What does a marketing budget include?
What we need to decide at the beginning is what is included in the marketing budget, to determine the required expenses. It is true that every situation is different. However, most digital marketing strategies contain the costs of various promotional activities in the omnipresent Internet space:
- social media — Facebook, Instagram, TikTok,
- Google SEO optimization,
- PPC campaign — Google Ads, Microsoft Ads, Facebook Ads,
- Content strategy and content marketing.
The easiest way for companies is to hire specialists or a digital marketing agency. They will use their extensive experience and knowledge in the field of digital marketing to achieve the best results and gain as many new leads as possible for you. Anyone can try their hand in this field, but your business cannot wait, and such specialists in digital marketing are ready with solutions and strategies.
Remember that funding for advertising your business should be based on your overall business goals and objectives, as well as available resources.
How much should a company spend on digital marketing, and what is the optimal digital marketing spend for maximum ROI?
The amount you will need to spend on promotion depends on several important factors. Including the size of the company, type of industry, target group, market size, offer, or even current trends.
One common approach to determining marketing finance is to allocate a percentage of the company’s revenue to advertising fees. Therefore, it is believed that the average B2B marketing budget should be between 2% and 5% of revenue. On the other hand, B2C companies have a slightly higher percentage, ranging from 5% to 10%. This is due to greater investment in advertising channels that allow you to reach different target groups and wider audiences. In the e-commerce sector, companies invest up to 20% of their proceeds to acquire new customers.
In addition, it is worth considering the average ROI on marketing spend. It is essential to calculate how much you can earn by investing in this area. To do this, decide which distribution channels will be most appropriate for your business model and your niche.
The budget for promotion should be, above all, measurable and well-used. Therefore, the fees associated with the promotion must translate into increased sales. It is worth thinking carefully about the company’s advertising strategy and donating the right amount for its implementation. Every cent spent needs to work towards your benefit.
Marketing budget calculation methods
Taking your first steps in business or wanting to reach more customers raises the question of how much should the company spend on marketing? There are many considerations to be made when calculating advertising costs and the use of different methods, such as:
- Comparative — it is a comparison of marketing costs in the industry and determining the most common of them in relation to revenue. This makes it easier to determine how much to spend on this department.
- Objectives and tasks — setting promotional goals and determining the fees that are needed for this.
- Competitive — examining the expenses of the competition and adjusting the budget of your own activity.
- Tool — using tools that provide data about recipients and their interests. In this way, it is easier and more effective to create a digital marketing campaign based on the information obtained. This, in turn, increases the reach and more traffic, e.g., on the website.
- Result — is determined on the basis of a percentage share of sales. Then several other indicators are important, such as: the number of sales planned for a given period, the average revenue from each transaction, the percentage of advertising contributions. The total can be calculated using the formula in which all these charges have to be multiplied. The amount obtained in this way determines the amount of funds that can be spent on promotion.
Whichever method is used, it is essential that businesses regularly evaluate the effectiveness of their marketing strategies and adjust their funding accordingly. What works for a smaller company might not necessarily be best for one with greater reach.
Clickmagic — digital marketing support for companies
Investing in advertising is an incredible opportunity because it can bring long-term benefits in the form of increased brand awareness, customer loyalty and revenue growth. In particular, enterprises should be wary of overspending on marketing and ensure that the activities selected and conducted are in line with their overall business strategy.
If you are looking for a solution in the field of digital marketing, take advantage of the experience of professionals — choose social media marketing agency Clickmagic.
If you have any questions or concerns about this — please contact us. We will explain how to achieve your goals. We will guide you step by step through the entire campaign and take care of online promotion of your company. Furthermore, we know you should be proud of your company, now show it to others.