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The next thing we're going to talk about, and it's the point of frustration for a lot of digital marketers, is the budget. Now, the problem with budgets is that you need to plan for how much money you're willing to invest over a given time.
Therefore, you have to create a budget plan. You need to come up with a plan of how you're going to implement the budget, how much each function is going to require, because if you have a meticulously planned budget, providing all the necessary detail, it's very difficult to say no.
Essentially, budgets comprise media costs, creative production, agency fees, and digital tools and technology for the purpose of delivering on a campaign or strategy. Additionally, staff costs, training and processes can be included as part of the overall budget though this isn’t always the case.
This will usually be the largest budget consideration of any digital marketing plan. In order to budget and forecast you can use historical performance or estimates from the channels or media platform. You should look at the overall goal of your strategy and prioritize the budgets towards the channels that deliver on your goals. If your goal is sales, you will put more budget into PPC than the other channels in your plan, as PPC is a conversion-driving channel. On the other hand, if your goal is interest or consideration you will put more budget into display or social media.
As every digital marketing strategy will be different, there is no one size fits all rule for budget allocation and you should try to balance channel and conversion costs from historical data against your overall goal to distribute the budget across your different channels. It’s possible to move media budget from one channel to another if you are seeing good performance when the campaign is live.
Production costs will be the second largest expense after media when budgeting for a digital marketing campaign. Depending on the type of media chosen, you will need to produce specific creative assets. These include videos, social media images, advertising banners, website image assets, email formats and other creative outputs to use on your media and website. These fees are for designer, account manager and video production time so it’s important to remember that certain media choices require creative formats to run or you can’t use them to their full potential. As a result, it essential to leave enough budget available after media costs to produce the creative assets to run on your media choices.
If you are using a third party to run and manage your campaign, including, booking and buying media, managing creative assets, reporting and optimization, you will need to pay for their time - this is usually costed on an hourly fee. It tends to be lower than media and production costs. While some agencies will charge their fee as a percentage of media spend, this method rewards spend not performance, irrespective of how good or bad the campaign performs. The agency gets paid simply for spending the media, there is also little insight into how many hours are invested in the campaign. As a result, it can be difficult to drive performance when agency fees are calculated as a percentage of media spend. Most agencies will charge an hourly fee which is a better model for driving performance.
Sometimes there are digital tools required for the campaign, for example, ad serving tools which are used to upload, manage, and serve your image creative assets to your audience. These tools and additional analytics tools will have associated fees. If there are additional tools that are required for the campaign, it’s important to understand the value and purpose of the tools before committing to a budget to pay for them. Therefore, it’s essential to understand if they are a crucial part of the success of the campaign or a “nice-to-have” additional piece to enhance understanding.
So, your budget is directly dependent on what factors are influencing these areas.
When you're planning your budget, the following considerations are key areas for you to evaluate:
How many people, realistically, are within the target audience that you feel you can reach? We all want to be highly successful and make millions of dollars for the organizations that we work for, but realistically, how do we ascertain a successful measure of new customers? How many customers do you need to make in order to keep the lights on? How many customers do you need to make to be really successful?
What follows next is the important question of “How big is your budget?” If you think you will be given a small budget, I suggest focusing on your target audience through a specific lens. For example, if you told me that your target audience was 25 to 35-year-olds, and then you told me that you had a small budget, the first question I would ask you if you think you will be more successful with a male or female audience. For multimarket, it's the equivalent to saying if you think that you're going to be the most effective with city dwellers, then only target the capital cities of specific markets to make sure that you're effective.
You need to understand that budget setting for channels and formats is linked to your objectives. You should allocate more budget to those channels that will efficiently and effectively deliver on your digital marketing objectives. It's possible to forecast channel performance by using historical performance as a benchmark for future campaigns. Using historical conversion rates, you can estimate how much traffic you need at that conversion rate to deliver a certain number of sales or leads. With paid media, you can estimate the cost of that traffic by using historical CPCs or CPMs to estimate costs.
How much money do you realistically feel you can invest in digital? It is often the case that when you go through this process you will realize that you don't have enough money to invest in digital to do absolutely everything you want to do, and that is okay - nobody ever has enough money that they want to put in digital. I regularly have to bow to give money to other channels or other media because, strategically, it's the right thing to do.
Are you under-investing in digital and is there a gap that you need to now make up? This is a commonly occurring challenge for a lot of businesses who might be late to the game. Generally, they find that they haven't invested in digital and all of a sudden they need a new website, they need social channels, they need to create content. All of that can be quite daunting, so you need to find a way to make sure that you understand how you might be able to spread those costs out.
This is important because a lot of brands early on don't invest in media, and similar to the under-investing example, it can become quite a shock when you realize that you actually have to pay-to-play for a lot of the media channels that you should be using. Some brands start out with social, and then ignore search or ignore display for a long time, and then they realize they're missing those elements in their media mix. So, it's important to anticipate ad spend allocation and if it will be enough.
The final point is the budget allocation and prioritization. When you get to the end of this, if you feel you're under-investing, then you need to make a case for either more investment, or you need to make a case for a better use of your resources. The problem with under-investing is that you can find that you're not going to do enough to even try to make digital work. It will not be a success and you will find yourself facing challenges as to it not working, when actually the reality was, the business didn't invest correctly in the first place, thereby obfuscating the efficacy of your digital strategy campaign.
Next, we're going to talk about developing a budgeting plan. Budgeting plans allow you to plan out all investment month by month, over a specific period of time. Planning long term will secure investment. Without a plan, money will be moved around, resulting in digital being under-invested in, under-performing and ultimately being questioned.
Without a plan, what will happen is money that you had will all of a sudden get moved to another department or another requirement because there was no plan for it. So, just ensure that when you're planning over a number of months, that you address moments when you think that the investment will need to fluctuate. For example, in campaigns during seasonal periods, try to anticipate how your budget might need to increase or decrease. An example of this that is important is Christmas for retailers. Retailers tend to underestimate how much budget is going to be required during the Christmas period.
So, if you've spent time addressing your budget, you can ensure that the teams are also sticking to the plan, everybody's following the numbers that are on the sheet. Then begins the reflection stage where you should try to discern if you under-spent or over-spent in certain areas with a view to making adjustments in the following period.
What can happen is over-investment in the early periods, and then by the time you get to the end of it, you realize that you actually don't have the money to achieve something that you wanted to do. Building a plan that tries to anticipate these possible fluctuations, to give you the room to maneuver, can make all the difference to seeing good results from your digital strategy campaign.
So, if you know what your budget is for a year, you should plan for a year. If you know what your budget is for a half year, you should plan for a half year, and so on. Never plan beyond where the budget exceeds because all you're doing is guess work then.Back to Top
Please note that the module slides are designed to work in collaboration with the module transcript document. It is recommended that you use both resources simultaneously.
Jessica is a consultant with experience in marketing and an in-depth knowledge of the latest marketing techniques. Her previous roles have included working in a marketing agency and numerous customer-service-facing positions that have given her exposure to a wide range of customers and clients.
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ABOUT THIS DIGITAL MARKETING MODULE
This module identifies the core components of an effective digital marketing strategy and explains how to develop an effective budget plan and measure the ROI for digital activities. It covers how to set clear and actionable objectives and measurable KPIs as well as the key research activities to undertake to guide channel selection and messaging. It also explains how to develop a creative strategy based on campaign research to engage an audience and deliver on campaign goals. The module concludes by explaining how to execute a digital marketing strategy supported by a channel plan, a paid media plan, a campaign action plan, and succinct strategy documentation.