Setting up an Ideal Digital Marketing Budget

Advertising plays a huge part of the American economy. As technology grows, along with the goods and services that come with it, so does the number of advertisements as well as marketing tactics. Digital marketing tactics have taken in the lions share of the advertising budget.   In fact, marketing is a growing service industry, based on the growing demand for advertising. In 2018, “digital ad spending has surpassed the $100 billion mark.” So, if anyone wants their business to grow, the business owner needs to invest in a proper marketing budget with digital marketing added in the mix. But how much are business owners are expected to spend on their marketing budget? Where should they allocate the funds, and how effective can a proper marketing budget be? Let’s marketing budget

What is an Average Digital Marketing Budget?

There is no specific cap on how much a company spends on advertising or marketing. It often relies on different variables such as the size of the company, how long it has been participating in the market place, its current financial situation, and the audience they are targeting.  There are also different methods that businesses can determine their marketing budget.

Percentage of Sales Model

One way to determine it is by allocating a specified percentage of sales revenue to the marketing budget. This is more popular with corporations and businesses who are firmly established, but the basic principle is easy to understand.

The CFO or Financial advisor for the company allocates a percentage of funds from last year’s profit back to the advertising budget.

Smaller businesses range often from 12%-20%. On average though, the allocation for larger businesses run from 9%-12%.

This is because larger company brands are often so well known, that they do not need to spend as much money on advertising.

If your company makes more money in sales, then more money is added to the budget by default of the percentage. This tactic is often utilized to prevent the depletion of the sales budget from unnessecarry spending.

Flat-Dollar Approach

If you are starting independently, or you just don’t want to deal with difficult math, then the dollar approach might be for you.

These dollar amounts come from the mindset of what a business can afford. This is good for one time expenses, or short term marketing plans.

Digital marketing, as a rule of thumb, shouldn’t cost as much as traditional avenues. However, it is not hard to spend a lot of money on paid advertising. The dollar amount will help you keep track and put a cap on what you are willing to pay.

Matching Competition

This method of creating a marketing budget based on the business plan of a competitor. While it is useful for comparison, it is often a terrible idea when scale is not taken into account.

For instance, if a small store tried to compete with Walmart’s advertising budget, they will go bankrupt quickly. You need to not just look at what your competition is spending, but how it is being used.  Check for effectiveness more than dollar signs.

If you want the right amount of bang for your digital marketing buck, you want to invest in these three things:


Where Should the Money Go in a Digital Marketing Budget?

digital marketing sales chart

Content Marketing: I have seen it time and again. A website that makes no content for their audience is going to be virtually ignored by everyone and Google. If you want to be seen on the first page of any search engine, you want to at least invest in giving people a reason to view and enjoy your website.

If you don’t think you can blog yourself, you can always hire a blogger to do the writing for you.

Social Media and Influencers:  I am not talking exactly about Facebook Ads. Just like content marketing, people want a reason to see a social media account. They want to fall in love with a personality, not be sold a product by a complete stranger. The more open you are about your business on social media, the more likely you will get a lot of engagement. Especially from future customers. Invest in Facebook, Instagram, or any other social media brand that you think your business can benefit from. If you want to do it yourself, that’s great! If you don’t, you can hire other influencers that might like your brand.

Tracking: If you know what works, and what doesn’t, you are more likely able to gain and keep more customers. And the best way to do that is to keep track. If you keep track, you can know what was most effective, and when to stop or keep promoting a product or an event.

If you want to know about this and more, contact us or visit our site @