Before a fiscal year starts, every business and organization starts focusing on setting up their budget for the year. First, they focus on evaluating their last year’s budget, study the areas that need significant improvements, and then shift their focus to build a more effective and balanced budget that helps their businesses grow.
A budget is a financial plan for a particular period (often a year) that mainly includes:
- An estimated money a company wants to spend on a specific project, service, and marketing campaigns.
- An estimated volume of various items a company tends to invest in.
- An estimated additional expenses.
In simple terms, a budget of a business defines the investment planning for a specified period. It guides the company on how much to invest and where to invest throughout the year.
Every business and organization needs to prepare a balanced budget as it sets the base for the business operations for the entire fiscal year. It also significantly contributes to the growth of the business.
With the rise and increasing importance of digital marketing in businesses, business owners started prioritizing digital marketing in their budget. They allocate around 7-10 percent of their revenue to only digital marketing. And the reason behind this is, of course, the benefits digital marketing campaigns give to businesses.
However, most business owners do not know how much they should invest in digital marketing. Keeping that in mind, we have prepared a detailed guide for setting up a digital marketing budget for a fiscal year. You must explore this if you want to take your business to the next level this year.
Table of Content
- The Importance of Digital Marketing in Businesses
- Some Factors to Consider
- Setting Up a Digital Marketing Budget
- Some Digital Marketing Methods to Focus On
The Importance of Digital Marketing in Businesses
Before we discuss setting up a digital marketing budget, it is crucial to understand the role and importance of digital marketing in businesses.
Digital marketing is a modern marketing method that helps businesses reach out to their potential customers in no time without any considerable investment. It is far better than traditional marketing methods and techniques.
It helps businesses to:
- Attract a large number of potential customers
- Generate quality leads
- Boost sales & revenue generation
- Build a strong recognition
- Build a brand credibility
- Make an impression on audiences
Keep it in mind; it won’t be wrong to say that digital marketing plays the most crucial role in the growth of businesses. And that’s why you should make an effective and balanced budget for digital marketing.
Some Factors to Consider
Deciding on how much you will invest in digital marketing is not a cakewalk. It depends on various factors, including:
The Amount of Revenue You Aimed For
You will already have set a targeted revenue that you want to earn by the end of the fiscal year.
The bigger the amount of revenue, the higher the amount of money you need to invest in digital marketing, or else you won’t reach that mark.
So, before allocating a significant percentage of your revenue to digital marketing, make sure you correctly calculate the amount of investment required to earn the amount of revenue you aimed for at the end of the year.
Aims and Objectives
A business does not aim only for earning profits, but it has many other objectives towards its employees, stakeholders, and owners. It also has certain responsibilities towards the society, environment, and the country it is performing its business operations in.
You need to evaluate how much investment is required to fulfill all those aims and objectives. Once you have an estimate, you can decide how much percentage of your company’s revenue to allocate to the digital marketing budget.
Your Company’s Position in the Industry
Where does your company stand in the industry? If it is around one to five years old in the industry, you need to allocate more percentage of your revenue to the digital marketing budget than older and established companies. It will help you expand your market on a larger scale quickly. The same reason why Speciate AI is built for. They help companies turn threats of disruptive hard science and digital technologies into opportunities.
On the other hand, if your company is well-established in the industry, that does not mean you can cut your digital marketing budget, as it can result in a huge fall in your company’s revenue. You need to continuously invest in digital marketing to maintain your company’s brand value and boost its sales and revenue.
It is another important factor you need to keep in mind when preparing your digital marketing budget.
Last Year’s Digital Marketing Budget
Suppose you invested in digital marketing in the preceding year. In that case, your past digital marketing budget will play a role in preparing an improved and more balanced budget for the current year. It will help you know what went wrong and to identify the areas that need significant improvements. Moreover, you can use your company’s last year’s budget to change your strategies and approaches for the current year’s budget.
Setting Up a Digital Marketing Budget
Now that you know the importance of digital marketing and the factors that matter the most let’s learn how to set up an effective digital marketing budget.
First, calculate your company’s gross revenue from the preceding year. Then, check out your company’s last year’s budget to know how much you spent on digital marketing. It will give you an idea of how much of the entire marketing budget you should allocate to digital marketing.
Secondly, conduct research to determine an estimated cost of various digital marketing services, including online advertising, search engine optimization, branding, etc. One thing to note here is that digital marketing services vary, depending on various factors. It would be best to stay on the safe side by allocating more than the determined percentage of revenue to digital marketing.
Lastly, use the 70-20-10 rule to set up your final digital marketing budget. As per this rule, you need to allocate 70% of your entire digital marketing budget to those strategies that have already proved useful and helped you get the desired results. It should be search engine optimization and internet advertising.
You should spend 20% of your budget on those strategies you think can help you get great results. And the rest of the 10% you can use on other strategies you want to experiment.
Some Digital Marketing Methods to Focus On
There are different strategies in digital marketing in which you can invest but not every strategy could prove beneficial for your business. Here are the three most powerful and effective digital marketing methods you need to focus. Check them out below!
Search Engine Optimization (SEO)
Search engine optimization is the most effective digital marketing method for allocating 70 percent of your budget. It is a way to boost your website’s ranking on the search engine result page, derive more potential customers to your website, and build your company’s recognition and credibility.
Typically, SEO Experts Company India performs search engine optimization practices to promote and rank a website. You can hire them to boost your lead generation, sales, and revenue.
Online/ Internet Advertising
Like SEO, online advertising is another effective digital marketing method that helps your business grow in no time. However, it is more expensive than search engine optimization services provided by an SEO company India.
With online advertising, you can quickly attract many potential customers and convert them into sales. It would be best if you keep this with SEO services in your budget.
Many online advertising platforms allow businesses to run their advertising campaigns on search engine result pages, social media, and popular video-sharing platforms. You should make full use of those platforms.
Sponsored Posts and Social Media Promotion
Sponsored posts and social media promotion methods are trending these days. Investing in these methods can also be profitable, but you should allocate only 10-20 percent of your budget to these methods. Backlink Monks is a link building platform that offers strategic and sustainable ways of blogger outreach. If you are looking for high quality links, you can easily get them through their connection with different websites.
Setting up your digital marketing budget for a fiscal year is quite confusing, but if you follow the steps and tips included in this post, you can easily set up an effective budget. One thing to note is that you should allocate a higher percentage of your entire digital marketing budget to search engine optimization as it is the most effective way to grow your business.