As with any business function, marketing and promotion of products should be done cost-effectively. Given that most marketing has moved online, a digital strategy is vital, and the bulk of a 21st-century business’s budget should be dedicated to it.
Once a digital marketer knows how much money they have to spend on a campaign, they set about creating a budget of how best to spend it. This includes ensuring that whatever digital marketing strategy they use offers a high return on investment, following these steps:
Understand the past
Before setting any plans in motion, a good marketer needs to examine past trends and results. They guide decisions by showing what worked and what did not. Using marketing attribution solutions from LeanData, a company can determine which marketing channels were most successful. This already guides a digital marketer in calculating how much money they will need, as marketing channel prices vary.
Studying what did not work is equally important, especially when it was successful for competitors. This should lead to introspection, determining factors that could have contributed to a failure. A close look at competitors is also a good idea as it allows a company to avoid spending money on digital marketing efforts that have already been proven ineffective.
Without a concrete goal, much of a company’s digital marketing efforts might be wasted. A marketer must know what they want to achieve before embarking on any activities. The well-known SMART goal setting approach is useful. This means ensuring that goals are specific, measurable, achievable, realistic, and timebound.
Therefore, saying that you want to increase sales is a statement of intent, not a goal. Saying that you want to see a 30% improvement in your conversion rate within the next three months is a goal.
An increase in revenue should not be the only goal of a digital marketing campaign. The goals should include using part of the budget to raise or reinforce brand awareness and loyalty. Not all digital marketing efforts should be solely aimed at sales.
An indirect approach, such as using corporate and social responsibility programs as part of a campaign, is often more successful than an aggressive sales-driven one.
Break it down
Armed with data from past campaigns, information about industry trends, and knowledge about which channels to use, a digital marketer can refine their budgetary plans. For example, they determine which platforms to include in their efforts and what each will cost the company. Therefore, if a digital marketer decides to use Google Ads as a primary strategy, they should know how often they intend to use paid advertising and how much it will cost.
However, a digital marketing budget goes beyond activities like those mentioned above. There are also human resources considerations. Will the company hire a full-time digital marketing expert or use a freelancer? Who will write the content for digital marketing campaigns? A budget should include these aspects if it is to be accurate.
With a limited amount of money, a digital marketer needs to investigate how best to spend it. For example, they could do a comparative analysis between Facebook and Instagram, setting out the costs of using each one and the projected return on investment, including how many people will see a post and act on it. This analysis ensures that the allocated budget is put to the best use possible.
Another primary characteristic of successful digital marketing is fluidity. Markets change frequently, and what worked today might not work tomorrow. Therefore, a digital marketing budget should include room for adaptation to changing contexts. Monitoring is an essential component of the budgetary process.