Creating a budget for a small business may be a bit of a challenge. Many of these businesses are often on a very tight budget, so business owners make sure they are distributed well enough that none of their business needs get neglected. Digital marketing is one of these necessities and determining the budget to allot for this may be difficult to figure out.
Regardless if you are creating your first digital marketing budget or making adjustments to an existing one, these tips will make it less of a burden.
The Rule of Thumb by Percentage
No two businesses are alike, therefore, the digital marketing budget likewise differs and will depend on several factors. Based on general rules, B2B companies usually spend about 2-5% of their gross income on marketing while B2C companies spend about 5-10%.
There are two things you need to keep in mind when following these general guidelines. First, while there are important variations within the range, your business might not belong within the range. You may use the ranges as a general guideline and remember that you are not obliged to stick to the figures. Second, the percentages indicated apply to all marketing and to digital marketing alone. So this means your revenue of 2-10% will include any non-digital marketing you do such as radio ads, ads at bus stations, print flyers or in-store advertising.
Potential Digital Marketing Expenses
To determine where your business falls within the usual range for digital marketing budgets, list down all the expenses you have and will have in the future. Make sure to include digital marketing strategies that you plan to use such as local influencers.
Consider other possible important costs and any associated expenses for each. For example, for website costs you have to include costs for the design, hosting fees, domain fees, and website maintenance.
Consider Your Customers
After completing a list of potential expenses, you have to take your customer base into consideration. You have to figure out what channels they are on and what type of content would they most likely respond to.
Once you have the answers, you can then decide how to allocate your budget. Your budget should be focused on the channels and marketing strategies that will most likely yield results.
Create Clear Goals
Your next step will be setting goals for your digital marketing efforts. Goals should be measurable so you will be able to track them.
Decide on What Tools to Use, Including Free Ones
It is natural for small businesses to stick to a low digital marketing budget as much as possible. Fortunately, there are free tools you can use to achieve your goals. Google AdWords Keyword Planner is one example. Although keep in mind that paid tools will provide you with more resources and features but you may not need them.
You should also decide whether to do marketing in-house or if you should outsource them. Remember that doing it in-house doesn't mean it will be cheaper since you will go through a learning curve and spend time learning rather than doing something more productive. This effort may result in lower ROI. So you need to evaluate the pros and cons before deciding whether to outsource some of the marketing efforts.
Track the Budget and Results, Adjust When Necessary
As a small business owner, you shouldn't stick to a marketing budget long-term once it is established. You need to regularly assess your digital marketing results and expenses. Then compare the results to baseline figures from before you implemented new strategies.
If the results aren't enough to reach your goal, then you should think of increasing your budget. If you go over your goals, you can consider reducing your budget. If you don't see any results, then reduce the marketing budget for the meantime while you reassess your marketing efforts to know what works best.
Conclusion
Many B2B businesses usually spend between 2 and 5% of their total revenue on marketing, and B2C businesses usually spend 5-10%. You may use these figures as a starting point but think about your goals and potential costs. The bottomline is you should regularly evaluate your marketing efforts and results.
If you deem it necessary to outsource some of your marketing efforts, Triad Web Design Service can be of service.
