It's quickly becoming one of the biggest questions facing small businesses: how much money should you allocate to digital marketing?
Of course, there's no hard-and-fast rule or "correct" amount to spend, as each case is down to the individual needs and goals of your business. That said, there are plenty of guidelines you can use. One of the best indicators is past performance - how much money did you allocate to digital marketing in previous years, and how was the ROI at that level of spending? Keep in mind, though, that it's not always a matter of higher spending equaling greater returns. If you know that certain aspects of your digital marketing are performing better than others, it may be time to ramp in those areas, or spend some of your budget troubleshooting the underperforming aspects so that you can make your existing budget stretch further.
If you're new to the digital marketing game, or you feel like your past budgets were way off the mark and you just need a number as a starting point, the Small Business Administrationrecommends that 7% to 8% of your gross revenue should be spent on marketing as a whole. Anywhere from a third to half of that amount should be allocated to digital - it could be even more, if you're serious about staying ahead of the curve and embracing digital marketing as the way forward. The only reason to go lower than a third is if there is still some specific reason that traditional marketing is better suited to your business, but over time that likelihood will almost certainly decrease.
So if you use those numbers as a general benchmark, perhaps the even more important question is where exactly the money should be allocated. This is where it becomes important to have clearly-defined goals. For example, if your brand is mostly visual and your target demographic is on the young side, then maybe one of your top priorities would be to build an engaged audience on Instagram. Other businesses may find that fine-tuning their SEO is more important, or creating compelling video content. You will probably also want to set aside a percentage for periodic software upgrades. Deciding on those targets ahead of time is essential in order to make sure that none of your budget is wasted.
As with any project, the best plan is one that keeps your overall goals in mind, but is flexible enough to pivot when it's clear those goals aren't being met, or the goals evolve into something different from the original design. What you don't want to do is take a reactionary approach, moving your budget around anytime there's a momentary change. Digital marketing strategiesbuild results over time, so it's important to decide what you're aiming for, allocate the appropriate budget, and then stick to your chosen approach for at least several months, until you can see how well your efforts are starting to pay off.