How to Allocate a Budget for Digital Marketing?

Our team at WeOptimse receives numerous calls from small businesses requesting help with budgeting and prioritisation of digital objectives. team look. Allocating a budget for digital marketing involves careful planning and consideration of various factors and each business as you can imagine is different. So how exactly do you allocate a budget for digital marketing?

Here’s a step-by-step guide to help you with the process:

1. 1. Set clear marketing goals: This may sound obvious, but its the most important step. Start by identifying your marketing objectives. We often ask clients to write down three different objectives to get started. Next, determine what you want to achieve through digital marketing, such as increasing brand awareness, driving website traffic, generating leads, or boosting sales. Clear goals will guide your budget allocation. We also like to put a specific measure on this after evaluating their current metrics through a Social and SEO Audit.

1. 1. Understand your target audience: Conduct market research to gain insights into your target audience. This task is made easier if you have access to various analytics emerging from social and web platforms. Once you can understand their demographics, interests, online behavior, and preferred digital channels, then you will better understand how to reach this audience. This information will help you allocate the budget to the most effective marketing channels. At this stage, we would also caution the need for proper setups to analyse and track the results of spending.

1. 1. Identify suitable digital marketing channels: Based on your target audience research, identify the digital channels that are most relevant and effective for reaching your audience. Common channels include search engine marketing (SEM), social media advertising, content marketing, email marketing, influencer marketing, and display advertising. We generally like to consider things in terms of a campaign and then let those requirements also feed into this step.

1. 1. Consider the customer journey: Everything in business comes down to touchpoints and understanding how and where customers actually engage with your business. Its important that you map out the customer journey from the initial awareness stage to conversion. Next, determine which marketing channels and tactics are most effective at each stage. The initial thought might be to allocate more budget to channels that drive awareness and consideration, and allocate sufficient budget to conversion-focused channels. However now consider the existing customer, their reviews could influence the start of the customer journey for others. So there is a lot to consider.

1. 1. Evaluate previous campaigns: If you have previously conducted campaigns on social media or adwords, then review the performance of your previous digital marketing campaigns. How did the the return on investment (ROI) work for each channel and tactic? Can you identify the campaigns that yielded the best results, understand why and allocate a portion of the budget accordingly? These may be simple options when considering how to allocate a budget for digital marketing.

1. 1. Consider industry benchmarks: Depending on the industry, you may be able to get some indication of expected ROI. If you research industry benchmarks to understand the typical allocation of digital marketing budgets in your sector, you may find some useful information. This can provide a baseline for your budget allocation and help you make informed decisions. The bottom line here, is that the more information we have, the better decisions we can make.

1. 1. Determine your budget size: Consider your overall marketing budget and determine the portion that you can allocate to digital marketing. The budget size will depend on various factors such as company size, revenue, growth targets, and industry competition. While this makes sense in a conventional way, its important you are slowly engaging in a strategy and monitoring data at expected points.

1. 1. Allocate the budget: Now that you have a clear understanding of your goals, target audience, marketing channels, customer journey, previous campaigns, and budget size, you can allocate the budget accordingly. Assign appropriate percentages or amounts to each channel based on their expected effectiveness and potential ROI.

1. Monitor and optimise: Once you start implementing your digital marketing campaigns, closely monitor their performance. Use analytics tools to track key metrics and make data-driven decisions. Allocate more budget to the channels and tactics that are delivering the best results, and adjust or reallocate funds from under performing areas. We use various tools including Google Analytics, Social Insights, Add planners etc to monitor the success of these campaigns. Its important to understand that campaigns evolve and learn through human interaction.

Remember that budget allocation is not a one-time process. It should be reviewed and adjusted regularly based on the evolving needs of your business, changes in the digital landscape, and the performance of your marketing efforts.

Our team helps your prepare a financial roadmap for utilisation of various vouchers and website grants in Ireland. Learn more about our Digital Strategy option and build your financial roadmap.