As digital marketing continues to grow and take a more prominent role in advertising, it is normal for businesses to be wondering just how much of their budget they should be allocated to it. Answering that question, however, requires the consideration of several different factors.
What is Digital Marketing?
To begin with, let’s define digital marketing. In essence, it refers to any online marketing efforts. This can include email marketing, pay-per-click advertising, blogging, and social media marketing. It includes assets such as your company website, reviews, images such as infographics, video content, and more.
Digital marketing is important for one main reason: it works. It works so well, in fact, that if you choose not to make use of it, it won’t be long before you are falling behind your competition.
Factors Affecting Cost
This brings us back to the question at hand: how much should you be spending? As mentioned above, this will depend on a few things such as:
- Your Company’s Size. A small business just starting out is clearly going to have a much smaller budget than a large corporation with huge revenue. To retain your current position in the market a company should be spending 5% – 7% of their revenue on digital marketing. A company looking to grow it’s market share should be spending 7% – 15% of its revenue on digital marketing.
- The Agency’s Experience. When partnering with an agency that has extensive experience, you can typically expect to pay more, as you are paying for the value of their expertise. You will want to work with a digital marketing agency that has a history of successfully helping their clients reach their goals.
- The Complexity of Your Strategy. Your budget will determine how complex a strategy you can implement. Taking a more aggressive approach might achieve better results, but will also require more time and greater effort from your digital marketing team. Making use of a Pay Per Click (PPC) campaign, for example, is paid advertising, and as such will require a larger part of your budget.
- Your Timeline. This also related to strategy. Certain approaches simply require more time than others. SEO, for example, is an ongoing process that cannot be hastened a significant amount. Other strategies might be put into effect faster, such as a web redesign. This will come at an increased cost, however.
While you could certainly take a minimal approach and create a plan that focuses purely on the basics, such an approach will provide basic results in return. Today’s digital world requires a somewhat greater effort.
Where to Invest
To get the best result for your money, what should your digital marketing plan include? Here are some of the places to invest your marketing budget:
- Local Search Marketing. This creates an excellent foundation for your business. To begin, claim, verify, and optimize listings on Google, Yahoo!, Bing, and Yelp.
- Review of Marketing. This comes down to managing your reputation online. A satisfied customer who leaves a good review on Google can encourage others to give your business a try, and if they in turn leave a good review, you might soon find your reach and reputation increasing dramatically.
- Social Media is practically impossible to overlook today. Even if a customer doesn’t learn about you through Facebook, once they discover you, they are likely to check out your Facebook page to learn more about your business. Be active on social media, and you will start to build a relationship with your audience, often before they take the next step to becoming a customer.
- Paid Advertising. While social media can be a great way to build rapport and get free word-of-mouth advertising, paid advertising can also offer a dramatic boost to your business, quickly bringing you added visibility.
In the end, the ultimate cost of digital marketing will be determined by your approach, your goals, and more. For that reason, be wary of any agency that offers a one-size-fits-all solution to your needs. Instead, take the time to develop a plan that suits you and your business. Most of all, don’t consider digital marketing as a cost, but rather an investment.
Christian is a British-born entrepreneur and founder of Marwick. For over 19 years, Christian has successfully helped businesses excel in digital marketing. Founded in 2012, Marwick has grown from a start-up to the 11th Fastest Growing Company in Canada in 2020 and expanded into the UK in 2019.