Digital marketing is such a vital part of any overall marketing and growth strategy, and in 2023 this will prove no different – in fact, arguably more important than ever, given the rapid advances in supporting technologies such as Artificial Intelligence.
But how do you go about creating a digital marketing budget, or updating your budget from previous years? Not all businesses are the same, or have the same capacity to spend on digital marketing, so how can all businesses, regardless of budget availability, create a meaningful plan to build success?
We’ve put together some pointers that should help you create a budget that’s effective, appropriate and measurable, including not only a landscape forecast but also some guidance on where you should be spending your marketing budget.
Why do you need a marketing budget?
2023, for various reasons, will be a complicated year in terms of expenditure – there is pressure on consumers which will affect cash flow and sales for many businesses.
Having a clear and strict marketing budget aligned to a proper plan will help businesses manage cash flow better, and avoid unnecessary expenditure that will only add to economic pressure.
Your marketing budget will help you:
- Manage the amounts you spend sensibly
- Focus your team on spending in the right areas
- Set goals for measuring success, not only this year but in relation to 2022, and as a benchmark for 2024.
- Create transparency and accountability across your business and team
- Reinforce that you and your team have good, well-considered plans for growth
2023: A landscape of increased marketing prioritisation
Whilst there is a lot of economic pressure in general, many businesses are increasing their marketing budgets this year. The thought process behind this is that the landscape is more competitive – by now most businesses have websites, digital sales channels, marketing strategies, acquisition strategies and so forth in place.
How then, does one stay one step ahead of the competition? Typically, by allocating more resources to marketing, largely in the form of more budget…
According to HubSpot “in a survey of 1000 marketers, 47%…reported that their [2023] budget would increase.”
So nearly half of marketers will be spending more this year – that’s a large group of people making a move to secure more market share!
Where will these increased (and existing) budgets be spent?
Fortunately, this is a pretty uncomplicated answer – tried and tested channels that deliver high return value for investment. These include:
- Facebook – 18%
- TikTok 16%
- YouTube 16%
- Instagram 14%
- LinkedIn 8%
In terms of marketing assets, video remains the number one priority as marketers recognise and leverage the power of social media to create virality, develop new audiences and use content as a driver for sales and acquisition.
How much should you allocate to your marketing budget?
In truth, that number is really up to you – you will have the best knowledge of your business’s cash flow, profitability and margins, and can allocate accordingly.
For new businesses, allocating a significant portion of start-up capital to marketing would be a good tactic. Be careful not to cast the net too wide with no sense of which mechanisms to use – see below for more insights…
For established businesses, using focused budgets based on previous year’s revenue-related results to develop new business would make more sense.
But as a guideline here are some indicators that may help you plan:
- In 2022 the average marketing budget was around 9% of overall revenue, up over 5% from 10 years ago (an indication of the growing importance of digital marketing)
- Product-based businesses allocate the highest amount at 15% of total revenue
- SMEs are the fastest-growing segment in terms of marketing budget allocation, with more than 50% spending up to £12 000 per month on marketing
How do you go about creating a budget once you know how much you want to spend?
There are a number of key steps that will help you plan where, how and how much you allocate to each channel in your budget.
#1 Understanding the types of digital marketing
Knowing what you want to spend your money on is of utmost importance – these are typically the marketing mechanisms you should look to use:
- Paid advertising on Google and social media channels such as Facebook, Instagram etc.
- Pay per click adverts (PPC)
- Email marketing
- Sponsored content
- Marketing support tools such as CRMs, schedulers etc.
- Search Engine Optimisation
- Marketing specialists (new hires or contractors) to help develop and manage strategies and campaigns
- Influencers
#2 Allocating budget to the correct mechanism
There is a saying that goes something like ‘fish where the fish are’ and in terms of allocating your marketing budget accordingly, this maxim applies.
- B2B businesses – content marketing is key, as is email marketing, blogs and good SEO
- Product-based businesses (broad audience) – social media channels are crucial channels, as is paid campaigning on Google
- Millenial/Gen Z-focussed businesses – content on video-led platforms like YouTube, TikTok and Instagram are key mechanisms
Audience research, therefore, plays a large role in helping you determine who you want to target, and where they spend most of their time online.
#3 Learn from experience
There are two aspects to consider here – firstly, auditing your previous year’s budget to understand what was spent, where it was spent and what the benefit was to the bottom line will give you some clear indicators to help you plan your current year.
And secondly, there is a wealth of information and experience available online to help you identify what strategies, budgets and mechanisms have worked for businesses similar to yours.
#4 Consider the full marketing cycle
Building an effective budget needs to take all aspects of your digital marketing strategy into account – by this we mean that it’s not enough just to identify your audience, create a campaign and send it out on the most appropriate channels.
Once that first part of the exercise is complete, what comes next? Typically, your budget planning should cover:
- Building brand awareness or punting a particular product or service using the mechanisms and channels that work best for your audience
- Measuring these campaigns in deep detail
- Reinvesting that feedback into 2nd phase campaigns
- Retargeting potential customers via appropriate channels
- Reviewing each budgetary cycle for effectiveness
#5 Use the tools available to you
Taking on a digital marketing strategy, executing it effectively, measuring it etc. can be daunting.
But there are many ways to help you manage your budgets and campaigns effectively:
- Use an outsource agency with digital marketing experts who really understand the full cycle
- Invest in tools such as:
- CRM (Customer Relationship Management) – HubSpot, Salesforce etc.
- Project management – Asana, Trello and Monday.com etc.
- Lead generation – Pipedrive, Lusha, Slintel etc.
These will come with some costs, but build these into your marketing budgets and assess their effectiveness in the same way as you would for all other cost items.
If you’d like to find out more about how to set up and manage your digital marketing budgets and campaigns effectively, contact the team at Realnet on 01223 550800 or email us on info@realnet.co.uk.
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