How to allocate funds for digital marketing?

Budgeting for digital marketing is a mystery for most clients.

In my experience, 2 out of 3 clients have asked me to recommend budgets for content marketing and digital media planning.

Is there a science to figure out the right media mix?

Lets go a little deeper to understand this problem.

A marketing plan is a detailed roadmap that outlines your marketing strategies, tactics, costs and projected results over a period of time.

Your marketing plan and budget keep your entire team focused on specific goals – it’s a critical resource for your entire company.

Frankly, nobody knows how much is too much for Digital and why?

Though, it is slightly easier for organisations whose DNA is 100% grounded into digital like e-commerce, gaming, music or other content apps etc.

But even for them, prioritising their budgets towards various channels is still difficult. 

I’ve consulted numerous startups at different stages of their business, marketing spend optimisation is as important as conversion optimisation. 

Here’s how one should go about budget allocation in digital marketing. 

CONTENT MARKETING Vs DISTRIBUTION (PAID ADVERTISING)

 

The first question marketers have to answer is how much they should spend in creating their digital assets and how much they need to distribute it.

Trust me, it is not as easy question as we think it is.

Key to this question lies in the understanding of digital metrics at different stages of customer journey.

  • What are we really chasing? (Brand Awareness / Brand Recall / Conversation Share / Leads / eCommerce sales etc.) For e.g. How much you should spend on content creation if your objective is sales?
  • What are your industry specific trends? ( for e.g, according to a Cisco report, B2B companies have rated video content in the top 3 most effective digital tactic for lead generation )
  • What are the general paid and organic benchmarks for Search & Social?

Allocating BUDGETs by Audience

 

People think the beauty of digital marketing is audience targeting.

Wrong!

The real beauty is the power of data analytics which helps you understanding your audience preferences in finer details.

Different data types in analytics helps you uncover various aspects of audience behaviour.

Also Read : Understanding types of data sets in marketing

It is very important to start understanding your audience reports in web /app analytics. 

Your site analytics could tell you a lot about your future customer and how you need to reach out.

By comparing sources such as paid campaigns, organic traffic and social media channels, you can apply the Pareto Principle, also known as the 80/20 rule.

You are going to find out what sources generate the majority of sales to later tune up your budget allocation.

Use the Pareto Principle and identify the top 20 percent of your traffic sources that generate 80 percent of good results. Focus your budget on that.

Also read : 80-20 rule of sales – How to find your best customers 

A/B TestING, Scale up and Repeat

 

One of the most important thing I’ve learnt in my digital career is to learn the art of creating successful pilot test campaigns.

It is vital for your to create certain hypothesis KPIs and key assumptions about your business audience which you would want to test through your pilot campaign.

For instance, if any third-party reports are saying that your target audience is actively engaging through social media and searching less on search engines, you should create a separate social led campaign to test the hypothesis.

Once you have your results, try re-verify them, but this time with slightly higher budget.

Now repeat this to your strategic benefit as it would give you enough confidence as marketer where you can keep on increasing your budgets in social media as a channel and optimise your business returns.

Create your own Digital Strategy Template

 

While allocating digital marketing budget for your brand or startup, it is critical to follow your industry best practices but at some point you must try to find some key insights about your actual audience.

A lot of times, you would realise that the actual buying audience is very different from the target group you are chasing for a long time in your media plans.

If you act fast enough, you can optimise the channel budgets in real-time which can boost your overall performance and drive efficiencies. 

Also Read : How to create your digital strategy template? 

Budget Allocation should be fluidic

 

A lot of enterprise companies allocate funds annually for marketing, but digital marketing usually requires more maintenance, with quarterly or monthly allocation adjustments.

High volume, automated buying in channels like paid search or paid social should be analysed for performance and landscape fluctuations, with budget allocations being adjusted accordingly.

70:20:10 Rule of Digital Media Planning

 

Frankly speaking, nobody can actually guesstimate the budget amount,  but new predictive modelling technologies have emerged to help CMOs forecast media performance to better allocate budgets.

If you are a nimble startup or a small business, consider the 70/20/10 rule as a good starting point.

  • 70% of the budget be allocated to “tried and tested” channels (like Search, Social Media & Email)
  • 20% to “safe bets” (newer channels like Mobile Marketing & Native Ads, that seem promising, even if they haven’t proven themselves just yet),
  • 10% allocated to “experimental” (cutting edge, unique opportunities like “Big Data” which might provide a big payoff).

Social Media Trend : Twitter buy now button may alter consumer journey forever

In the last few years, e-commerce has transformed the way brands are looking at their businesses.

Not just the retail, but it has forced the entire services sector to build a unique experiential model online and create newer revenue channels (powered by e-commerce) to their existing business models.

Without doubt, social media platforms like Facebook, Twitter and Pinterest have literally altered the consumer’s path to purchase across industries, by making it more dynamic and real-time.

Talking about real-time, Twitter is the undisputed king of real-time marketing in social media. And yet brands are often challenged to work out exactly what role it should play in the mix. It can be used to create awareness, drive engagement, and play a crucial role in customer service.

Twitter users’ shopping habits make them a valuable audience for retailers and the findings can help businesses maximise sales by “sending Twitter shoppers the right message at the right moment.”

According to a Millward Brown survey of women on Twitter who had recently purchased household staples, Twitter users have bigger budgets and buy more often than non-users.

For five major retail categories, Crimson Hexagon used keyword analysis to quantify the share of conversation on Twitter for each stage of the purchase process.

 

“Whether they’re learning about a new product or on the cusp of buying, shoppers rely on Twitter for information and advice. The survey showed that nearly half (49%) of female Twitter shoppers say Twitter content has influenced their purchase decisions, which makes the platform prime real estate for brands,” Twitter says.

For five major retail categories, Crimson Hexagon used keyword analysis to quantify the share of conversation on Twitter for each stage of the purchase process.

Twitter Buy Now Button for e-commerce

After two years of testing, Twitter is finally making it easy for millions of merchants to sell products through a tweet.

The micro blogging network announced Wednesday that its “buy now” button will be available to any merchant in the United States that uses one of three major e-commerce platforms to run its online shopping operations. A store that is a customer of Demandware, Bigcommerce, or Shopify can use the software to tweet out a link to a product that will show up with a buy button.

What does this means for ecommerce startups and small business?

Technically speaking, you could run a startup business with the Twitter Buy button without even owning your own website. If the button allows you to connect directly with a payment processor it would work like Amazon or eBay where some people simply create an account on one of those sites and start selling — without ever having to slog through the hassle of launching their own site.

With Twitter Buy button, you can possibly cut down on the steps it takes for people to buy items from your store. From the looks of it, this button can be used as a one-click feature wherein your followers can link credit cards to their profiles.

Since no one has to go out of their way to get to your website, this feature constitutes a huge advance for the user experience. You won’t have to worry about how your shopping cart is working.

Honestly, I assume some stores would transition most of their resources to Twitter and other social outlets if this ended up working well, since the maintenance is so low and your entire checkout is handled by Twitter.

That, ladies and gentlemen, is quite frankly, a revolution in making.