Money Matters!
We all know money doesn’t grow on trees, so this is probably one of the toughest questions to answer in business. How much should you be allocating to budget for online marketing? There is no simple, single answer, either, but if you can answer a few more questions, you can start to work out the rough, “ballpark” figure you should be considering as your online marketing budget.
How Much of An Online Presence Do You Have?
If your online presence is nonexistent, and you need to do everything from set up a website to create social media profiles, to develop content, create landing pages and launch a PPC campaign, you will need to allocate more money to the process than if you already have all or some of those set up and working well.
While it is technically possible to do most of those things on your own, you will probably also find that they take up a lot of your valuable time, and that at some point, you are going to need to outsource the process to a professional, just to get things set up correctly. In fact, as Forbes pointed out in their entrepreneur section, it can be more costly to do these sorts of things in-house than by outsourcing.
The good news is that even though you will need to budget more money to get these things set up and working right, this is a one-off, lump sum payment, which will drop dramatically when you get down to the business of monthly online marketing!
How Long Have You Been In Business?
Your marketing budget will change depending on how long you have been in business and what stage your business is at, as pointed out in an article on Entrepreneur earlier this year.
Generally, the first year of any new business will be a whirlwind of figuring out processes, servicing your first clients, getting systems in place and other critical issues. If you are in your first year of business, chances are you will not have the time or budget to spend on online marketing, or the capacity to handle too much growth. At this stage, you should be spending on a good website, and get your social media accounts etcetera set up, but you probably will not need a large online marketing budget just yet.
Once you have been in business for a year to five years, you have worked out the kinks, and you want to grow fast, you should be dedicating a large chunk of your revenue (possibly as much as 10%) to marketing, and the bulk of that should go on inbound marketing to maximize ROI.
After five years, you can start to slow down with the marketing. You will have established your brand online, you will have developed a following, and you can scale back your budget to maintain that presence, although by this stage, you should have built your revenue up considerably, so your marketing budget will be much healthier!
Who Do You Sell To?
Generally, companies that sell to consumers rather than other businesses (B2C rather than B2B) tend to spend more on marketing. In fact, while B2B companies reported spending 5-6% of their revenue on marketing according to The CMO Survey’s report, B2C companies spend double that.
Of course, that makes sense, because when you market to consumers, you are spreading the net wider to reach your customers, and competing against many other voices. When you sell to businesses, your marketing can be far more targeted.
What Can You Afford?
If you are bootstrapping a company, or attempting to save one from financial disaster, then your question should not be what you should be budgeting, but how much you can afford. Ideally, you should devote something to online marketing, since it is the single most effective type of marketing out there, but you should never spend more than you can afford.
The good news is that even a few small actions per month, performed consistently, can make a difference, because online marketing is cumulative. In fact, online marketing made it onto Mashable’s list of marketing ideas for bootstrapped companies!
How Much of Your Budget Should Go On Online Marketing?
According to the latest HubSpot State of Online Marketing Report, small and medium sized companies are choosing to spend most of their marketing budget on online and inbound marketing strategies, purely because of the greater return on investment.
It is only larger companies, with bigger budgets, who can afford to spend money on traditional print and broadcast advertising who are still pursuing those channels.
If you do not have millions of dollars to spend on marketing every year, then you should be spending most of yours on online marketing too. It has been proven time and again to deliver better, more consistent results.
How Should You Spend Your Budget?
Once you have established what your online marketing budget is, you are probably wondering how you should spend it. We have compiled a list of areas where you should be spending your marketing budget, in no particular order.
- Improving your website
- Starting or improving a business blog
- Creating offers and using them to convert leads
- Social media marketing
- SEO, including local SEO
- Pay Per Click advertising
- Online press releases
- Facebook, Twitter or LinkedIn ads (depending on your target market!)
- YouTube video marketing
- Instagram, Pinterest or Snapchat
- And more
If you are just starting out, you probably won’t want to spread your marketing budget too thin, so start with one or two core items (usually your website and blog first) and build on them until they are working well. Then add new channels one or two at a time. Remember that setting up a new online marketing channel takes more work and generally costs more than maintaining one, so you can regulate your spending by taking things one step at a time. Even Neil Patel advocates a scaled approach like this.
Measure and Track Results
To get the best return from your online marketing budget, measuring and tracking results is probably the most critical thing you can do. Install and use a tracking platform like Google Analytics. Measure your baseline reach. Then track results every time you add another marketing channel to your funnel. Keep what works, and change what does not. In fact, in their annual state of online marketing report, HubSpot noted that marketers who check their metrics more frequently get a better ROI than those who don’t.
If you are going to be using PPC as part of your online marketing strategy, measuring and tracking of your conversions via that channel will be critical too. Create distinct campaigns and landing pages. Track which keywords are performing best in terms of conversions. Increase spending on high converting keywords, and eliminate campaigns that are not turning visitors into leads or clients. WordStream even recommend using keyword analytics data to develop products your clients are looking for.
Where to Splurge and Where to Save
If you have a tiny online marketing budget, and you already have a website, then the one place we would recommend you spend time and money is on content marketing. Great content is the corner stone of a good inbound marketing campaign. Everything else you will do with your online marketing efforts will direct visitors to your content, so you want to make sure that it’s high quality, engaging, and positions you as an expert.
There are low cost online marketing options, as noted by Quicksprout, but most of them rely on content in some form, so if you’re going to spend anywhere, start there, by developing a killer strategy and scaling as you go along. In fact, Seth Godin, who once famously said that content marketing is the only marketing left, has revised his position. He now feels that companies should hire editors rather than brand managers.
A Plan That Is Flexible and Scalable
The most important thing to remember about online marketing is that it can and will grow with your company. Even if your budget is tiny now, it will not be in a few years, but the mechanisms and channels you put into place now will still be sending customers to your website and your business.
If you can afford to, and without sounding biased, engaging a professional to help you create an online marketing plan that is tailored to your marketing budget now and in the future can be a worthwhile exercise if you can afford to. There is a learning curve involved in online marketing, and while you can do some research and implement a plan yourself, it can take time, trial and error, and end up costing more in time and sweat equity than you would spend hiring a professional.
That having been said, if you cannot afford that just yet, there are great free resources (like this blog) on the internet that can help you get started.
Author: Todd Mumford
Courtesy: www.riverbedmarketing.com
