How Much Should You Be Spending on Digital Marketing
More than 76% of people in the advertising industry believe that marketing has changed more in the past 2 years than it has in over 50 years. There has been a shift towards valuing digital marketing over traditional marketing, as it helps reach consumers in the ever-changing online world. A strong digital marketing strategy is what differentiates companies from their competitors, it redefines the content. Having acknowledged the importance and the vital role marketing plays in company growth, now comes the real question, how does a company determine how much of their budget to spend on digital marketing?
What’s the Perfect Percentage?
Evidently, companies differ and thus their financial allocation towards marketing will differ as well. Dependant on how established and which industry they fall under, their focus on marketing will vary. According to Business Development Bank of Canada (BDC) most businesses should be spending around 7%-11% of their overall revenue on marketing. For B2C companies, they should be aiming to be on the higher side of this range and investing more into marketing channels to reach a larger market. This is the average percentage of an overall revenue that companies should allocate towards marketing. Within this budget, a higher value should be placed on digital marketing as it is outperforming traditional marketing methods. When it comes to marketing budgets, it is important to remember that it doesn’t matter how much you spend, what matters is how much your return is, your ROI value.
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How Much of Your Marketing Budget Should be Spent on Digital Marketing?
More businesses are stepping away from traditional marketing and focusing their attention on digital marketing. Traditional marketing omits your ability to interact with your target market at ease and foster a communicative relationship. According to a Canadian Ad study, this year advertisers in Canada will spend around CAD $8.80 billion on digital ad formats, or 53.5% of total advertising spending. As a rule of thumb, around 50% of a company’s marketing budget should be dedicated to digital marketing. With every year, this number is increasing as digital marketing is growing in popularity. The more progressive and forward-thinking a company is, the more they allocate towards digital marketing.
Why Spend 50% of the Budget on Digital Marketing?
Digital marketing encompasses numerous features in this definition. It allows you to reach your target market in a way that traditional markets would never make accessible. The benefit of digital marketing is that it permits you to achieve more than just brand awareness and exposure. Through digital marketing your company can : increase sales revenue, generate more leads, increase website traffic, improve lead quality, improve brand awareness and increase your online presence. According to a survey conducted by Manifest, 64% percent of respondents in the survey allocate the majority of their digital marketing funds towards social media.
Budgeting and Planning
Once a budget has been set, it is important to identify a target market. By identifying who you are marketing towards, it facilitates the process of picking which channels to use. Setting strategic goals make it easier to know how much you will be spending exactly on which platform and marketing channel. It is important to comprehend the value of marketing to your company, as Martin Sorrell once said, “ Marketing is an investment, not a cost”.