Whether your business uses traditional means to determine marketing budget, follows current trends or has a custom formula based on specific needs, there is a good chance that more of it will be allocated to digital marketing with each passing year.
In fact, our new research revealed that 98% of marketing leaders believe digital marketing is important to their organization's success with 90% expecting to increase their digital marketing budgets by 2020.
Depending on factors such as business type, size, and industry, the actual dollar amount of your digital marketing budget will vary, but you can learn from tips and techniques to optimize spend.
In this article, we provide 8 useful tips on how to optimize your company's digital marketing budget to get results that meet business objectives.
1) Determine What Falls Under the Digital Marketing Umbrella
If you are going to optimize your budget, you need to know which elements are considered 'digital marketing' and which are not. For many companies, if it's online, then it's considered digital marketing, but not every activity or service may fall under the marketing umbrella.
By deciding what’s included and what’s not, you can focus on the right platforms. Some of the activities to consider include:
SEO (search engine optimization) – Some senior marketers may not consider SEO or organic traffic a marketing activity, but it is a valuable tool when it comes to driving traffic and producing qualified leads.
Social Media – The people in your target market likely frequent platforms like Facebook, Instagram, Twitter, and LinkedIn, and social is becoming a massive source of qualified prospects for many companies.
PPC (pay-per-click advertising) – This is often thought of as the gold standard when it comes to online marketing since you only pay when someone clicks on your ad, and you can target based on tight demographics.
Email Campaigns (inbound marketing) – A 'pull' rather than 'push' type of strategy and emails continue to be a valuable way to market to people online.
Digital Display (banner ads, online video, etc.) – Modern banner ads are non-intrusive and targeted, and video is emerging as the marketing wave of the future.
Content Creation including Website Pages and Blog Posts – It’s easy to neglect content creation when thinking of your marketing budget, but it’s a critical part of the overall picture.
2) Find Out Where Your Target Audience Spends Time Online
In order to optimize your digital marketing budget, the first step is knowing where your customers and prospects spend time online. This way, you can direct your resources in the appropriate places and maximize the return on your spending. The results of this kind of investigation often surprise many marketers, as they have assumptions as to where their ideal customer is active online.
For example, if your company puts a lot of the digital marketing budget into LinkedIn, only to learn an inordinate percentage of your customers spend most of their time on Facebook, that's not an efficient use of marketing dollars. By using analytics and advanced metrics, your digital marketing team can track where your target audience spends its time, how long they stay, and what typically causes them to leave. Of course, to gather this information it's also necessary to create a persona of your ideal customer, so you know what you are looking for.
If you have a digital marketing budget, then you should also have buyer personas to work with. But, if for some reason that hasn't happened, create detailed personas of your ideal customer or client that include age, gender, job title, income, family life, hobbies, interests and anything else that is relevant.
3) Test Multiple Channels
Digital marketing can be a fickle activity, and what works for one marketer may not always work for another.
Early in the budgeting process, your company should have established Key Performance Indicators (KPI), and by testing across several channels and comparing performance against your KPI, you'll get a better sense of what is working and what isn't. You may find that you're getting a noticeably higher conversion rate on one channel over all the others or your cost per conversion is quite a bit lower or higher on one channel.
Testing across multiple channels allows you to capitalize on opportunities and avoid areas where you're not getting worthwhile results. At this point, you can optimize your digital marketing budget by focusing on those channels that are providing the highest ROI. In all likelihood, the 80/20 rule can be applied or possibly even 90/10 depending on your industry.
4) Cross-Channel Remarketing
Remarketing is an activity that’s easy to let slide, but also one that can provide a good return for minimal investment. For those who don't know, remarketing or retargeting allows you to show ads to web surfers who have visited your site or clicked on one of your ads but didn't convert. They have already shown an interest, and now your ads will show up as they surf on other sites and platforms.
In the past, remarketing didn’t follow web visitors to different channels. But with cross-channel remarketing, someone can click on a Google ad and then see follow-up ads in Twitter or Facebook. Your organization can optimize budget by giving prospects second and third chances to interact with your brand after their initial contact. And as with any PPC ad, you will only pay if the ad gets clicked on.
5) Examine Trends to Stay Competitive
Research about what other senior-level marketers in your industry are doing will help give you an idea of the best ways to optimize your digital marketing budget.
In a survey of senior marketing executives and CMOs, 66% expect the competition for customers to intensify over the next year and expect to increase their online marketing budgets.
That's not to say you should follow the competition precisely, but keeping in touch with what your competitors are doing online will give you a better idea of where you need to make adjustments to remain competitive. If they have captured a significant market share or you want to capture it from them, learning where they allocate digital marketing dollars and how they optimize their budgets will help optimize your own budget.
The research also pointed out that many marketers are not particularly adept at factoring associated costs of digital marketing into their budgets. Added costs such as software, online marketing tools, analytics tools, and training employees in new methodologies all need to be included when determining the budget and the overall digital plan.
6) Reallocate as Needed
Many marketers may view allocation and optimization as separate things, but in the digital world, a key element of optimizing your marketing budget is being able to reallocate as conditions change.
For this reason, having a certain degree of flexibility in budgeting makes sense. Since results are often seen instantly, you'll want to be able to take advantage of opportunities as they present themselves or cut losses if a particular strategy is proving ineffective.
7) Continually Test and Refine
Optimization is an ongoing process, especially when it comes to digital marketing. With so many tools available to test and measure, it’s important to keep testing results even after you have decided on specific channels to focus your efforts.
Even the smallest tweaks in a campaign can yield wildly different results. As an example, an email campaign could be producing a favorable ROI, and then a simple switch in the email sequence or a different type of subject line may boost it even more.
If the goal is to always get the most out of your digital marketing dollars, then your marketing team needs to keep refining the campaigns across all platforms and testing new ideas, strategies, and concepts.
Most of the time, a slight change in a campaign won't result in higher expenditure, so if it produces a greater ROI than before, then you have effectively optimized your marketing budget with improved results.
8) Ensure Sales and Marketing Are Aligned
Because optimizing your digital results will also help you maximize your budget, it's essential to have the marketing and sales departments working together to accomplish your goals.
With many online marketing initiatives, there is no direct contact with a member of the sales team, and purchases are made online. But if your sales funnel includes the sales team, then these must be aligned to convert leads into paying customers. It is only with a collaborative effort that sales and marketing can form a cohesive unit and get the results you need.
There are many variables in play when it comes to setting and optimizing your organization's digital marketing budget and that variables can change quickly and without warning.
Using these 8 strategies should help to ensure your budget stretches further is being used on the platforms that get results.