Budgets

Digital Marketing - Study Notes:

Budgetary constraints

So, we’re particularly looking at paid search when we’re looking at budgetary constraints. Budgetary constraints are, of course, they’re relevant for all different channels. Part of this looks at display marketing. But we’re really looking at paid search.

Daily caps

You need to set daily caps within your monthly budget that will ensure that you stick closely to the budget that you’ve agreed. You can imagine that that could go far beyond where you want it to go if you hadn’t set daily caps. So, for any given day in Google Ads your average daily budget can be exceeded by 20%. And that’s just because Google’s trying to maintain good visibility for you that steadies throughout the day. There may be an opportunity to increase by a further 20% and they will allow you to do that. However, that will be evened out over the month. So again, that’s something to consider. It’s a good thing for us as search strategists because it means we don’t go 20% over for the whole month. But it does mean that there’s going to have to be something to counterbalance that somewhere else in the month.

Frequency caps

These are particularly relevant for display marketing. One thing you might want to consider is that when volumes of potential impressions are low and you set a low frequency cap on the display advert, you might find that you aren’t able to reach the budget that you’ve set. Because with a frequency cap, once a consumer has seen your ad a certain amount of times, they won’t see it thereafter. You want to make sure if you’re doing that that there’s a large impression share out there that you can go after.

Impression share

Speaking of impression share, you can’t predict exactly what your competitors will do over the year. And that means that sometimes they can become a lot more aggressive in an area where you felt comfortable up to that point. If that happens and you can’t increase your cost-per-click, you’ll need to have the discussion internally because the only way that you’re going to regain those possessions is to increase your budget. It’s the nature of what we do. If the cost-per-click increases, to be in the top position, you’re going to have to pay more.

Different types of costs

So, now looking at the different types of budgets that we encounter on a daily basis but particularly in this planning phase.

SEO technical

The first type that we should look at is SEO technical costs. And the reason I’ve put this as the first one is these are the changes that take the most time to implement. One of the real challenges of the SEO industry is performing technical audits and ensuring that they actually see the light of day. That they are implemented. Quite often they’re left to gather dust, because they fall quite far down in the company’s list of priorities as they move to, say, a new platform or a responsive website or whatever it may be. So, up front you want to understand exactly what it is you want to achieve.

Now, if all you want to do is add 20 canonical tags to a website, that may only take a couple of weeks. However, if your recommendations are about improving your mobile site speed, that’s probably a six-month job. And it will require a lot of budget. Normally internally you won’t need external suppliers more often than not. But you won’t have that discussion up front.

Content marketing

Your content marketing costs come in two forms really. You have the fixed costs of what it is that you need to create. So, be that a video or an infographic or whatever it happens to be, you should know what the fixed cost is for that. You’ll also need content marketing strategy costs, which will go alongside that. Those will typically be on a day rate or on an hourly basis.

Campaign advertising

Your advertising costs will largely be tied to the media that you buy for your strategy.

They can fluctuate from day to day, sometimes from hour to hour actually. But you still know what you’re dealing with in that sense. Your budget will be going to Google, Bing, or Facebook.

Personnel costs

Your personnel costs cut across all the top areas. This would be SEO content and campaign advertising because you need account management in all of those areas. It will typically be tied to the number of hours that each individual spends working on the plan and their designated hourly rate. So, you’ll want to think about what level of seniority is required. Sometimes that can be just account manager level, sometimes you need someone very senior if you’re planning a very complicated search strategy.

IT systems

Your IT costs will be fluid. I would suggest on a quarterly basis you have a budget set aside that you can dip into for this, because you can’t always be sure of what’s going to be required. Things change on a daily basis as we know. So, as a result, it is imperative that you plan ahead.

Different search engines

Another big consideration when you’re looking at your paid search strategy is that there are different search engines out there. I’ve chosen to look at Google and Bing because they’re the two biggest players in the West, but if you’re dealing with, say, China, you’ll encounter Baidu. In Russia, it will be Yandex. The same principles apply though, no matter which market you’re in. So, these two giants in the West, are similar in the platforms that they offer and the targeting options. Google’s dominant position is down to the fact that it has a larger audience. And larger audience gives it more data. More data to us as advertisers gives us more targeting options, more accuracy and a better return on our spend.

But don’t discount Bing. There are still a lot of opportunities there and its market share is growing. What you can find in Bing is for certain products and certain demographics, they over-index slightly versus the market average. So, it’s always worth considering that.

Measuring returns

So, one of the main questions that will come up as you’re planning a search marketing strategy is how are you going to calculate whether this has been successful? What’s going to be the metric you use on a daily basis that says whether this has been a good day or a bad day, a good year or a bad year? I’m relating this to paid search in particular, because these are more complicated to calculate looking at SEO, for example.

Your main metrics are as follows:

• ROI: This is return on investment. It’s your revenue minus the cost of goods sold divided by the cost of the goods sold.
• ROA: This is the return on ad spend. That’s the revenue attributed to running ads divided by the cost of running the ads.
• CPA: This is the cost per action, or you may hear it called cost per acquisition, though the idea is broadly similar. This is calculated by taking the cost and dividing it by the number of pre-defined conversions, leads or orders.

The reason we’ve put pre-defined is that you may have a completely different idea depending on what you’re trying to do, of what your CPA is. For some people, that action is a click. For some people, it’s a newsletter subscription. For a lot of people, it will be a purchase of a product. But before you can calculate your CPA, you need to know what that action or acquisition means to you and to your business.

Estimating costs

So, with that in mind, we should be in a position to know how costs differ across these different areas. In the SEO world, we deal with two main areas. There are the technology costs and there are the personnel costs.

• SEO: SEO is heavier on the personnel costs than other areas. It’s very dependent on consultancy versus media spend or content creation or anything like that. So, that’s worth bearing in mind.
• Content marketing: We can split this into direct content creation costs, and then there’s the personnel costs. If we were to add another layer to that we would talk about content amplification. That content amplification could be achieved through the areas below.
• Paid search: We’re looking at media budgets, technology costs, because your bidding platform will charge you a fee alongside of what Google charges. And the account management costs.
• Display: This is largely similar. We’re looking at media budgets, tech costs and account management.
• Video: It’s also media budgets, tech costs and account management. What we should add to that, and that distinguishes it from display, but particularly from paid search, is that there’s a large creative element that will define success. And we’ll look at that a little bit later.