Budgeting Overview

Digital Marketing - Study Notes:

Importance of digital strategy

The success or failure of any digital initiative is influenced by many factors. One key factor is the effectiveness of your digital strategy. Consistent success depends on how well you plan, and how much time and energy you’re willing to invest in analyzing your business goals, segmenting your audience, and setting the right key performance indicators.

With that in mind, it’s important that you understand the primary components of a good digital strategy, including what questions you should be asking, what data you should be analyzing, and how thoughtfully you should be plotting the customer journey throughout the conversion funnel.

You should feel comfortable:

• Building a goal-oriented digital strategy using the best data available
• Analyzing the results of past initiatives to predict which strategies will be most effective
• Collaborating more effectively with peers and agencies
• Allocating a budget
• Deciding which tactics to prioritize
• Measuring your success with carefully chosen KPIs

Digital budgets

A key element of a successful digital marketing strategy is the budget. Digital budgets are made up of costs relating to people, media fees, content production, technology, training, and process.

Within a budget, different priorities and spend-levels are associated with each of these elements or line items. Some elements are likely to have an immediate impact on the fortunes of an organization – such as media campaigns. Other elements, such as training, can have a longer-term impact. Therefore, budgets should be created with the organization’s short- to long-term priorities in mind, based on the expected impact of each line item.

Prioritizing line items based on their impact helps you invest your money in the most important elements and outcomes. This should give you a better return on your investment. 

Variables in budget setting

A typical budget is influenced by several variables. The four main variables in budget setting are:

• Business priorities
• Product priorities
• Market priorities
• Customer priorities

When creating a digital marketing strategy, you need to consider various factors before setting a budget. These include:

• Business goals: What business goals are driving this initiative? What specific challenges are you facing? What new trends or competitive information should be considered?
• Objectives: Based on your broader goals, it’s important that you create specific, measurable objectives for this initiative.
• Target audience: Which audiences are high priority for this initiative? How will you segment your audiences? (Behaviorally, psychographically, or demographically?)
• Value proposition: How will you leverage the messaging provided by your leadership team? Consider your audience’s media consumption patterns.
• Tactics and channels: How will you target customers in each stage of the conversion funnel? Consider your audience’s use of various channels. What percentage of your budget will you allocate to each channel?
• KPIs: Based on your broader goals, how will you measure whether you’ve achieved your objectives? What does success look like?

Budgetary constraints

Most marketing plans must contend with budgetary constraints that determine what you can achieve from your strategy. Essentially, your strategy’s objective and budget are interlinked and they must align. So, you need to know how much you must spend before you start developing a marketing plan budget.

You can use the budgetary constraints you’re operating under to manage expectations about what you can achieve. For example, while it’s important to optimize performance, budgets aren’t limitless and expected outcomes must be realistic and based on the available budget. No amount of optimization can achieve unrealistic goals with a constrained budget.