Digital marketing has been the most leveraged marketing technique since the advent of the digital era. Businesses, whether large or small, established or start-ups, have benefitted from the exceptional outcomes of digital marketing. And, there is no doubt that this was possible only because they have contributed an ample amount of their revenue in digital efforts. That is, they had set aside a portion of their revenue for digital marketing budget every year so that they can spend adequately on their marketing.
Being a marketer, you too have to plan an average digital marketing budget so that you can get the most out of your digital practices. You have to work on your digital marketing budget breakdown so that you can distribute your marketing dollars among the right practices and in sufficient proportions.
But how?
Before I make you understand how you can calculate your digital marketing budget for 2019, I would like to you to emphasize on the importance of planning a budget for digital marketing practices. This would help you to develop the right strategy in calculating the average digital marketing budget.
It is rightly said that, to earn money you have to spend it. But what is more important is to analysis how much you have to spend to get more from it. A marketing budget works as a guide that ensures that you are on the right track to balance the difference between the actual cost of marketing and the estimated costs. It allows you to measure your investments in gaining new leads and maintaining the existing customers. It helps you to decide on what terms you have to spend and what you can save on. Planning an average digital marketing budget every year makes it easier for you to make improvements on the weak points of the previous year.
Okay, so now when you are very well aware of the significance of a digital marketing budget, we can look forward to deciding on the strategy to calculate it.
I think you should first know what trends your competitors are setting up for you. For 20189-19, 57% of the Gartner CMOs are planning to increase their marketing budget owing to their revenue in 2018.
Let me tell you about the main psychology of marketing budget. You have to increase your marketing budget with the increase in conversions and your revenue every year. But, again the same question, HOW MUCH?
Let’s dig deeper into the problem.
Your company never always demands new customers. So, you may be thinking that you can spend on marketing whenever you feel the need. And, you also assume that, whenever you start a marketing campaign say, Facebook ads, your followers will immediately visit your website and purchase that particular item.
Unfortunately, you are wrong. Marketing does not work this way. Even, it may happen that YOUR business would not profit from this idea. The main thing is marketing campaigns do not work according to your assumptions. It’s not like you can start marketing anytime and your visitors will immediately turn leads and then to customers. Most importantly, you have to keep in mind your audience while promoting your services. The customer is not always ready to buy anything.
It’s shocking but true that a lead takes approximately three months to about a year to turn into a business term or a customer. And, it is this buyer’s journey that proves your assumption wrong.
Let’s have a look.
In simple terms, buyer’s journey describes how a buyer first comes to know about their problem, then looks for solutions to the problem, and then finally opts to buy a product to solve the problem. Hence, the journey has three stages of passing through:
In this stage, the buyer gets to know that they have a problem in something or they need something to improve their current position.
Here, the buyer then elaborates on their problem and tries to find a solution for it. They look for the available options.
The buyer now finally decides to buy a product that can solve their problem. They select the most appropriate of all the options available to them.
Hence, you may be now agreeing with the fact that it takes a very long time for a lead to pass through your sales funnel.
The main reason why I made this clear is to make you realize that you have to plan a digital marketing budget to keep your campaigns working throughout the year and you do not have to wait for long when your company needs new leads.
Now let’s come to the leading players in your company that will decide how much you are going to pay for your digital practices. These factors would allow you to allocate the right amount of your marketing dollars to all the important terms.
The revenue of your company is, however, the main lead of your business. Whatever you earned the last year determines what are you going to spend this year. What you got from your marketing campaigns the previous year will help you to invest in the present year. But you have to look at the other side also. If you will not spend more on your marketing efforts, your campaigns would not earn you enough. That is, you have to spend more of your company’s revenue to your budget so that it can bring you more profit.
This kind of give and take process is known as a causal relationship where spending back a portion of your revenue into your marketing campaigns is the cause of your profit from them. In this way, you would be able to persistently trigger more leads for your business and in turn high revenue.
As per Gartner’s CMO spend survey 2018-19, the company is going to spend 11.2% of its revenue in the digital marketing budget. It is close to the previous year’s expenditure, 11.3% of revenue.
It is crucial that you analyze where your business stands in the list of your industry. Is it a start-up or a well-established business? As it helps to decide on your digital marketing budget breakdown, considering the overall revenue of your company.
As a matter of fact, start-ups and young enterprises should spend more on their marketing campaigns as compared to well-established firms. New start-ups have to make their reputation in the market while the established companies have already proved themselves in the market. Therefore, the former must be more dedicated to their expenditure on marketing and advertising to increase their brand awareness. The more they will invest in their marketing efforts, more are the chances of reaching a larger audience at faster rates.
But I recommend larger firms not to decrease their budget based on this analysis as they have to maintain their reputation in the industry and stay competitive among the start-ups that are going to make their position. If you are an established business marketer, then you have to be determined with your marketing campaigns to beat the rush.
And why do you want to spend on your marketing campaigns? What are your goals?
Just simply ask the following questions to yourself before you start planning your digital marketing budget. This is important because if you don’t know why and for what are you spending you won’t invest your money in the right way.
You have to answer these questions to decide where you want to see yourself with the results of your marketing strategy. When you have highly relevant goals and a predefined strategy, you will be able to pour sufficient money in your marketing campaigns.
Follow the procedure.
The first step in determining the marketing budget is to determine the revenue of your company so that you can find the right percentage. To do this, you must make sure that you consider the gross revenue for calculation and not the net revenue.
Whether you are thinking of outsourcing your marketing to a freelancer or an agency or investing in an in-house team for marketing, the cost is the most crucial factor. Although the cost of hiring an agency is more than that of an in-house team, yet it depends on the type of your business. If you own a start-up company, then though it is costly but profitable for you to outsource your marketing. But if your company is an established one, then you can obviously invest in building your in-house marketing team.
And the cost of these services decides how much you should spend on your marketing budget. You should know which method works the best for you and determine the cost in each of them. Then if you want to increase your budget to add to your revenue, you can opt for the agency to outsource your marketing.
When you are done with all the analysis based on the costs, goals and your position in the industry, you are now ready to find the actual percentage of revenue.
A general study by Wordstream says that if you are a start-up marketer, then you should invest 12 to 20% of your revenue in marketing practices. Whereas, being a large business owner, you can spend 6 to 12%.
But the reverse can also be considered if you own a well-established business willing to invest in a new channel, you can spend more in your marketing campaigns to promote your brand. Also, if you own a start-up, and you have enough leads then instead of investing more in marketing, you can look forward to increasing your sales.
Let’s assume that you are the owner of a company ABC. You have started your business with 15 employees.
You are now looking to get exposure and increase your brand awareness as your first preference. Your company made 2,50,000 dollars in the past half year. It is now clear that if everything goes the same way, your company will make another 2,50,000 dollars in the next half year. That is, your total revenue is 5,00,000 dollars.
Now if we go according to the rule, you are investing 20% of this revenue in your digital marketing budget. That is, your budget allocation becomes
$5,00,000 × 0.20 = $1,00,000
That means you have to contribute 1 lakh dollars of your revenue to marketing practices.
So, in spite of all the confusion you face while calculating an average digital marketing budget for your marketing efforts, if you look forward to deciding it step-by-step, working on the above-discussed points, I am damn sure it will be much easier for you. Just keep in mind the main formula and you are done.
We will help you dominate your industry online
The post How to Create a Marketing Budget appeared first on Lorenzo Gutierrez Digital Marketing.
You may be wondering; how do I advertise my small business locally? Digital marketing has evolved into a robust marketing technique that is helping businesses to leverage the most out of their marketing efforts. While global or online-only businesses are setting up examples for their competitors to be consistent throughout the digital marketing strategy, local businesses are still struggling with traditional marketing techniques.
To promote their business among local customers, small business owners have to adopt a digital approach to reach their audience and that too in a smarter way to benefit from digital marketing in a limited budget.
Here is a collection of some “must-follow” local digital marketing tips that can help local businesses to target specifically the local group of customers.
Mobile compatibility is one of the most significant local digital marketing strategies that small business owners must consider. Most of the customers use their mobile phones to access information about relevant businesses. Make your website design responsive to ensure that it works better on mobile phones. This allows your customers to go through your website on any device at their own comfort level.
Google My Business provides local businesses with a great opportunity to improve their online visibility. Get your business listed on Google My Business so that your audience can find you easily on Google in its search results. Optimize the listing to place your website in the top 3 results triggered by Google as a customer searches for a similar business.
Local search engine optimization (SEO) is an important tool for local businesses. It helps them to connect with local customers who are interested in your business. They normally prefer nearby places in their searches. Therefore you need to optimize your website to give them the necessary information about your business like location, service hours, and contact details.
Your website speaks a lot about your business. It is the destination where you want your audience to land when they find you online. It is the perfectly designed website that makes them decide to make a purchase or switch to another option. Make sure that your website design and development is easy to navigate and include elements that can improve customer experience.
Social media marketing is ranked among top local digital marketing tips. Use your social media accounts to connect with your audience. Utilize your account to post relevant content so that your audience can benefit from your products. This might include photos of your product, videos on product usage, and latest updates and offers.
Being active on all the social media platforms would not fit for small business owners. Rather, you should focus on the one that aligns with your audience preference. Gain insights about the online presence of your audience and then decide which social media platform could help to connect with them and increase your sales. For business offering B2C services, Facebook and Instagram work the best, while for B2B ones LinkedIn and Twitter could be a better option.
Adding relevant content to your website increases customer engagement especially for local businesses as it allows the audience to know more about their products. Relevant content here means the content that is suitable for local customers keeping in mind their needs and demands. Blogs, eBooks, informative articles, videos, to name a few are some forms of content marketing that can help your customers to resonate with your business.
Target those keywords that are likely to be used by your local customers. For example, they normally use keywords followed by the phrase “near me” or “in (city name)”. Focus your keyword search on this type of phrases so that it aligns with what your customers actually seek. You will find a lot of options for keywords in the generated questions that drop down while searching.
Among various local digital marketing ideas, customer reviews help you to refine your products and services. Apart from this, it forms the basis of a customer’s decision to make a purchase. While positive reviews increase customer engagement, you need to work on negative reviews. Try to figure out the problem and solve it. As far as positive ones are concerned you can post them on social media to encourage more customers to buy your products.
It has been found that about half of the conversion rates for local businesses are the result of PPC advertising. PPC ads allow you to target those customers who are actually interested in your products. You just have to focus on the right keywords and set the amount that you are going to pay for each click. Since these ads appear at the top of the search engines results page, it increases the chances of more people finding you online.
Local businesses find it hard to stay ahead in the competition. One way out of this is to mark the differences between your business and the competitors’ and then lead through them. Search for your competitors and note the important aspects of their service like delivery, quality, speed, price, etc. You cannot create a much larger difference but still, you can improve on these points to highlight your terms of service.
Being a small business owner, you cannot leverage the benefits like those of big firms yet you can stay competitive by working on the basics of your website. Loading time is an important matter of concern while optimizing it. No one opts to wait for a slow-loading page. Fast loading time is the basic requirement of customers when they click on a website. More than 3 seconds of loading time leads to high bounce rates.
Content creation with visuals like videos adds up to your marketing arsenal. Videos directly convey what you want to tell your customers about your business. A study states that almost every customer seeks video content to know everything about a product. It has helped businesses to increase their sales with the help of engaging video content that they share with their audience.
You can approach other local business owners like you to link your website in their blog. It can be as a favour in return of a guest post. Another option is to contact local bloggers who could add links to your website in their posts. When their followers will go through the post and if they are interested to shop for something similar, they would visit your website through those links. Link building improves your rank in search results.
Give your customers discounts and offer coupons from time to time. Whether it is an occasion or some other day, giving a few percent’s off can attract more customers. You can share your offers through emails or social media stories. You can target some special products that are likely to be sold out on particular occasions. It can prove to be an effective idea among all the local digital marketing ideas.
Like big and well-established businesses, small businesses do own a reputation and it is as important for them as it is for bigger ones. Even small business owners need to know what their audience thinks of their products and services. Keep yourself updated about comments on your social media posts and if you find something that is inconvenient for your brand reputation, fix it immediately.
Landing pages if used in the right way can stand among the top local digital marketing strategy. A landing page is one on which your customers arrive on after they click on your ads or your website. But it would sound boring if you choose a single landing page for all your campaigns. Be specific. Customize your landing pages highly relevant to a particular campaign. It gives a boost to conversion rates.
When customers visit your website and if they wish to make a purchase or consult for further guidance, they look for a medium to connect with you. Adding a call to action allows them to do so. Specify your audience how you will communicate with them. Make it clear for them if you want them to make a call or meet them personally. You can also leverage from call-only ads directly allowing a customer to call you on a click.
Being a local business owner, you need to be very careful with your marketing results. If your strategies are doing well then, it’s ok, but if they are not earning you anything worthy then you need to change them. Try using replacements that can drive more sales for you. Sticking to the same ineffective technique could cost you conversions at a great extent. It’s good if you are investing enough in your marketing efforts, but it is a waste if you gain nothing.
Some customers might fail to make a purchase at a particular time. It might be due to an improper connection or lack of information. Retarget them in your next campaign to remind them of their purchase or by promoting similar products through attractive offers. This would allow them to complete their purchase if they are still interested or could prompt them to look for other products.
Think like a customer when you test your website or a post on social media. Do not wait for a customer to place a negative review on your post. Ask your employees to do this. When you apply a customer-centric approach in your marketing, it will prevent negative reviews to a great extent. You would be able to rectify the flaws on your own before your customers notice them.
Ad extensions improve your online visibility. It is a part of PPC advertising that can be used in two different ways – Display location and promotion. While the display location feature allows you to direct your customer to your store, promotional extensions help you to place time-sensitive discounts and offers. Both of these techniques are highly effective if used in the right way.
Instead of just selling, you can choose to be a little help to your customers. This can be done through content guides. Apart from creating blog posts and articles about your business, you can create guides for your audience on the topics that are not related to your business but to the local community of which you are a part. It is considered among the indirect but persuasive local digital marketing tips.
When you create mobile compatible ad campaigns you can benefit from something that is not possible for even bigger firms. Mention the approximate distance of your store from a particular location. Make use of Google Search console to get the most out this strategy, a creative one amid the most powerful local digital marketing strategies.
Keep your customers updated about regular offers, trends, new products through emails. You can also send them tips and tricks for their daily lives which somewhat relates to your business or services. Offer them subscriptions so that they can avail as much as they can from your products on a monthly or annual basis.
Geofencing is yet another technique as a part of local digital marketing ideas that your business can leverage from. With the help of geofencing, you can easily target the customers who come into the area where you do business. It shows notifications and relevant ads in their phones when they enter your location.
Being a small business owner, you cannot invest much like big companies but you could definitely stand unique in the competition by applying these local digital marketing tips in your business to engage with local customers. If leveraged in the right way, these tips can prove to be a successful local digital marketing strategy for you.
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