Raise your hand if you’ve ever tried to figure out how to create an online advertising budget for your business, but had no idea where to start.
When you start the process of creating an online advertising budget, you’re hit with a ton of different options from Google ads to SEO services. Finding the right mix of products, services, and internal resources to allocate can quickly turn into a major headache.
Deciding to spend some of your business’s hard earned cash to increase your online footprint can be difficult – but there’s good news: Creating a budget for digital marketing doesn’t have to be intimidating. With the right research, planning and strategies you can easily create a powerful online advertising budget — all without much time or energy going to waste.
Below we’ll walk you through the five basic steps to creating an online advertising budget. When you’re done you’ll have a better idea on how much to budget, where to spend and how to plan for the future.
1. Determine a Percentage of Overall Revenue to Spend
Allocating a percentage of overall revenue is an important first step to creating an online advertising budget. This model creates a consistent and repeatable method for developing your digital marketing spend. According to Gartner, companies spent around 2.5% of their annual revenue for online marketing in 2014. This will only continue to increase significantly in upcoming years. Don’t be afraid to start small and increase the percentage as you become familiar with what works and what doesn’t. The main point is that you have a well-reasoned, predetermined amount to get your digital marketing efforts off the ground.
2. Use the Competition’s Budget as a Reference Point
Building greater brand recognition than the competition is one of the primary objectives of advertising online. By using competitors’ budgets as a benchmark, you know about how much you need to spend in order to match their level of brand awareness in the marketplace. Surprisingly, there are a variety of tools and applications available online that can provide insight into your competitors’ budgets. For example, iSpionage allows you to enter a competitor’s website address and subsequently generate a report detailing how much they spend on both organic and paid search. Use this data as a guidepost, and cross-reference it with your figure from the previous step to get an even more accurate figure of what you should probably spend.
3. Determine What Your Strategic Goals Are
Deciding how to create an online advertising budget depends heavily on the overall strategic business goals of your company. This can vary depending on each situation, and include things like generating brand awareness, capturing inbound leads or increasing sales conversions. Implementing a SMART (Specific, Measurable, Attainable, Relevant, Time-Based) goal-planning methodology for your overall business is a great first step. Once you’ve identified the key, big-picture success metrics — revenue targets, increase in client base — you can then determine how online marketing will help you achieve those goals and how much you’ll need to spend in order to get there.
4. Use Historical Data and Analysis
In today’s landscape, having a data-driven approach pays huge dividends by way of making accurate, well-informed business decisions. In terms of creating an online advertising budget, there are quite a few research databases that provide historical online marketing data. These can be broken down by time period, industry, company size and other variables. Tools such as SimilarWeb provide historical benchmarks for statistics like web visitors and mobile app usage. A comparison of the relevant historical data with your current statistics and marketing objectives will then lead you to make more informed decisions in the next step, which is choosing the appropriate online advertising tools and platforms.
5. Select the Online Advertising Channels That Are Right for You
Finally, and perhaps the most important of the five steps to creating an online advertising budget, is deciding the online platforms and channels that best suit your business. These can include, but are not limited to, Google ads, Social Media, Video Content, and Retargeting ads. Each comes with its own set of strengths, weaknesses and associated cost structure. You may want to start by gauging the status of your current basic online marketing efforts, which typically include website performance, SEO and company blog — if you don’t have one now, you probably should. Based on the previous four steps you can then assess your potential online marketing mix, how much each one will cost and what they will likely contribute to your long-term business goals.
Complete these five steps to creating your advertising budget and you’ll be well on the way to digital marketing success. And do you know what the best part is? Creating your online advertising budget for the next year won’t feel nearly as daunting.