As a digital marketing firm, we are constantly asked about the right budget for digital marketing from agency clients, franchise corporations, and small business owners alike.

How Much Marketing Budget Is Right?

There are a few standard business answers that companies give out, but we’ve learned as digital marketing consultants, there are very few standard business answers. While most companies budget around 5-15% of their gross revenue for marketing efforts, that rule of thumb doesn’t specify how your budget should be allocated across the different marketing channels that are available today.

How much should go toward traditional marketing? How much of your budget should be spent on digital marketing? We’ve learned that the answers to these questions depend on the answers you give to a few other questions. Like most questions in business, there’s a simple formula, but that formula requires some additional information and a bit of customization to make it work for your business.

What Type of Business Are You In?

The first thing we’ve noticed is that the division of your budget across marketing channels is most dependent on the type of business you’re in and who you’re selling to. For example, if you’re a manufacturing company selling to other businesses, social media will be one of your least beneficial marketing channels, while highly-targeted online ads might be one of your best. In contrast, if you’re a consumer-focused eCommerce business, you may live or die by your ability to manage and market to an active social media community.

Who Are Your Customers?

The second thing we recognized is that the audience you’re targeting usually falls into one or another specific usage profiles defined by the group’s preferred marketing channels. So if you were targeting buyers for a sophisticated, luxury tech product, you would use blog posts, social media ads, and a monthly email campaign to find, collect, and stay in front of your tech-savvy consumer.

For a brick-and-mortar store selling specialized products to a young niche audience, your channels would include local SEO for mobile location-based searches, along with remarketing traffic from your website with ads across social media and display ad networks. And from these examples, you see that we also know that your audience needs to receive your messaging across more than one of their preferred channels in effective doses of the appropriate reach and frequency.

Calculating Your Digital Marketing Budget

We set out to incorporate all of these learnings into a simple tool that works with established guidelines and best practices from the countless advertising budgets we’ve helped prepare over the years.

Digital Marketing Calculator by Leadgenix

This easy-to-use calculator we designed takes into account your answers to three basic marketing questions in order to suggest a reasonable allocation of your digital marketing budget across the four most important and most common digital marketing channels: search engine optimization, pay-per-click advertising, social media marketing, and content marketing.

Simply answer the questions and adjust your budget and goals to get a recommended digital marketing budget that fits your organization. Then, share this tool or even embed the whole calculator onto your own site to help others calculate an appropriate digital marketing budget for their business.

Jamie Bates