Allocate a Digital Marketing Budget for Your Business- Importance, Template & Guidelines

As you prepare your company financially for the year 2024, you need to evaluate your digital marketing budget as well. With each passing year, digital marketing is becoming even more important. 

Especially with the onset of the pandemic, many businesses have taken to digital marketing which means that every business is setting aside a considerable budget for digital marketing. 

To start your year right, you will need to start by allocating your budget to every department, including digital marketing. 

In this article, we will read more about digital marketing budgeting notes, digital marketing budget allocation, how to create a digital marketing budget, how to allocate digital marketing budget, digital marketing budget example, digital marketing budget template, and more. Let’s get to it!

Bonus: Learn budgeting with specialists in this online media planning training

How To Plan A Digital Marketing Budget – Detailed Steps 

Let’s have a look at these steps for how to set a digital marketing budget – 

1. Understand your costs and revenue

You need to take into account your current costs before formulating a digital marketing budget plan. What are your current costs? How much value do your marketing activities create currently? What are your operational costs? You can then plan for the future only after taking control of the current situation. 

2. Define your marketing goals

About 30% of digital marketers admitted that securing a good budget can be a challenge. Before allocating your budget, you need to outline your goals for the coming year. What are your KPIs? How many new customers do you wish to have? What is the retention rate? These questions will not only give you a direction but also 

3. Align your marketing strategy

Your marketing strategy needs to be in alignment with your budget. The current targets and future targets need to be clear for the way forward. 

4. Determine a rough budget

Make a rough outline of your budget. This may not be set in stone, but it will give you an idea of how to go out allocating it for marketing activities. Try to be strict about sticking to it as much as possible. However, there can be unforeseen expenditures. 

5. Work within the budget set and review weekly or monthly 

When you are working with the budgets, keep testing and reviewing on a weekly, bi-monthly, or monthly basis. This will help you gauge if the budgets are working for you or not. 

6. Analyze your results over time and re-evaluate your budget or strategy accordingly

Analyze your marketing budgets and the results with the marketing team and management. You can accordingly tweak the average digital marketing budget or the marketing strategy, helping you identify what needs to change for maximum results. 

Top 3 Digital Marketing Sectors To Invest in 2024

Listed below are the top 3 digital marketing sectors to invest in 2024-

• Social Commerce

Social commerce seeks to reduce the gap between brand discovery and conversion. It involves using social media as commercial platforms for retail and other brands. Many brands have seen a boost in sales with Instagram Shop alone. It proves to be good for brands with smaller budgets as compared to the big brands.

• Live Streams

Live Streaming is a trend that has seen a rise in 2021 and is still continuously growing, mostly due to people shopping online. It has gained more popularity over pre-recorded visual content as well, with 3 times the conversions. This is because users can see the product live, ask questions and then make a purchase decision. 

• Good Content 

The market is flooded with digital content. How do you make your content stand out from the crowd? You create good, impactful content. It need not be flowery or over-the-top. It needs to be clear in your messaging and easy for the user to comprehend. Invest in good content. Video content has seen higher ROI as it is easy to consume. 

These are the top 3 digital marketing sectors to invest in for 2024.

Digital Marketing Budget Template & Example

Here’s a digital marketing budget template example that we have for you:

You need to chalk out all the tasks at hand within digital marketing and accordingly allocate your budgets. We hope that this digital marketing budget template helped you strategize a good budget.

Digital Marketing Budget Calculator

How much should you be paying for ads? This digital marketing budget calculator will help you analyze this. 

• Projected Monthly Spends

A 10% of your marketing budget is a good place to begin if you haven’t ever run ads.

• Expected Cost-per-click

How much do you wish to pay per click? You can use Google Keyword Planner for estimating the CPC for search ads.

• Conversion rate

What percentage of your target audience turn into customers?

• Average sale price

What is the average sale price of your service or product? What is the lifetime value of each customer?

• Lead to customer rate

How many leads turn into actual customers? This is a very crucial aspect that needs to be monitored. 

With these questions in mind, you can calculate your expenses and how to allocate them. Many apps with free digital marketing budget calculators that will help you with this process. 

Importance Of Digital Marketing Budget

So, what is a digital marketing budget exactly? It is a set amount of funds that the company uses only for its digital marketing activities. We’ve listed a few reasons as to why a digital marketing budget is important for your business or company – 

• Provides a clear sense of direction. It makes the management believe in your efforts as well as you can share the results later
• There is clarity on the allocation of financial funds
• Easier coordination and planning of other areas of the company such as finance, human resources, etc.
• It provides a foundation for comparing actual results. This can give you a clear picture of how much you earned from investing in a particular area of digital marketing.
• You will have a better idea of which marketing avenues to choose whilst looking at your allocated budget. This can maximize your ROI and also prevent wasteful spending. 
• A budget also makes the team more responsible with their marketing spending as they are answerable to the management. 

Common Problems in A Digital Marketing Budget

Some common problems in formulating a digital marketing budget include –

• Not in line with the marketing strategy

Do the marketing goals and the marketing budgets add up? This is a serious question your marketing team needs to be prepared with. Many companies think of marketing as a luxury and do not spend as much on it. 

However, if you only put in half the effort, the company will reap only half of the rewards. Make the most use of your allocated budgets by working smartly.

• More cost does not mean more success

Some companies think the more the budgets, the more success there will be. This depends on a lot of factors. The more expensive choice may not always be the best. 

For example, if your brand caters to teenagers, then advertising on social media portals like Instagram and Tiktok makes sense.

• Small budgets

Small budgets can be an issue for digital marketers. The notion that small budgets won’t get you any results is a myth, however, it needs to be sufficient enough for the company to grow. 

If you wish your company sees growth in sales and brand recognition, then you need to take your budgets and strategy seriously. Hence, paying the cards right and allocating your budgets well is important. 

• Inaccurate budgets

Many a time, companies end up investing in areas that they do not need to or invest too little in areas they need to. Hence, a good market research and company audit beforehand is a must. 

• Digital marketing spend by industry

A particular budget that works for one industry cannot work for the other. You cannot use the same budget for another industry. Every budget needs to be industry-specific after thorough market research. This can be time-consuming for digital marketers. 

Conclusion 

We hope that this article on Digital Marketing Budgets gives you some clarity on how to create a budget. If you may have any more questions, you are free to reach out to us at IIDE. 

We recommend this short course in digital marketing that will help you understand digital marketing as a whole and come up with a good budget. You can also check this MBA in Digital Marketing out if you are on the lookout for an MBA-Level program.