Brands on average spend up to 10% of total revenue on their marketing budget.
A percentage that increases year by year.
This is why it is important for marketers to have specific key performance indicators (KPIs) in place to ensure that their efforts are successful.
The key is to focus on the numbers that matter most to your business One of the most beneficial KPIs is achieving a positive return on investment. However, this can be difficult to do as there are many ways to market your brand and measure the ROI of those strategies. It is therefore important to focus on the numbers most relevant to your business.
It is important that every penny you spend is helping you to achieve your goals. Your goals might be different from another brand’s goals. Some brands might want to increase conversions, while others might want to attract more traffic to specific pages on their website.
In order to achieve your goals, you need to track your progress. Otherwise, you will waste money on things that are not effective.
This post will show you how to get the most value for your marketing budget and how to track the ROI of your marketing strategies.
What Is a Marketing Budget?
Your marketing budget is how much money you plan to spend to reach your target audience.
When you are creating a budget, you need to look at your marketing goals and how much you want to spend to achieve them. It is a good idea to write down the various strategies you will use and how much you will spend on each one.
Here’s what this might look like:
- Social Media Marketing: £15,000
- Content Marketing: £10,000
- Print Marketing Materials: £5,000
- Marketing Budget Total: £30,000
It is important to remember that the numbers we just gave are only examples. Your expenses could be much higher if your business is already established, or much lower if you are just starting.
Marketing experts recommend that B2B businesses spend no more than 8% of their total revenue on marketing, while B2C businesses should spend up to 10%. New businesses tend to spend more on marketing, up to 20%, until they establish a customer base.
Remember that the amount of revenue is not the only way to figure out how much to spend on marketing. ROI is another way to look at it.
The frequency of how often you adjust your marketing budget will depend. Some brands set their marketing budget once a year and stick with the set amount. Others will adjust it every quarter to account for seasonal campaigns and any other notable events.
Before we move on to what is typically included in a marketing budget, we’ve put together a few benefits, to sum up why you need a marketing budget:
- Brands can Allocate Resources More Effectively
- Allows you to Easily Track ROI
- Can Motivate Employees to Succeed
- Encourages Long-Term Planning and Growth
What is Included in a Marketing Budget?
You need to be aware of what is included in your marketing budget. This budget is not just for your advertising costs, despite what most marketers believe.
Typically, your marketing budget will consist of:
- Advertising Spend Money that will go towards your preferred marketing channels (i.e. social media, SEO, and print).
- Outsourcing Funds: Some brands seek the help of freelancers, agencies, and paid interns to help them deliver their marketing.
- Event Costs: Many brands take part in, or run their own, events to promote their brand and their offering.
- Staff Salaries: How much you’re paying staff members needs to be covered under your marketing budget in some instances.
- Brand Swag: Merchandise to promote the brand (i.e. hats, stickers, beanies, tote bags, etc.).
- Software/Tools: Any analytical/research tools that help you conduct your job effectively (i.e. Ahrefs and Grammarly).
Most marketing departments will need to account for advertising spending and software tools.
Those are requirements, not suggestions.
Brands that use video marketing will need to include this in their budget. This will cover the cost of renting equipment, renting a location, and paying for any featured actors.
How Does ROI Affect Marketing Budgets?
ROI, or return on investment, is a measure of how much profit you’re making in relation to how much you’re spending. It’s important to measure ROI because it allows you to see how effective your marketing campaigns are and whether or not you’re losing money in areas that aren’t bringing you closer to your goals.
And in business, no one likes wasting money.
OI can help guide brands to more effective use of their marketing budgets according to their greater marketing goals. In other words, understanding where the money goes and how effective your strategies are will ensure that budgets are used effectively.
If you’re not getting a good return on investment from some of your marketing, you can adjust your strategy and put more money into the areas that are more successful.
Marketers often choose strategies that they think their customer base would like, rather than those that they know their customers would actually prefer.
Your ROI defines your success with real numbers, which empowers brands to choose strategies that link them with their audience.
Remember that your ROI is your guide. Stick to it, and you’ll be able to fix what’s not working while continuing to use the strategies that are getting you closer to your goals!
How to Maximize Your Digital Marketing Budget
To get the most return on your marketing investment, you’ll want to invest in the channels that will have the biggest impact for their cost.
How do you know what those are?
The specific percentages and levels of effectiveness can vary from year to year. Still, generally, marketers have come to accept that the main channels to expand brand reach, deliver leads, and generate revenue are things like:
- Email Marketing
- Paid Search (PPC)
- Content Marketing
- Paid & Organic Social
The majority of marketers are familiar with digital marketing channels, but they don’t typically give each one its own line in the budget.
We don’t always think of search engine optimization (SEO) as its own marketing channel, even though it’s just as important as other digital marketing channels like pay-per-click (PPC) and social media.
This often happens because SEO is seen as part of the web team’s responsibilities.
This is a mistake.
What is SEO in the Context of Digital Marketing?
SEO involves using methods recommended by Google to make a website more likely to appear at the top of search results.
Despite the fact that there are other search engines available, Google continues to be the most popular, with 92% of mobile and desktop users.
SEO is commonly perceived as a magic switch that can be turned on to support marketing efforts. Increasing interest in a product launch or traffic to a website can be accomplished by improving SEO.
Most marketers who employ search optimization use it as a way to boost the other digital marketing channels such as social media, third-party media, and PPC ads.
If you only use SEO, you are not using all of the available tools and are missing opportunities.
SEO isn’t just a channel that can be leveraged more fully – it’s a tool that supports other marketing efforts. Undervaluing SEO can weaken your ability to generate revenue effectively.
The Under-Utilized Results Multiplier
In order to stop using SEO to support other marketing channels, and instead make it the center of your marketing plan, you need to shift your focus. This will help you to save money on your marketing budget.
SEO can boost the effectiveness of your other marketing strategies.
SEO should be integrated into your budget from the beginning of your planning process to make the most of it. If it is just a part of your digital marketing, that’s fine, but make sure there is enough money allocated to it to cover consistent work throughout the year.
Even better, make SEO a category of its own and make sure you have subcategories to support its different needs, for example:
You will need to allocate dedicated resources to web development in order to implement technical SEO successfully.
To improve your website’s ranking in search engine results, you need to create new content and optimize the content that already exists on your site.
Off-page SEO is basically anything you can do externally to your website to improve your ranking in the search engines. This can be things like building links and social media.
If you plan on hiring an SEO agency to help with improving your website, it is easy to find out how much money you will need to spend. Most agencies will offer a free consultation to discuss your needs.
SEO companies that are reputable can tell you what to take into account regarding your business goals when you’re trying to get organic search results.
If you are trying to optimize your website for search engines by yourself, it is very important to make sure you have all of the necessary resources. This includes having enough staff to support each area of SEO, and making sure this is accounted for in your yearly budget.
Instead ofassuming that marketers can add SEO to their responsibilities, it is proactive to put resources towards SEO as if it were a new project. If a company has not invested in SEO before, then this is an entirely new venture.
Optimize Your Marketing Budget With SEO
No matter what size your digital marketing budget is, these budgeting tips will help you make the most of your money and get great results.
Measure Customer Lifetime Value (CLTV) by Source
If you find it difficult to persuade a CEO or CFO to invest in SEO, start by gathering the data you need to make a strong case.
Show data about the customer lifetime value that each marketing channel generates, rather than just presenting the impact of each channel as a function of cost per lead and ROI.
Since it’s less expensive to keep customers than to attract new ones, it’s sensible to spend more time and resources on tactics that bring in customers who generate the most revenue.
Marketing professionals who participated in a study by Forrester Consulting found that customers who found their business through organic search were more loyal and engaged. Because these customers spend more time interacting with a website’s content, they are more likely to stay with the business.
The more engaged a customer is with a brand, the more money they will spend on that brand’s products or services.
The CFO will be pleased with the bonus as concentrating on the channels which make the most of ROI, CPL and LTV will allow you to use your marketing budget to make the biggest difference to your profits.
Build SEO Into Your Content Marketing
This means considering your buyer persona, understanding their questions and concerns, and writing content that directly addresses these needs. This does not just mean adding keywords to your blogs, but also considering your buyer persona, understanding their questions and concerns, and writing content that directly addresses these needs.
Generate pages that are designed to rank for topics that you find through keyword research to integrate SEO into your content marketing efforts.
The purpose of keyword research in an SEO campaign is to discover topics that are of interest to your target market, which you can then use to create content that answers their questions. In order to reach more people with your content, add these topics to your content calendar alongside other subjects you’re covering that will be of interest to your customers.
You will attract more traffic by strategically identifying topics and writing about them than by taking a passive approach.
Optimize for Conversions
The rest of your goal is to convert that traffic into customers who buy your product or service. Your SEO goals should not only include increasing traffic but also converting that traffic into paying customers.
Make it easy for your target audience to convert once you have their attention.
Your conversion goals should be clearly defined, and your conversion points should be highly optimized. You should focus your online budget on funneling traffic to those points.
Conversion rate optimization (CRO) is the process of improving the percentage of visitors to a website who take a desired action, such as making a purchase or filling out a form. CRO can be used to improve the effectiveness of a website in generating revenue or leads.
The success of your conversions is key to proving that your marketing spending is justified, so make sure you can attribute transactions correctly to the relevant channels in Google Analytics.
If you follow the tips above, you will be able to get the most out of your marketing budget and see a positive return on investment.
There are many ways to measure marketing ROI, some more difficult to track than others. Another way to determine how effective certain strategies are is by measuring how long it takes to create content or marketing materials. This will give you an idea of how much it costs.
If it is taking too long for you to produce your assets, you should talk to an agency.
The effectiveness of your marketing budget depends on it!
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