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Digital Marketing Budget – Planning and Management Guide [How to + Example]

Let's face it: a lot of people have problems with setting their advertising budget. Even more people struggle with the digital marketing budget. Well, rest assured, I've got you covered [...]

April 1, 2017

11 min reading time

Let’s face it: a lot of people have problems with setting their advertising budget. Even more people struggle with the digital marketing budget.

Well, rest assured, I’ve got you covered in this one…

My background in finance taught me that small companies often fail because they lack budget planning and big companies fail because they budget has 0 flexibility.

So what’s the problem?

First,  every company needs a solid marketing plan that outlines every effort to strategise, develop and market a product or service. With every new year, there are new customers, new goals and new opportunities to grow your business.

Most companies plan their marketing budget in two ways – based on previous year’s budget and based on estimations.

This can be so devastating because first, you could be condemning your sales strategy to ruin and second you could end up spending too much on wasted efforts just to get things rolling. By having a digital marketing budget, the company can be focused on specific goals to make things work long term.

I’m going to break down the key things to do, before you start budgeting, while you are doing it, and after you’ve finished with your digital marketing budget plan.

Set Your Overall Marketing Strategy

Before you can even start thinking about any digital marketing budget you should set your master strategy. Your overall marketing goals should be aligned with your company’s goals when coming to growth.

If you are not sure what your strategy should be, see how can my team help you.

If you plan to grow your revenues by 30% but only want to spend 10% more on marketing you could be disappointed with the results. Many businesses nowadays still operate only from a master budget, without any plan to accompany their strategy.

Why is this wrong?

Most of the time the strategy will be trapped inside few people’s heads without any coordination of the entire group. It is very important to develop a written marketing strategy so you can get all of your executive, sales, marketing team together to combine their joined activities and work in the same direction to maximize growth.

Udonis marketing agency - digital marketing budget written strategy

Overall marketing strategy should consist of key activities like classic advertising, public relations, search marketing, video marketing, events, etc. Also nowadays it is crucial to incorporate digital marketing into your strategy.

Online marketing and social marketing should be your primary goals when reaching to wider audience – because everybody nowadays uses the internet. The same process listed above for the overall strategy should be repeated in the subcategories.

Larger firms have the overall marketing budget that is then divided into these subactivities like video marketing or social media marketing. The more details – the more specific your plan is.

How come? Look at the example below:

Udonis marketing agency - digital marketing budget strategy
Udonis marketing agency - digital marketing budget table

Get and Organize Financial Information

This is another thing you must do before you start planning your digital marketing budget. You absolutely need to get in hold with the company finances. This is crucial because you need to get everything organized and you need help from the cold, hard numbers.

Now listen to me very carefully: you can’t create a realistic online marketing budget if you have only estimates of numbers in sales etc.

You need to know exactly how much your company makes in a given time period. Of course, the variations will exist and that’s why you always take the minimum amount.

For example, if your company has $10 000 of revenue in one month and $14 000 in another, in your calculations you will take the 10 000 as it is the lower amount. Why? Well, that’s because any amount that is over the minimum cannot be relied upon as it is there one month and it’s not in the other month.

After you have those numbers you need to subtract every expense you think of. By that, I mean renting costs, materials, utilities etc.  But this time, exactly the opposite, take the highest amount of expenses you have.

Got it? Lowest revenue, highest expenses.

The key to creating any type of budget is to closely examine the numbers and figure out the disposable income that you can rely on.

After you have that amount you now need to decide where will that money go. There are other areas of your company and other people counting on the portion of that amount. Those people will plan their own strategies and have their own budgets, Marketing is only one area you need to incorporate in a budgeting plan and online marketing is an area within an area. Got it?

Depending on your goals and plans your online marketing costs can be even 80% of the overall marketing budget. On the other side, it could be as little as 5%, it all depends on which industry you are targeting, where do your competitors stand and how people react to your marketing channels.

Note: also consider putting some money aside for unexpected costs

Start Setting Your Digital Marketing Budget

Once you have your strategy, goals and numbers you can start building your budget around it. Marketing budget allocation is next on your list. You need to know exactly what to do with the money you are given.

If you have a small marketing budget you should probably consider to print ads and get involved locally. With a medium budget you can add in online advertising and with a big budget you can add in radio and/or television ads. One thing should be there in all budget sizes and that is social media presence. With social media, you can bring in a wider range of clients that could be miles away from you.

People always ask – how much? How much do they need to spend in order to get things going?

The answer is, as always – it depends.

It depends mainly on the strategy you have outlined before. What do you want your results to be?  Do you want to retain customers and slowly build valuable leads that give big bucks or you want to accelerate the process and apply more resources in complex marketing strategies?

Usually, I tell people not to focus mainly on maintaining their customer base, because for some reason no matter how good you are, some of them will always leave you and you can end up slowly bleeding money.

You should always look for something more, more leads, more customers, more growth.

Note: also if you are considering a new marketing channel, put aside more money for testing. See our Facebook case study.

In that order to bring you exact estimates I will set an example of a company that uses only social media marketing in order to advertise itself (online marketing budget = 100% overall marketing budget). You can then scale that number for yourself if needed, depending on the factors I listed above.

The numbers from your financials will now help. How big is your disposable income? The next thing that matters is in which industry you are in.

This is an average digital marketing spend by industry:

Udonis marketing agency - digital marketing budget average spending

According to most studies, the average product and service businesses spend around 10-15% of that income on marketing. On the other hand, SaaS companies take it to the next level with averages around 35+%.

Manufacturing handles around 20% of their disposable income. And these are the modest numbers, they go even higher if you want to accelerate the process with ambitious plans to grow your business by 20+% annually.

Let me break it down for you once more in this digital marketing budget calculator:

Udonis marketing agency - digital marketing budget calculation

According to my digital marketing budget template, your monthly revenues would be $400 000 and your expenses (except marketing expenses) are $200 000. That leaves you with 20k of disposable income. Let’s say you are a B2C company selling furniture. You need 15% of your $200 000 to be put into the overall marketing budget.

That’s $ 30 000 a month to spend on your digital marketing budget which equals 100% of your overall budget in my example.

Now scale it down as you need it and start working.

The Aftermath

The final step is to REVIEW the data you have.

It is the analysis where most people fail.

They come up with some number and they leave it there for years. Social media is a big trend for the past decade and it posts bigger and bigger growth every year.

In a recent survey run by Duke University over 400 senior marketers were generally wrong about how much to put into social media marketing budget. You need to be just in pace with the market movements.

If the social media industry is growing by 25% a year, you must get in line with those numbers and gradually increase your budget. Those senior marketers were wrong and they were putting less than the industry growth, just imagine what profits were they missing on that decision.

By some forecasts, the US digital media investment will near $120 billion by 2021.

The industry is changing every second and you must evaluate and improve your digital marketing budget constantly. The marketing itself is a service which brings in extra revenue. If the overall strategy does not bring in new revenue to the table, you should better try something else.

As I said before everybody nowadays uses the internet and you should get in line with the numbers.

Even grandmas have Facebook these days.

Udonis marketing agency - digital marketing budget grandmas

Assessment is maybe the most vital part of all. You should be able to compare the past results to the ones after you implemented your strategy accompanied with the digital marketing budget.

Look at the changes in revenue.

If the revenue has indeed increased by $100 000 a month, but the strategy cost you $110 000 you still aren’t doing good results. You would be surprised how many people don’t get this. Also if possible try to pinpoint the exact advertising source that brought you that extra revenue and make sure revenues aren’t influenced by outside factors like holidays or seasonal changes.

If you are trying to acquire leads from Facebook you should definitely check how we have done it RIGHT HERE.

So to wrap everything up – write a strategy, get financial information, set your budget and evaluate the results. It is not that hard…


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About Udonis:

We are an award-winning marketing agency specialized in mobile apps & games. We help scale products that people love, keeping the attention on data and results. Have questions, need help? 🤗 Email us at hello@udonis.co!

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Slavica Grgić

I'm Slavica, Social Marketing Manager at Udonis. If I'm not writing new blog posts, I'm making sure that everything is picture perfect.


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