September 3, 2021 |
How To Allocate Budget for Digital Marketing

Budget is probably the biggest frustration of digital marketers. Take note that digital marketing is an all-encompassing job and it means that the allocated budget does not just go to one platform (e.g. Facebook) or to one strategy (e.g. SEM). While not many people are keen to talk about this side of digital marketing, let us discuss how to allocate a budget for digital marketing.



How to allocate budget for digital marketing


Allocating your budget is no easy feat, and this is true in any given industry. There is the question of how do you divide the allocated budget between different components of digital marketing. What are these components to begin with? Do you need to prioritize one component over the other? Most of all, how much do you have to spend for its entirety?

According to the suggestion of experts, a brand should spend between 5 to 15% of the business’ revenue on marketing, and 10 to 50% of this should go to digital marketing. It appears to be an extensive range, so here are a few steps on how to plan your digital marketing budget.


Identifying business goals. The number one goal of any business is to increase sales. To achieve this, you also need to increase your brand awareness. These goals appear too broad, so you also need to identify the tactics and the strategies you plan to do to achieve them.


Go into the details of your strategies. Whether it’s increasing website traffic, increasing your conversion rate, or increasing social media engagement, they should all be included in the details of your strategies to achieve your marketing goals.


Analyse which channel is working best. Take note that this analysis does not just include determining which channel works and which doesn’t. You also need to do competitor research, keyword research, and customer discovery.


Determine your marketing activity costs. After you have identified which channels are the most effective for your campaign, it is time to determine the costs for those channels. Keep in mind that the cost may also vary depending on several factors including but not limited to the type of your campaign, the duration, and the results that you want to achieve.


Set a marketing objective


Let’s look closely at setting marketing objectives. Basically, these are the defined goals of your brand or business. Your objectives should show an outline of what you are aiming for in terms of marketing, the strategies that you plan to execute, and other information that can help and support your objectives. This is important because, without a concrete plan, your brand will feel like it has nowhere to go and may eventually fail.


These are some of the objectives that you can include on your list:


Increase in digital presence and build brand awareness. A brand’s digital presence is fairly important especially these days when a large portion of consumers is on the internet. If your brand is new and you do not have much online presence, you may want to with SEO (search engine optimization) to increase your online visibility both in website rankings and social media channels.


Promote your products and services. Increased sales is the number one goal of every business, and this can be achieved if consumers know about the products and services you offer. Include promotions of products, both old and new, in your marketing objective.


Lead generation. If you only have a few prospects in your pipeline, you may also include in your objective how to attract prospects and convert them into actual customers.


Customer acquisition and customer retention. Attracting new customers and keeping the existing ones should always be included in your marketing objectives. This is the next goal you can focus on after generating leads.


View your marketing data


Marketing data consists of all the information about your marketing campaign, from customer data to market research. It is important that you analyse this data because this will determine which area of your marketing campaign you should focus on. Additionally, you can use the information upon working on most of the items on your list of objectives.


Below is the list of data you should look at.


Customer data. From the name itself, this is the information about your customer. It may include their contact details and demographics.


Market research. This contains information about your target market. It includes data on customer preferences and consumer behaviour, interests, and even the channel of communication they prefer.


Corporate intelligence. Also called as competitive intelligence, this data contains details about your brand competitors such as products and services, pricing, and even business capabilities.


Sales and transactions. These are the records of your potential customers, quotes and proposals, and also the actual purchase transactions.


Customer interactions and feedback. Customer interactions include website visits and customer service inquiries and issues, while feedback includes customer reviews, ratings, and interviews.


As you collect and analyse your marketing data, it is also important for you to have marketing metrics. You need to determine your point of reference so you have a figure to compare with as you evaluate your marketing results.


Analyse which channel is working best


If you have been doing digital marketing, it is much easier to analyse the best working channels. Basically, you just have to look at your old data and determine which worked and which didn’t. Your data should also show how much you spend in each of the channels you used and which of them delivered strong results. Having this information will make it easier for you to decide which of the channels deserve a chunk of your budget.


This is a bit tricky if you haven’t done digital marketing before, especially for your brand. However, what you can do is conduct a quick market research to identify the best digital marketing platform for your brand. Find out the online platforms where your customers are normally present. Look for the channels that your competitors might be spending on and determine their allocated budget. Research for the major keywords that brings traffic to websites similar to yours and find out the average bids. Just keep in mind, however, that digital marketing platforms work differently and what works for other brands may not work for yours. Although, the data you can gather from this research will help you determine which platform you are going to spend most of your digital marketing budget.


Below are the most effective digital marketing channels you can choose from:


· Website or content marketing

· Email marketing

· Social media marketing (Facebook, Twitter, Instagram, LinkedIn, Tiktok)



· Display ads


How to allocate budget on Facebook


Facebook is one of the biggest platforms where most digital marketers focus their energy. With roughly 2.89 billion active users each month, it is safe to say that a big chunk of the consumers can be found in this social network. In the past, allocating digital marketing to Facebook looks a little bit tough. There are different aspects that you need to consider in order to maximize your budget. For example, you can allocate a certain amount for specific days and increase it on other days when consumers’ social media activity. Let’s take a look at the video below:




Facebook advertising cost is also affected by several factors. Industry, for one, can affect the ad cost. For example, ads from the financial industry are reported to be more expensive than ads from the apparel industry. Your timing is also a huge contributing factor in your ad costs. The cost for the same exact ad may vary during different hours of the day depending on the behaviour of the consumers. Additionally, it will cost much more during periods when a lot of advertisers fight over the attention of the consumers.


In 2017, Facebook launched Campaign Budget Optimization (CBO). This aims to help advertisers get better results while spending less. Essentially, advertisers are given the option to allow Facebook in allocating their daily ad budget based on its algorithm. This way, the ad budget is distributed based on Facebook’s algorithm to reach the right audience. This business automation will also the advertisers save time and perform other important marketing tasks.


How to allocate the budget for SEM


In reality, there is no accurate number for the cost of your marketing budget, let alone for SEM. Budget allocation for SEM varies in every company and industry. As for the cost, there are three factors that you need to consider—your market size, your expected profit, and your competition.


Market size. If you are an SME (small-medium enterprise) but you deliver your goods nationwide, of course, your budget should be relatively higher than an SME which delivers the same product but only locally.


Expected profit. For this one, if you expect a much higher profit, you should also spend more in order to achieve it.


Competition. If there is a lot of competition in your industry, it significantly affects the cost of your marketing budget. It will be difficult to rank if everyone wants to be on top. Additionally, your current ranking is also a factor in the increased cost of the budget.


Indeed, it is a challenge to create an optimal marketing budget, but with experience and lots of trial and error, your digital marketing journey will be as exciting as it should be.


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