A vast majority of small businesses in the U.S. make use of digital marketing — and for good reason. Digital marketing offers an excellent return on investment, and its results are measurable.
If your business is looking to try out digital marketing for the first time, you’re late to the party but better late than never. One of the things you need to establish before getting started is a digital marketing budget.
How much should you spend on your digital campaigns? Is there a formula for everyone or it’s an open market?
Read on for expert insight.
How Much Are Small Businesses Spending on Digital Marketing?
Before you draw your marketing budget, it helps to get an idea of how much businesses like yours are spending.
According to surveys, about half of all small businesses spend less than $10,000 on marketing.
Most businesses dedicate a fixed percentage of their annual gross income to marketing and advertising activities. This percentage varies from business to business.
As a business owner, you'll need to determine what portion of your revenues to allocate to marketing. Here are the factors that will influence how low or high your marketing budget will be.
If you’re in a fiercely competitive industry, it’s a no-brainer that you’ll have to spend more on marketing. If your competitors are splashing 10% of their revenues on digital ads, for example, you might have no choice but to match or even go higher.
The food delivery app is an example of an industry that’s overly competitive right now. If you’re a new service looking to break into the market, you have to compete with well-established companies. This comes at a cost.
Your Digital Marketing Strategies
There are several digital marketing strategies your business can deploy. These include search engine optimization, pay-per-click, and social media marketing.
The strategies can be further categorized into paid marketing and organic marketing.
Paid marketing, such as PPC, requires you to incur direct costs. Organic marketing, such as SEO, doesn’t have direct costs.
If your strategy heavily involves running PPC and social media ads, your marketing budget will feel the heat. These ads cost you money every time someone clicks on them, so you must be prepared to create a sizeable budget.
If your strategy is SEO-dependent, you can get away with a smaller budget. Although you might need to pay for things like content creation for your blog, the expenses are manageable. The HOTH’s blog has an informative guide to content marketing.
You’re in Charge of Your Digital Marketing Budget
Digital marketing is an indispensable tool for any modern business. While there are no limits to how much you can spend, it’s smart to set a digital marketing budget. The size of your business, your industry, and the types of marketing strategies you intend to use are some of the top factors that will influence your budget.
Explore our blog for more small business tips and advice.