At Saturate, one of our most common queries is: ‘How much is digital marketing?’ While there isn’t a generic response, your marketing budget depends on several factors such as your business size, sector and objectives.
That’s why we’ve developed our Budget Calculator. Simply enter some basic information about your business, and we’ll do the rest.
With an annual survey among chief marketing officers revealing that 9.1% of employers’ revenue was allocated to marketing in 2023, the importance of a marketing budget cannot be overstated. But let’s discuss the key reasons for having this crucial budget in the first place:
Calculating your marketing budget requires a thorough understanding of your business’s financial data, overall growth and marketing objectives.
We’ve laid out some metrics that will help you to determine this:
Further metrics that can help you discern how much you can afford to invest are your current customer annual value, average client tenure and customer acquisition cost. This will give you a sense of a customer’s value, as well as how long it may take you to recoup your initial investment.
Establishing marketing objectives depends on the above metrics. After all, you’re attempting to determine the cost of achieving your goals.
For instance, if you require an additional 21 customers and it costs you £3000 to acquire a customer that pays you £18,000 per year, you must plan to spend £63,000 over the next year to acquire those additional customers.
You also know that if you achieve these goals, you’ll add £378,000 in revenue to the company from just £63,000 in spend. When viewed as an investment in company growth, that £63,000 (or £5,250 per month) isn’t such a hefty expense.
The example above demonstrates that you must understand your company’s figures. Without knowing the worth of a customer to your business, you’ll either over or underspend, resulting in not reaching your growth objectives.
To invest your entire budget into a single marketing channel is a fatal error. There are no facile methods when it comes to generating leads, so you shouldn’t expect them to come from just one place.
It’s critical to have a mix of methods to engage your target audience in various ways. Your budget should be divvied among the channels that are optimal for your business and allow you achieve your marketing objectives effectively. A good rule of thumb is to allocate half of your marketing budget to staple channels and the other 50% to new channels or experiments.
Some of the most popular marketing channels include:
Finally, keep in mind that the performance of marketing channels can fluctuate: as a marketing channel becomes more popular, it’s likely to become more competitive. So, you’ll need to continually adjust your marketing mix and budget to ensure that you’re deploying your resources to the highest-performing channels.
As previously mentioned, we’ve developed a Budget Calculator to help you with all of the above. Simply provide us with some basic details about your business, and we’ll provide you with benchmarks based on industry standards, enabling you to make informed decisions about where to invest your marketing pounds.
Remember that your competitors are also investing in marketing, and they may be spending more than you. So, it’s essential to have realistic expectations and allocate your marketing budget sensibly.
Don’t forget that having a budget is only the first step in achieving your marketing goals. You must regularly monitor your progress, adjust your marketing mix and invest in multiple channels to reach your audience effectively.
Saturate can help you to navigate the complex world of digital marketing and allow you to develop a strategy that works for your business. Contact us today to learn more about our services and how we can help you achieve your fiscal objectives.