Although it may sound contradictory, the best way to predict future outcomes in your digital marketing budget is by taking a step backward.
To get the best results, it’s vital to understand exactly how previous budgets have fared. Once you’ve established your initial digital marketing goals (you can find a guide on budget goal-setting here), it’s time to analyze and reflect on past budgets.
Read on to learn the most effective techniques for planning a solid digital marketing budget that will allow you to feel prepared for anything that comes to your company’s way.
Learn from the past
Firstly, investigate how much has been invested in each digital strategy and rank how successful these campaigns were. Take note of areas where money was invested in campaigns that failed to generate leads and sales.
Likewise, look into channels that were under-supported but saw positive performance and ROI. Begin to consider your digital budget based on these findings. Allocate money to strategies based on their success, not their actual cost. Smart budgeting is investing in the tactics that will see long-term steady success rather than instant results that aren’t sustainable.
Avoid surprises with statistics
To give you a rough benchmark of how much you should invest in your company’s digital marketing budget, it’s helpful to research the average spend for other businesses. You can compare these numbers to what your overall spend is projected to be.
Come to your conclusion after investing your company’s previous campaigns and weighing them up against the direction you wish to take in the future.
Goal-setting meets forecasting
So, you’ve now reviewed your previous digital budgets and established what worked most effectively. The next step is to incorporate this into your new budget.
In our last blog post, we discussed the importance of goal-setting in a digital marketing budget. Forecasting goes hand in hand with this technique.
Digital marketing budgets are an ongoing project as much as they are an annual exercise. Annual budgets should take into account everything that may impact on marketing efforts for that year instead of simply altering the structure of previous years’ budgets.
For example, is there a new company branch opening? Are there large events occurring throughout the year? Do you plan on hiring new staff? Overall, the most important question to ask is how the marketing strategy aligns with the company’s goals, and how the budget will be used to achieve them.
Forecasting your budget will allow you to account for all costs instead of throwing money you don’t have at something during the year, resulting in setbacks for your company.
Questions to ask yourself:
- What is each customer worth to you? (LTV/ROI)
- What might your average conversions be? (CTR/Conversions)
- How much can you spend on digital marketing?
- How much will you allocate to each tactic (social, EDM, SEM)?
- What tools will you need, and how much will they cost?
- What are the other expenses you need to plan for?