Digital marketing is more popular than ever. As a result, corresponding budget allocations are increasing, leaving marketers scrambling to keep up.
Digital marketing spend increased nearly 16% from 2020 to 2021, making it the top priority among advertisers and marketers alike, a recent CMO Survey found.
That shouldn't come as a surprise to any marketing professional who has watched digital marketing shift from an expense to an asset over the years.
After all, digital marketing is so much more than just advertising a product. Digital marketing involves employer branding, building digital authority, and establishing an online corporate brand reputation and presence. Accordingly, this type of marketing is getting the credit it deserves.
When done well, it's a top-line driver of increased revenue streams.
Still, it can be difficult to figure out how much of a marketing budget you should earmark toward digital marketing campaign initiatives, as well as what your overall execution should be. Pervasive B2B digital marketing misconceptions can make the process even harder.
Common Misunderstandings About B2B Digital Marketing Campaigns
When thinking about how to budget for digital marketing in a B2B environment, you need to avoid some of the most widely held misunderstandings about digital marketing.
The biggest mistake is believing that you can spend your way to success.
Although you do need to spend money on digital marketing campaigns to make them effective, you can't keep all your eggs in one basket and expect to see returns. You have to invest in the right areas, such as digital marketing infrastructure. Implementing proper business planning, projections, data dashboards, and expectations will make success more likely.
Unfortunately, too few marketers concern themselves with developing realistic projections and goals to help them dominate the market in the next 1-10 years. Instead, marketers tend to just spend what they have without a plan for success in place.
In fact, many B2B digital marketing campaigns fail as a consequence of basic lack of planning. Case in point: A PPC practitioner may think a 1:3 return on advertising spend (ROAS) ratio is fantastic. Fair enough, but if the company's cost of goods sold (COGS) is 70%, the company will still lose money on every sale, despite the ROAS.
The same principle holds true even if marketers don't take into consideration customer LTV impact, return rates, and retention rates. It's impossible to see a positive ROI if your business constantly has to acquire new customers. You just end up spending a lot on digital marketing without having the data or feedback loops in place to create a smarter budget.
Working Toward a Smarter Digital Marketing Budget
So, what's the secret to constructing a sophisticated, airtight digital marketing budget that's justifiable and sensible?
The first step is to understand all the digital marketing advancements available. That way, it's easier to figure out which ones you want to use for each campaign. Choosing the right tools will help guide your budgeting because you'll know what each one costs to use.
For instance, AI-fueled software is allowing marketers from even smaller companies to remain competitive. The software may be expensive up front, as many businesses spend tens of thousands monthly for best-in-class tools. However, successful marketers know that those tools will make a significant impact rapidly. Thus, the investment makes sense even though it comes with a hefty price.
Another advancement in the digital marketing space is the ability to use data more efficiently. If you can collect and parse your data more reliably, then you can more accurately predict your plans and modeling. AI plays a role here, too. For example, if you feed Google enough data and then show it the targets and ROI you want to hit based on small-scale experiments you've done already, Google's AI-based algorithms will do the rest.
As a result, you can enjoy the advantage of receiving automated CPA targets, allowing you to be both innovative and strategic.
Three Steps to Developing Your Digital Marketing Campaign Budgets
You have short-term and long-term digital marketing plans in place. You know the latest developments in the digital marketing world. Now, it's time to apply some final concepts to help you budget wisely for your next campaign.
1. Name your growth goals
Maybe you want to add $1 million in sales to your company within 12 months. Keeping that goal in sight, you need to figure out how much to set aside for your digital marketing costs.
A good rule of thumb for B2B marketing campaigns is to budget about 10-20% of the revenue you hope to glean. So, in this scenario, you would expect to spend between $100,000 and $200,000 on your marketing efforts to get a 5-10X ROAS.
2. Enhance your digital marketing infrastructure
While keeping your general dollar figure in mind, you have to make sure you steward your money properly. In other words, you need to allocate your money appropriately throughout your campaigns and projects. Otherwise, you may run out of cash before you get close to meeting your goals.
Having a strong digital marketing infrastructure that includes a live, data-backed feedback loop keeps you in proactive rather than reactive mode. When you're looped in live, you don't have to wait for monthly profit and loss reports to pivot. You can play the long game while focusing on the minute as well.
3. Track the right metrics
The only way to find your brand's unfair advantage and double-down on your strengths while staying within your budget is by tracking the right metrics.
LTV is a top one to measure, particularly if you're working with a multiattribution model. Customer acquisition cost is an important item to measure, too.
Bottom line: Make sure you're not getting sidetracked by vanity metrics that look exciting but aren't giving you any insights into how to improve your ROI. You want to optimize your digital marketing spend above all else, not fall into the trap of heralding metrics that don't move the needle toward your revenue goals.
* * *
As the saying goes, you need to spend money to make money. But in digital marketing spending, the cash flow has to be tactical.
By thinking more critically about your goals, revamping your infrastructure, and monitoring your data, you can ensure that your pennies go to the right place and your digital marketing campaign returns significant results.
More Resources on How to Budget for Marketing Campaigns
Know someone who would enjoy it too? Share with your friends, free of charge, no sign up required! Simply share this link, and they will get instant access…
You may like these other MarketingProfs articles related to Marketing Management:
- The Top Challenges Companies Face in ESG Reporting
- Empowering Sales Success—The Role of Marketing in Sales Enablement: Owen Richards on Marketing Smarts [Podcast]
- Marketing Has a Data Problem, and Here's What Can Fix It
- How to Attract and Retain Top B2B Marketing Talent
- How Employers' Political Stances Affect Recruiting and Retention
- What Remote Workers Do While on the Clock [Infographic]