Serp Matrix Logo Serp Matrix, 3934 Farm to Market 1960 Rd W #203 Houston, Texas United States

What is a good budget for digital marketing?


Recent Posts

Follow Us On Social Media


SERP Matrix What is a good budget for digital marketing Blog

We are all aware that many people would just as soon never want to deal with any kind of budgeting. The fact remains for many companies that marketing budgets are necessary, and creating a marketing budget can require several educated guesses and assumptions about how money will be best spent for an organization without really knowing whether there will be a return on investment (ROI)

No person will want to put money towards an activity that does not work, but companies also need a budget to experiment and see what types of initiatives are going to be successful. This is true even when there is no prior data to prove that a company will get the results it is hoping to achieve. 

Finding the best mix of tried and true budgetary expenses and leaving enough for new ideas can be a very difficult balance to satisfy, but it will be important for a company to do its best to avoid overspending. There is no tired and true method for how to allocate budgets for digital marketing, but there are several best practices people can follow. 

Setting Up a Digital Marketing Budget

Setting a digital marketing budget is usually the responsibility of team leaders in a marketing department. Although budgets must be approved by accounting, finance, or upper management teams, it will be the job of the marketing leadership to provide a budget outline and an explanation as to why certain activities require the requested amounts of money.

The general rule of thumb is that many brands spend about 7 to 10 percent of their overall revenue on marketing activities. Of that amount, about half should go towards digital marketing initiatives.

The obvious truth here is that every company is different as is every industry. This can mean that some organizations will have to spend far more money on digital marketing than others.

It is important to understand what the standard is in your business and what expectations will be.

Incorrect Budget Consequences 

People need to do the best they can to get as close as possible to the money they will need during their budget planning because a miscalculation can lead to several consequences. The first risk in these cases will be damage to a person’s personal reputation as a leader because teams and bosses may not have as much trust in a person if they fail to properly allocate the right resources to the different campaigns and initiatives. 

An entire department could end up on the chopping block when a company is seeking to decrease its budget and upper management believes that a team is not understanding its numbers. The biggest consequence to a budget miscalculation is not having enough money to achieve important digital marketing goals. 

This means that if a company has a goal of getting a certain amount of new leads through advertising but it does not have the budget set to run ads long enough to get leads, it will end up either overspending or losing out on important digital marketing opportunities.

Best Practices in Allocating Budgets for Digital Marketing

Knowing the best practices for how to allocate budgets for digital marketing activities can be as easy as using the right formula to find a percentage of overall revenue a company wants to spend on digital tactics. A person will also have to come up with a more detailed breakdown of spending and activities. 

Some of the best practices to keep in mind when people consider how to allocate budget for digital marketing initiatives will include:

  1. Outline a Sales Funnel

Before you dive into your numbers, step back to look at the big picture of a marketing-to-sales funnel. Do you know what steps along the process will be important touchpoints? 

You will want to know how your customers find you and what they need to understand about your brand before they convert. This will help you know what activities are priorities to invest in.

  1. List Operational Costs

Operational costs will be completely non-negotiable in any budget. Such costs must be taken care of and need to be set up first so a person knows how much budget is available for other activities. 

Operational costs may include website hosting, SaaS subscriptions, platform costs, or other taxes and fees.

  1. Review the Last Year’s or Quarter’s Results

Metrics and reports from previous quarters and years can be enormously important. Identify campaigns you believe were successful.

Also examine whether other goals were reached and what your ROI was. When you begin identifying what worked and what did not, you can start to add or eliminate specific activities.

  1. List Goals

It will be incredibly important to identify goals for the year to allocate a budget for different activities. You need to know what you want to achieve, and how much revenue you need to bring in.

Ask yourself whether you will be looking for leads, conversions, or sales. Establishing goals will help you understand the types of activities that are most beneficial for your budget.

  1. Drill Down Details

Once you know your goals, you need to get into the details. Ask yourself how you intend to achieve your goals. 

What types of activities have been proven to be or a company believes will ultimately be the best ways to go about reaching goals. Detailing out a marketing plan can give you direction on how to allocate a budget.

  1. Select Best Channels for a Business

There are several different channels that a company can use for its marketing initiatives, but not all brands need to have an active presence on each channel. Pick only the channels that are the best fits for your business and look at the costs associated with operating in each channel.

  1. Determine Cost of Marketing Activities

After knowing which channels you want to focus on, take a look at the costs of marketing activities within those channels. Also know whether you will want to grow on social media, how much it will cost to run ads and promote posts, and know what marketing activities fit into your goals.

  1. Scope Out Competition

Competitors are always a great resource when it comes to determining how to allocate budget for digital marketing. See what methods of marketing they are investing in and how those methods are helping them gain a bigger audience and close more sales.

You will also want to examine their marketing and advertising strategies to help you know what channels and campaigns work in the industry.

  1. Create a Marketing Plan

After all the planning and research is complete, it will actually be time to create a marketing plan. Whether a person is planning for the year or for a quarter, they should build out each of their initiatives based on the goals that they have, the tools they will need to achieve those goals, and the channels they need to focus on to reach their audiences.

  1. Estimate a Budget

After developing a marketing plan, there will be the matter of going through an estimated cost for every activity. Focus on ROI and estimate as close to the dollar amount as you can for every step of the plan and finalize your budget.

  1. Make Every Decision Based on Data

A person will likely be required to present their budget to upper management or leadership in their organization. This is why it is important to have clear data to back up every decision. 

A person should not just say that they think it will cost a certain amount to run ads. Instead have actual research and studies and past data to show exactly how much a successful ad campaign costs. 

  1. Measure Results

After a budget is approved, a person will still need to monitor their spending closely and look at the results they are getting. Use the results going forward into next year’s budget, and help create a system that gives you the best budget allocation possible.

Knowing how to allocate budget for digital marketing programs can be an important component of being a great leader and setting marketing teams up for success. Without a balanced budget that teams can work with, a company will find itself struggling to reach any goals it has set for the quarter or the year and risk overspending. 

Planning for a budget requires a person to have best practices in mind that they can apply in order to satisfy both upper management and their employees. It also helps to have digital tools that can make the budgeting process easier and give a person additional support as they create a yearly or quarterly budget.

Find Digital Marketing Help in Houston, TX | SERP Matrix

SERP Matrix is particularly adept at helping people with all kinds of web design and development issues. We also handle landing page design and testing

SERP Matrix has been handling SEO for years and knows how to get real results. You can also count on us for assistance with pay-per-click (PPC) advertising.

It will be important for you to quickly get the help you need. Call (713) 287-1134 or contact us online to arrange a free consultation.


Turn Clicks into Customers

SERP Matrix Logo

Hours of Operation

Google Partner



© 2019-2020 All rights reserved

Made with ❤ by OUR CREATIVE DEPARTMENT AT Serp matrix