If you travelled 20 years into the past and asked people about digital marketing, most of them wouldn’t know what the hell you were talking about.
But in the last two decades, the shift to digital has completely reshaped the marketing landscape.
Budgets that used to be dedicated to creating catchy jingles and print advertising are now focused on search engine optimization and social media marketing.
Looking back on it, it’s crazy to think about how much has changed in such a short period of time.
But if you haven’t been in this industry for half your life like I have, it can be tough to know how much you should be spending on digital marketing.
If you’re dealing with this dilemma then this blog’s for you.
How Much You Need to Spend on Digital Marketing
Follow the Money
At the beginning of the 21st century, most marketing dollars were being spent on things like magazine, newspaper, radio and TV ads.
Today, spending on print advertising is on a sharp decline, and radio ad spending is stagnating.
TV ad spending continues to see slight increases, but in 2017, digital ad spending finally surpassed television.
And it doesn’t look like that trend is going away.
According to data from Statista, worldwide digital ad spending is forecast to increase to nearly $350 billion by 2022, while spending on TV ads looks like it’s ready to flatline.
Data from Statista also shows that online advertising revenue in the U.S. has multiplied more than ten times since the year 2000.
But what does this all mean?
Well, digital is obviously working better than traditional forms of marketing, otherwise we wouldn’t be seeing this trend.
Does this mean you should be pouring your whole budget into digital marketing channels?
But before we get into all that, let’s look at what marketers and business owners think.
Find a Frame of Reference
I’d be bullshitting if I told you I know how much every business needs to spend on digital marketing.
But looking at what other businesses are doing provides a much-needed reference point.
So, let’s examine some survey results, which should provide some perspective.
A recent survey from The Manifest asked 501 digital marketers how they invest in digital marketing.
Survey results show that 99 per cent of businesses are planning to spend more money on digital marketing in the next year.
The survey also found that most businesses will allocate either 26-50 per cent or 51-75 per cent of their marketing budget to digital channels.
In addition, the survey found that most businesses plan to spend more on several digital marketing channels, but websites and social media marketing are the top priorities.
The Manifest’s survey provides a good point of reference for business owners.
However, most respondents came from companies with revenue in the tens or even hundreds of millions of dollars.
But what about small businesses?
Thankfully, Clutch’s 2018 Small Business Survey offers some insights that’ll hit closer to home for small business owners.
The survey found that 47 per cent of small businesses spent less than $10,000 on digital marketing in 2017.
The survey also found that 62 per cent of respondents have a website and 61 per cent use social media, which shows that most small businesses are engaged in some form of digital marketing.
Obviously, it’s not that digital marketing isn’t working for small businesses or they wouldn’t be doing it.
But the fact is, many of them just don’t have much money to spend on marketing.
In any case, it’s clear that digital marketing still has a lot to offer, even on a shoestring budget.
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Do What’s Right for You
So, we’ve looked at where the money’s going and examined what marketers and business owners are doing, but now comes the tricky part.
You can analyze stats and surveys all day, but what the majority’s doing isn’t necessarily going to be what’s right for your business.
Ultimately, the percentage of your marketing budget that should be spent on digital marketing depends on your industry and your target market.
If you’re selling video games or skateboards, newspaper ads and flyers probably aren’t your best bet.
On the other hand, if most of your customers are pushing 70, you might have a lot of success with those channels.
But there are no hard and fast rules.
If you’ve been having a ton of success with one tactic, don’t start pulling funds out of that channel because your competitors are doing something else. Stick with what works.
The same goes for setting your marketing budget. You can look at facts and figures till you’re blue in the face, but at the end of the day, you’ve got to do what’s right for you.
If you need a benchmark, the graph below, pulled from the August 2018 CMO survey, will give you an idea of what businesses are spending on marketing.
Plan and Prioritize
Once you’ve set your budget, the first step in crafting your marketing strategy is determining your target audience.
If you don’t know who you’re marketing to, you’re setting yourself up for failure.
Next, you need to look at your past marketing successes and figure out which channels are bringing you the most revenue.
The best way to prioritize your marketing tactics is by looking at what’s providing the greatest return on investment.
In other words, you need to consider what’s working and what isn’t.
Remember the old adage: “If it ain’t broke, don’t fix it.”
The next step is to determine what your marketing goals are for the next year.
These objectives need to be as specific as possible and you need to be able to quantify them.
For example, let’s say the channel you want to focus on is social media marketing.
In this case, you need to choose the platform(s) you’re going to use (Facebook, LinkedIn, etc.), how you’re going to use them (content marketing, social media advertising, etc.), how much you’re willing to spend, and what target you’re trying to reach.
Here’s what it would look like on paper:
Did these tips help you to set your digital marketing budget? Leave a comment and let us know how we helped.
Still not sure how much you should be spending on digital marketing? Visit TheBestMedia.com and book your Free Strategy Session with a Digital Marketing Expert today.