How Much Should You Be Spending On Digital Marketing?

Estimated reading time: 4 mins

I don’t need to tell you that digital marketing needs to be a central part of your marketing campaign. Everybody knows that they need one, but where people often get confused is when deciding how much they should be spending on their digital marketing. Lots of new business owners make the mistake of thinking that it’s a cheaper alternative to traditional marketing formats. It doesn’t cost anything to post on Twitter and Facebook so your costs should be almost zero, right? Posting a few things on Twitter and Facebook every couple of days isn’t a cohesive marketing campaign and it won’t help you properly grow a business. There are many different branches of digital marketing and you need a professional to coordinate a campaign that uses all of them in unison to create a properly thought out marketing campaign. This is going to cost money, but how much exactly should you be spending?


What is your product range?

The amount of resources that you need to put into your digital marketing strategy is dependent in part on the amount of products that you are marketing. If it’s just one, you can create a more focused strategy and it shouldn’t cost you as much. If you’re marketing multiple products, you can’t set up a few different campaigns and run them side by side. You need to create a cohesive campaign that builds a recognizable brand around your products, and this is going to be more extensive, and costly.

How Big Are You?

Another factor that you should take into consideration is the size of your business. If you are just starting out, you need to keep costs low and just focus on the core elements of a digital marketing campaign. Think about things like web design cost and a limited social media campaign, but don’t overstretch yourself.

However, if your business is already established you should be able to afford to put more into your digital marketing. When you’re looking to grow, a large digital marketing surge is the best way to do it. You’re trying to move up to the next level and the competitors that you find there will have much larger budgets than you, so you need to try to compete with them if you ever stand a chance of beating them in the marketplace.

What Are Your Competitors Doing?

Your current standing in the digital marketing race should give you an indication of the amount you need to spend on it. If you are leading the pack, then you don’t need to make any big, expensive moves. All you need to do is maintain the campaign that you’ve already got. It’s only when they start overtaking you, that’s when you need to start spending more money on it. If your digital marketing campaign isn’t on par with your rivals, you won’t match them in sales. When you’re falling behind, start diverting some more of your funds towards your digital marketing campaign.

The 10% Rule

As a general guide, marketing experts have said that you should be spending around 10% of your annual revenue on your digital marketing campaign. That rule is a bit outdated these days, and the real figure should be closer to double that for more established companies. Business owners that are just starting out are better sticking to the original figure until sales start increasing.

How Should You Split It?

Social media marketing is the most effective tool, but it’s also pretty inexpensive. You should be spending a good amount of money on a professional to manage it for you, but it doesn’t need to be the most expensive aspect.

Search engine optimization is the most important way to drive traffic to your website and if you want to get it right, you need to hire somebody or outsource to a company. Without a good SEO campaign, potential customers won’t be able to find your site when they’re searching for businesses online. For that reason, the majority of your digital marketing budget should be spent on search engine optimization.

The benefits of pay per click are disputed amongst marketing gurus. They do generate sales, but not at a very high rate. It can be a costly way of marketing if you focus on it too heavily. The best thing to do is put a small amount of money into it and see what kind of a return you get on it. If you find that it’s working, then consider increasing the amount you spend on it.

There is no one rule on how you should split your budget. The main thing to do is always monitor the effectiveness of different areas and adjust spending accordingly.

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