The truth is that without knowing what your business goals are and what’s most important to your business’ success, a digital marketing expert can’t help you figure out how much you should spend on things like social media, digital ads, or blogging. Your digital marketing budget should correspond directly to your business goals and the path required to achieve them.
How Much Should I Spend on Digital Marketing For My Small Business?
Most digital marketers recommend spending between 6% and 12% of a business's gross revenue on marketing. New companies tend to spend 20% or more of their revenue to increase market share and sales. But at the end of the day, what might be reasonable for your company might have little to do with your gross revenue. It instead should have to do with what you’re aiming to do with your business.
The first step to figuring out your marketing budget is taking a look at your business goals and figuring out what it will take to achieve them.
- How many sales do you need to make in a year to hit your revenue goals?
- How many new customers do you need to convert?
- How many loyal, repeat customers do you need?
Of course every business would love to have as much business as possible—but setting realistic goals allows you to determine the role marketing needs to play in your business. Working backwards from these numbers can help you determine how many visitors your website needs to capture based things like conversion rates and average sale amounts from your existing marketing and sales data.
After you’ve worked backwards from your goals and figured out how many new website visitors you need this year, you can start to develop a marketing plan to get those people to your website and, more importantly, what it will cost to do that.
What Types of Marketing Should I Spend My Marketing Budget On?
Bringing in a skilled digital marketing strategist to help you figure that out is an essential step to figuring out an effective marketing budget.
Without knowing benchmarks for performance, you’ll have a hard time determining which digital marketing tasks will most benefit your business. A digital marketing strategist can help you figure out if spending money on Facebook ads is better than making a highly targeted email funnel or working to build your site’s organic SEO. Above all, finding what is going to best the best use of your budget will keep your marketing budget in check and give a better return on your investment.
Every business’ marketing mix looks different but you’ll want to consider some of these marketing types:
- Social Media
- Social Media Advertising
- Email Marketing
- Influencer Marketing
- Display Advertising
- Video marketing
- Content marketing
You should spend your budget on whichever source has the most potential for high return on your investment while producing the required number of leads to hit your revenue goals.
What Is a Reasonable Marketing Budget For My Small Business?
It’s hard to give a general rule for digital marketing budgets because some businesses can get by with smaller budgets and others in more competitive markets just simply need to spend more.
What’s a reasonable marketing budget for your business might be completely unreasonable for another business, even a business in the same industry as yours.
The best way to find out what your marketing budget should look like and how you should be spending it is to work with a digital marketing consultant to determine a strategy and plan for your marketing.
Our team of digital marketing strategists have helped businesses like yours figure out what kind of marketing will work best and help them achieve their business goals. We use data, rather than hunches and gut feelings, to work with our clients to figure out what’s going to work and help them avoid what won’t. If you’re ready to take the next step and put your marketing to work for your business, contact us to find out how we can help you.