Before you ask how much you should spend, you should be asking: What should we be doing?
So, let’s start there.
What Should I Spend My Marketing Budget On?
Every business is different. Every market is different. You may be in a highly competitive niche, but the market is less competitive, or vice versa.
Here’s a simple blueprint for identifying where you should and shouldn’t spend your digital marketing budget on:
- First, you need to determine what your competition is doing right and emulate that.
- Then, you need to do it better.
- Next, you test the waters in different digital marketing channels that your potential customers are using daily.
- Finally, you need to continue to invest in what’s hitting the mark with potential and recurring customers. Ditch what’s not.
A digital marketing agency will identify what your competition is doing and what you need to do to do it better. This will be the starting point for figuring out exactly where your digital marketing budget should go and what projects you should tackle in order of impact.
Where Your Digital Marketing Dollars Should Be Spent
Your website is one of the first impressions potential customers get of your business, brand, and reputation. Is your website outdated? Does it look like something from the 1990s? Chances are this will turn off someone visiting your website, and they’ll run away to a competitor with a more modern-looking, easy-to-use website.
Your website is only as good as its content. Content bolsters the trust and authority that comes with providing genuinely useful information to a potential customer and is often what converts them to a lifelong one. Content marketing can be thought of as a multipurpose tool for your website with the ability to generate a better ROI. As you develop more relevant and knowledgeable content for your website, think of ways you can repurpose it for social media, email marketing, and more.
With Google taking more and more “real estate” on page one of the search results, ads may be the only thing potential customers see when looking for your business online. A good rule of thumb is that if you see that your competitors are doing PPC, you should be doing it too. Put yourself front in center, so you don’t fall to the sidelines. If you’re not first, you’re last in the eyes of potential customers.
Reputation management is more critical than ever online. Google values brand authority, awareness, and trust as do your customers. Online reviews have become a staple of Google My Business and big online directories like Yelp and Yellow Pages. Like PPC ads, Google My Business listings, are often shown above organic listings, which means if you don’t show up locally with good reviews, you may be overlooked for the competition.
It’s more important than ever to leverage video in advertising or on your website to capture new customers and showcase why your business is better suited to help them than anybody else out there. According to Blue Corona, “U.S. Internet users spend an average of 15 hours each week with digital video, and Cisco predicted that video will even make up 82 percent of all internet traffic in 2021.” 15 hours each week! If you’re not using video, your digital marketing budget is being wasted.
Google currently holds more than 70 percent of search engine market share. If you’re not found at the top of search results in your industry, you might as well not exist. Search engine optimization (SEO) is the only practical way to ensure your website competes organically against the competition. By investing in on-going SEO, your website is positioned to stay at the top of organic search results into the future which will only increase your lead generation and digital growth.
How Much Should I Spend on Social Media Marketing?
Before spending a single dime on social media marketing, your digital marketing agency will do research to determine where your customers are – those are the only social networks you should invest time and money into. Any marketing agency that says otherwise is wasting your digital marketing budget. Its mileage will vary depending on your industry. Some businesses create social profiles, and that’s it, they don’t need to use them. Other companies may need to focus on one or multiple social networks to reach potential customers.
How Do You Calculate a Digital Marketing Budget?
We’ve used this quote before as a good starting point for businesses. The U.S. Small Business Administration (SBA) recommends at least eight percent of your gross revenue should be spent on marketing. They suggest that up to 20 percent of your gross revenue be spent on marketing if your business is just getting started or trying to play catchup in your market.
If you don’t have the budget to do it all from the start, work with your agency to begin with what will make the most impact. Work your way down that list until you’ve grown enough to invest in all the digital marketing channels your potential customers are using. Remember you want to be front and center as the choice on all levels of your digital marketing campaign.
While the growth may be slower from the start, the initial growth will help you generate the revenue you need to keep investing in bigger and better from new and improved digital marketing campaigns for your business.
Keep in mind that most agency pricing will vary based on your industry, the marketplace, competition, and your location. If you’re a local business vs. a national company, the costs associated with running a successful digital marketing campaign can start in the thousands to tens of thousands of dollars.
Work with a digital marketing agency to let them guide where those dollars should be spent based on your business’s unique goals and competition. Don’t just throw digital marketing dollars around if you’re not sure where to spend them, especially if you’re not tracking your ROI. Your digital marketing budget is best served by being focused.
Your digital marketing budget shouldn’t be defined by an “all in” mentality by you or your digital marketing agency. Your budget should be defined by where your customers are lurking on the web. By hyper-focusing on where your customers are, you’ll be able to capture qualified leads quicker and more efficiently with your digital marketing efforts.
Don’t rely on fancy “marketing calculators” or gurus online to tell you how much to spend in a blog post or a YouTube video, rely on an agency in your corner understanding your business, your competition, and your customers to help you determine the best digital marketing budget to grow your business online.