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.
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.
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).