2020 is right around the corner, and so is your deadline to prep your budget for digital marketing in the year to come. To ensure you build a strategic digital marketing budget without flushing money down the toilet, you’ll need to roll up your sleeves and pull out the drawing board for some serious planning — or risk spreading yourself too thin or invest in the wrong areas for your current situation and goals.
For instance, your past and current performances say a lot about what you can expect in the future, but you also need to consider the typical return on investments for certain digital marketing budgets.
We’ll guide you through the process to make this as painless as possible!
List Your Business’ Top Revenue and Traffic Generators
First off, you need a clear vision of where to invest your digital marketing budget. What are the products or services that generate the most revenue and online traffic right now? List these out and note whether they come from organic or paid campaigns.
Include everything from products, services, trade shows, billboards, sponsorships, cold calls, organic web optimization, to anything else that is part of your marketing initiatives, budgets, and ROIs.
You may know the Pareto principle — 80% of your profits come from 20% of your customers. Find out where that 20% comes from so you can invest more resources into this.
You should especially pay attention to profitable sources that required smaller budgets to generate big results. Make sure to go back as far as you can up to the present day for an accurate representation.
List Your Business’ Lowest Revenue and Traffic Generators
For so many businesses, their top-performing offers are generating a huge part of the revenue and traffic while the bottom 20% generates less than 1% of your results — for the same amount of work.
Which elements of your business have underperformed despite your investment? Whether or not your business is currently generating a profit, take a look at each element individually to see which ones are incurring more costs than revenue.
From there, look at each unprofitable element and assess its potential. Is this something that can be tweaked to achieve a more tailored strategy? If not, consider cutting it out of your budget.
State Your Goals: Where Are You Now VS Where You Want to Be
Now that you know where you are, you can paint a realistic vision of where you would like to be in 2020.
Take time to summarize everything you’ve put together in your profit and loss analysis to make strategic decisions on what to do next. Each element you’ve analyzed should either be cut out or optimized based on past results.
Your top profit generators are your strengths. What patterns do you see that could be worked on to optimize in the same direction? What else hasn’t been tested for this element? If a profit-generating element has worked with a low digital marketing budget, can your results be multiplied by injecting a higher budget (taken from costly elements, of course)?
Your goals will determine exactly what you will focus on. For instance, scaling your ad budget for a similar cost per result wouldn’t require the same strategy as lowering your cost per result.
Each offer you have in your business, whether it’s a product or a service, should have its own series of goals and sub-goals. Some of your offers may be doing splendidly while others are eating into your profit, which is why they need to be examined one by one.
Select Digital Marketing Channels for Your Business
In order to plan your digital marketing budget allocation, you need a list of all the channels that are relevant for your business. These channels may or may not include channels that are brand new for you:
- Email marketing
- Pay-per-click advertising
- Search engine optimization
- Social media advertising
- Content marketing
- Affiliate marketing
- Display advertising
- Influencer marketing
- Online reputation management
Based on your previous analysis, you already know which channels are currently working for you and which ones need to be either optimized or cut out. However, for newer channels, we suggest doing some market research based on your audience to find out which new channels are worth budgeting for.
For example, if your audience is made up of US-based millennials and you have not invested in Instagram yet, whether for organic follower growth or pay-per-click advertising, consider trying it out. That’s because 59% of US millennials are active Instagram users!
Also, try to keep up with industry trends. What channels are used by your competitors? Where are brands currently spending their advertising budget? According to eMarketer, 84% of senior marketers plan on increasing their digital video budget in 2019. 70% are expecting to increase their investment in social networks. Ask yourself, where do you stand on those platforms?
State Your Top Key Performance Indicators (KPIs)
KPIs are the lifeblood of your business. They tell you whether or not you are where you need to be. But not all KPIs are made equal, and the top KPI isn’t the same for every business. Here are just some KPIs to inspire you:
- Cost per lead
- Cost per click
- Number of qualified leads
- Sales per month
- Customer lifetime value
- Conversion rate (for your landing page, for example)
- Organic traffic
Your top KPI should be based on your goals. For instance, if your goal is to double your leads, the total number of qualified leads should be your main KPI. However, if you’re trying to increase the efficiency of your budget, aim for a lower cost per lead.
Execute, Test, and Measure
Now you have your goals and subgoals for each product or service and understand all your strengths and weaknesses. You also know which KPIs to base your success on. It’s finally time to execute — but testing and measuring are crucial to see if your strategy is improving or worsening your results.
Each strategy will need a certain amount of time to test, and that time will vary from channel to channel. Decide the amount of time you’ll allocate for each test in advance and set time aside to review and tweak the results based on performance. Make sure to compare the year-over-year data with your more recent month-over-month data to get a bigger picture of your trends.
This will not only help you implement a strategic digital marketing budget for 2020, but also give you the data you need to plan 2021 and beyond
Despite your efforts, you still don’t know if investing in digital marketing is the right solution for your business? Ask our experts, they can help you!