SMB Digital Marketing Budget Guide

Determining the right budget for digital marketing can be tricky. A rule of thumb is to take a percentage of your total revenue and assign part of that total to digital. Small and mid-size businesses had grown their digital budgets to 30-35% of total marketing spend and that number continues to rise over time.

“Responding companies are spending, on average, 38% of their total marketing budgets on digital… Nearly two-thirds (63%) of companies surveyed plan to increase their overall marketing budgets.”
– Econsultancy Marketing Budgets 2015 Report

Companies are now projected to move more than 40%+ of total marketing spend to digital in 2016. As a general rule, startup companies should expect to spend nearly 20% of projected revenue with established companies falling in the 5-15% range.

How much should you pay for SEO, or other digital marketing services?

What you pay for SEO or other marketing services depends on your industry and the level of execution needed to reach your goals. For example, if you’re in a very competitive national business, you may need to spend more of your budget on digital marketing than a company that is in a much less competitive space who only markets their services to local buyers.

Setting a Budget

Since B2C digital marketing can often be much more competitive than B2B, we have allocated a larger total marketing budget to B2C. Below is an idea of what a very conservative budget of 40% of total marketing spend going to digital might look like for your business based on it’s size and industry:

digital-marketing-budgets2

3 Budget Setting Tips

1. Align Your Goals with Your Budget – Since your budget is based on your goals, try setting those goals first, then work your way back to the budget. One key metric to use is cost-per-lead. How much does it cost you right now to get a lead? If it’s $450 via direct mail, then you can probably expect to see a cheaper cost-per-lead in digital marketing if things go well.

If you need 10 leads a month for an SEO campaign to be profitable, can you afford to spend $3,000 a month to get those 10 leads? The answer is absolutely YES, if you’re spending $450 per lead on direct mail. (3000/10 = a $300 cost-per-lead) You would save $150 for each lead acquired through SEO.

“Set your goals first, then work your way back to a budget that meets those goals…”

2. Don’t Sacrifice Exposure for Sales Numbers – Don’t focus on one channel or two activities to bring in all of your leads or sales. Dipping your feet in one channel, even if its a small percentage of your total budget, is a good way to diversify and test different marketing lead sources. Sometimes its a matter of being seen across several customer touch points before you will see a lift in sales.

“If you’re using email as the primary way to drive traffic back to your website, why?”

3. Don’t Use A Retention Channel for Acquisition – Too frequently, I see clients using email marketing as their primary acquisition channel because it is cheap. If you’re using email as the primary way to drive traffic back to your website, why? Eventually that email list will be so fatigued that it will fail to generate the same results year-over-year and you’ll churn customers over time. Whenever you see things that don’t make sense channel-wise, it’s usually because their SEO is poor or it is because they don’t have a paid media strategy.

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