Knowing how to allocate your marketing budget efficiently is one of the toughest parts of being a marketing director. The percentage allocations that you make will have a significant impact on the overall success of your marketing that year, perhaps even more so than the tactics that you use for each channel. After all, if you dedicate a large percentage to a dying channel when you could have utilized another, you are throwing away potential profit and therefore cash.
Every single company is different, and this makes it difficult to give you a precise breakdown of how you should split your marketing budget. However, we can look at the industry and national averages and compare that to the success of these companies to get an idea of what the best choice is. But at the end of the day, it’s important for you to consider your position in the market as well as what your competitors are doing before you decide.
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How Much is Your Marketing Budget?
Another important factor to consider is the size of your marketing budget. With ten million dollars you might be able to spread your budget across a variety of different channels, while with only a thousand dollars it might be wiser to dedicate it all to a single marketing opportunity. For this reason, we’ll presume that you have a sizable budget to work with.
With a much smaller budget, you will almost certainly benefit from sticking to a single channel like SEO. Digital marketing is far more affordable and therefore the clear choice for smaller companies, and by putting your entire budget into this one method, you can maximize your impact. On the other hand, businesses with larger budgets will often see greater returns by spreading their cash around different channels.
Breaking Down the Average Percentages of Marketing Budget
In 2018 the average company in the United States allocated 41% of their marketing budget to online channels. The same study suggests that this is likely to grow to 45% by 2020 or earlier. Within online you have search engine marketing, PPC advertising, social media, online video, and other methods.
On the other hand, print, radio, and television were all expected to have a reduction in average investment over the same period. By 2020 only 32.9% of all ad spend will be on television, 11.1% on print and 6.1% on radio. In comparison, digital is expected to represent 44.9%, more than TV and print combined.
As you might imagine, more and more marketing departments are choosing to spend their budget online rather than in the physical world. This fact isn’t surprising to any marketing veteran as this trend has been happening over the past decade and is likely to accelerate rather than halt.
For small and medium-sized companies, TV, radio and print advertising is often cost prohibitive, and if it’s not, it’s very hard to measure its impact. For this reason, budget-conscious companies typically choose to use online marketing because they can have greater control over their spending, and can more easily see if there is a positive return on their investment.
As a larger category, online marketing consists of a variety of different methods, and for this reason, the statistics can be hard to follow. After all, social media, online video, PPC and posting on forums will all come under online marketing. Regardless, if you learn anything from this trend, it should be that you need to be increasing your spend on online marketing. More and more people are becoming connected to the internet each day, and as a result, the benefit of advertising online is likely to grow.
Search Engine Marketing
Two of the world’s most popular websites are search engines, YouTube and Google. Both of these can be optimized for so that your website ranks higher in the results pages and brings more traffic to your site. XYZ, the mother company of Google, is one of the largest corporations on the planet and therefore it’s a fair assumption that Google will be a prominent player for the coming decades.
Investing in SEO and SEM can generate a fantastic ROI, particularly for companies that allow sales to happen online, whether through online booking or via an eCommerce store. But even for local service companies, SEO is an affordable way to acquire more traffic month after month by beating your competitors using a 21st-century marketing technique.
For businesses that operate locally, PPC advertising will often represent the bulk of your ad spend. For these companies, SEO is best paired with a healthy dose of Google AdWords, Facebook ads and even banner purchases. PPC is ideal because it’s easy to measure and therefore you can guarantee a positive ROI once you have an existing campaign.
Companies with larger marketing budgets shouldn’t overlook traditional media options. While digital marketing is the new company on the block with shiny new options, the cost of traditional media advertising has plummeted in recent years as advertisers move to digital alternatives. As a result, radio and print ads are becoming more accessible than in recent years.
With a sizable marketing budget traditional media can give you excellent reach, and while it’s not as easy to track as online methods, with traditional media, you can use a shotgun approach. For this reason, it’s often not ideal for companies that need to be careful with every dollar; it’s best for huge firms that are looking for brand awareness rather than a direct, or short-term ROI.