44% of CMOs reported midyear budget cuts in 2020 – so this will not be the normal marketing budget post that I can usually coast on – the world is changing in a hundred different ways, that all feel unprecedented.
This guide will touch on crazy new stats, how marketing managers are changing the way they spend their time, and things affecting marketing budgets in new ways. Keep reading for how you should take action – but first get the takeaways in this short video:
What are the big changes happening in marketing budgets now?
- COVID-19 has affected the economic outlook for many customers.
- Trade shows and other travel & networking opportunities are upended.
- Social unrest has decreased foot traffic for people in cities in some areas.
- Mid year budgets swung wildly because of how unexpected this was.
- Long content calendars look a bit silly seeing as how much mid year change happened in 2020.
- The digital/online part of marketing budgets is expected to be up from 42% in 2019 – to around 45% on average by 2020
- Video marketing is the fastest-growing category, which will be double what it was from 2016 to 2021.
- Social Media Ads will be growing (less rapidly) to hit 25% of digital marketing spending.
How much should you spend on marketing in 2021?
The U.S Small Business Administration suggests spending 7 to 8 percent on marketing, though if you have a ‘high cost of goods sold’ industry (like construction) 4 to 5 percent is more appropriate, and consumer packaged goods companies spend higher – in the 20 percent plus range.
How much of your marketing budget should go to digital marketing?
At least half of most small businesses budgets should go to digital marketing. This is because the traditional methods are often overpriced. They are still effective, and so savvy businesses owners and marketing managers look for deals, and cover the basics on traditional and then focus on SEO, PPC, Website, and Social as a way to garner attention in a world where people are looking at their smartphone 10x longer than they’re on the road and could see a billboard.
In a world where when a commercial comes on – we often immediately pull out our smart phone and start checking our notifications.
Go where the attention is – look for deals – be ahead of the trend, not waiting for your competitors to get basic human nature in 2021.
In many cases marketing budgets got slashed in 2020
44% of CMOs reported midyear budget cuts in 2020.
Many of us were optimistic the economic impact of COVID-19 would be short lived and spending would rebound quickly.
The Solution? Half the time – those marketing budgets were fluff anyway! Learn to do some of the BEST stuff yourself, get painfully clear on what actually drove sales. Then (like the Marie Condo of Marketing) cut out the rest, and simplify your life.
Think of the lower budget – as Minimalism for the Marketer’s Soul.
Long content plans etc, are often abandoned when stuff inevitably changes
The Solution? Marketing Flywheels – not long planning (they sometimes come off tone deaf) Really – what were we doing making plans out 3 months anyway. To me – these long planning cycles are a little optimistic and naive. You think something isn’t going to change what your tone should be? You think you won’t learn something about how to write that post by the time you get there?
Big changes to how people are using budgets
Because of all the upheaval – things have shifted. People have necessarily gone digital quicker than they thought they would.
1. Activating current customers / clients
No one will tell your company story better than a RAVING FAN.
Meaning – one ‘over the moon’ customer is better than 5 ‘They did a good job’s.’
The reason is – because you can tell that story through video, in testimonials all over your website, and in events where you incorporate those raving fans into them.
Activating current customers and clients goes beyond the video testimonial though, you can also create ‘network effects’ by making groups of customers who benefit from knowing each other, and a lot of times those ‘mastermind groups’ (especially if you’re B2B) are as valuable or more so than the services you offer!
Be a connector. Activate your best customers. Scale stories.
2. Retargeting / Bottom of funnel initiatives
The best marketing is the marketing that takes 10 SQL’s or ‘Sales Qualified Leads’ and makes them more likely to close.
How do you do that?
- You create videos for people who are in the sales process.
- You educate and challenge these people who are already in the sales process.
- You create testimonials and case studies that educate them on what you do further.
- You push these stories out there with remarketing, on Youtube, Facebook and Google’s Ad Network.
- You tighten up your messaging, and help them want to be part of an aspirational identity “People like us, do things like this”
3. Sales Enablement Efforts
Once again – we’re talking marketing here, but marketing borders on sales, and when the border between them goes away is where I think both do their best work.
We love sales enablement at Hook Agency – in fact, I encourage you to contact us now and go through our sales process just to experience what it’s like so you can take some of those valuable nuggets and incorporate them into your sales process.
Here are a few of the types of tools that we’re using to use ‘marketing know-how’ in a more ‘sales enablement’ oriented way:
- Autoresponders (Gravity Forms)
- A questionnaire (Gravity Forms multi-step forms)
- Automatic follow ups – 3-6-12 days out from contacting. (Mailchimp)
- Video intro calls (Google Meet or Zoom)
- A Dashboard with all of the relevant information on it (Salesreach)
- A video integrated in that ‘sales enablement’ dashboard (Salesreach)
- Texting videos during the sales process (iPhone)
- Mobile friendly multi-step proposals (BetterProposals)
Ultimately – my favorite part of our strong connection between sales and marketing is that we communicate…. A LOT.
- I just did a brainstorm with our sales person this morning and talked to him about all the different themes he could be talking about on Linkedin.
- He often shares with me the top questions prospects have and I make videos about them.
- Every week we review where the best prospects came from, and how we can increase effort on those avenues to get better results.
4. Internal marketing / employee engagement
To start a fire you don’t start one log up on this side of the campsite, and then go over to the other corner and light some newspaper on fire.
You take all of your ‘tinder’ (paper, small twigs, bark, leaves) and ‘kindling’ (small to medium sticks) and get them as close as possible to each other until you get a HOT FLAME. Then you start putting on bigger wood. To me – the bigger wood in marketing is the broader market, the kindling is your best customers, and the tinder is your EMPLOYEES.
You want those people to be enthusiastic about what you do, because that mission will spread if you get it into a fever pitch.
I love internal marketing and employee engagement and the emphasis on this part of marketing is growing – as people understand how important it is. But what are some ways you can do it?
- Measure team attitudes (OfficeVibe) and create a highly motivating environment
- Use core values on the wall, or mission in a fun way as part of the decor.
- Make sure your swag is ‘mission driven’ and be generous with it.
- Have clear core values that drive who you hire, fire and promote.
5. The continued growth of video – and “thinking of every company as a media company”
What is incredibly scarce in this day and age?
Because on one hand you have wild Trump tweeting, and on the other hand you have 30 second sexy Tik-tok videos.
Every day is like a Michael Bay movie on the internet (the director known for his over the top stunts, and explosions.)
To compete in what we call the ‘attention economy’ you have to learn how to put out entertaining video. You have to create value for your audience, not just promote yourself? How do you do that? You create a media company within your company.
It’s not enough to DO VIDEO. You have to learn to do it well, and participate in the culture and make it fun. Ideally – but it takes time to get there. So at least, just get started.
A Recap of the Shifts That Have Led to This Point
How should you create your digital marketing priorities?
I strongly suggest taking a good hard look at every piece of closed business you had in 2020 and where it came from. And as many touchpoints that influenced CLOSED BUSINESS in 2020, particularly if you’re a service business – and your main objective is getting more leads.
- Make a list of the top 10 avenues that brought in leads over the past year.
- Identify every client you currently have and what brought them in.
- Take the top 2-3 sources/influence points and concentrate your efforts around them and supporting them.
The way we do this is by having a list of current clients and by tracking the revenue, and each lead source – and by using Google docs to have a live list of existing business we have. This list gives clarity in an ongoing way and shows where we should be spending our time and budgets.
For us, it’s fairly simple:
- Referrals are our number one source of business. Being on boards, speaking, and putting out LinkedIn videos and social media stuff, as well as attending events and shooting videos, all increase referrals. Anything that supports creating more referrals and referral systems should be doubled down on in 2021.
- SEO is our number two, with 34.2% of our business coming from organic leads, content creation, backlinking, technical SEO, and website improvements that will increase the number of conversions. These things on our website should be heavily prioritized.
- Speaking and social media efforts are our 3rd and 4th priorities, with a combined 5%. Clearly these two feed referrals though, so as long as they are connected – they should be solidly continued and doubled down on.
Do this for yourself – find what has the highest rate of return, find out what’s supporting that rate, and use that to prioritize.
5 Quick Marketing Budget Graphs and Statistics
- 48% of companies are spending between 4-10% of their revenue on marketing – Source: Hook Agency
- 50%+ of companies say the highest return on investment activities are search-related – including paid search, SEO, and content marketing. Source: Hook Agency
- 44.4% of companies said that their top marketing objective was to increase lead generation. Source: Hook Agency
- 69.7% of people said they were spending less than half of their marketing budgets on digital/online marketing for 2020. Source: Hook Agency
- The average percentage of revenue that companies spend on marketing is 11.2%. Source: Brafton/Gardner C.M.O.
How are people in your industry prioritizing, and why?
Now, what if you haven’t tried certain methods – and other people in your industry are using those methods for themselves. Why do I suggest not to rush in fool-heartedly?
Just because your competitor is doing something, it doesn’t mean it’s working.
This can be colorfully illustrated if you’ve ever spent a year and 100k on something just to see that the rate of return is WAY TOO LOW to continue. Just as you and your company are making a wise decision to withdraw, you see your competitor blatantly copying you.
Why should you be looking for white space instead of copying your competitors?
The most important question in marketing is “Who is it for?” – once you answer that, it should make your prioritization a lot easier. Define three ideal customers and figure out where they are REALLY spending their time online. Work with construction companies? They are probably not on LinkedIn all the time, let alone Facebook. They are at events, they are at home shows, they might be on Facebook and Instagram – a bit, but not much. High-end homeowners? They are on Facebook, Instagram, Linkedin, events, tradeshows, and talking to each other – networking.
Once you get “Who is it for?” down to a T – you’ll want to find where the WHITE SPACE is within that market.
Meaning – you’ll want to figure out where your COMPETITORS AREN’T.
Where is the attention, but competitors aren’t going after it? Often it’s a place that’s hard to reach – but it’s definitely worth looking. Are the eyeballs on HGTV, but your competitors don’t want to understand T.V. advertising? Are they on Facebook – but your competitor doesn’t understand digital? Are they at micro-niched conventions or events?
We see this all the time in search engine optimization because Houzz is going after our construction company and home services niches, but they don’t have the manpower to market to very specific neighborhoods – so the WHITE SPACE – is in neighborhoods, cities, and super-niched content to grab these ideal customers attention with super-targeted content.
White space identification + “Who is it for?” will significantly help you prioritize your 2020 Marketing Spend.
Now that you know “who it’s for” – what marketing activities should you spend on for 2021?
The first 3 things on this list we do very little of, and I hope you understand I don’t take that very lightly. Obviously I’d love to come out here and tell you all 5 of the top things you should do for 2020 are OUR services – but I also think you should take these more seriously since we don’t do them all.
1. A beautiful brand video that tells the story of your ideal customers
The first week we put out our “brand video,” we got 21 marketing qualified leads. Yes, it was smack dab in the middle of the upsurge that happens with people doing marketing planning in the fall, and yes, we have 4000 people on our website a day, but this is 2-3 times more than we normally get. We put our brand-focused video ALL over our website right before this happened. Coincidence? Probably not.
- Make sure the video makes your ideal customers look super awesome.
- Make it about them, not you.
- Make a 3-minute version and a 1-minute version.
- Put it all over your website in key areas where someone would be most likely to interact with it on all of the major pages and blog pages.
- Plan to spend money on Youtube, Facebook, and Linkedin to get the video out AT LEAST to remarket to people that were on your site in the past month.
2. Ongoing content marketing videos that let your subject matter experts entertain and educate
We get an average of 1000 views every video we put out – maybe you’d guess from YouTube? Nope.
Most of our views come from Linkedin, surprisingly.
- Find out where your ideal customers are and try to master the format there.
- Experiment with entertaining content as well – not just educational.
- Involve your team, and let other people create videos that you believe your ideal customers would enjoy.
3. Systems around putting out video regularly, cutting it up, subtitling it, social listening and turning into blogs
The actual format of your videos matter.
- Don’t expect people to just dive right into the first video you put out – think of every video you put out as practice and plan to practice a LONG TIME before you get ‘into the big leagues.’
- The big-leagues would be whatever your final goal for your videos will be. For instance, 1000 Youtube subscribers, 5000 views per Linkedin video, or making your company WORLD-FAMOUS. Whatever it happens to be – practice intentionally to get there, and get 1% better every time.
- Use subtitles under your video, and maybe a spicy title on top – square videos often get more eyeballs because they take up more screen real estate.
- Video is a powerful first piece of content, that can be then turned into podcasts, smaller videos for social, blog posts, infographics, and quotes for social. Make a goal never to create a piece of content that’s only O.N.E. piece of content – try to make every ‘pillar’ piece of content – at least a total of 3 pieces of content.
4. All kinds of targeting, experimentation, and promotion effort around your best content. Upgrading your content – download, and paid ads for ‘content upgrades’
As I mentioned, you should be putting budget towards distribution if you’re making great videos.
We predicted that 2020 will be the year of the ‘Content Upgrade’ – and there are two types:
Type 1 Content Upgrade: You should always be refreshing your best content, yearly if not more often. Use shorter, easier to remember ‘permalinks’ so that you can get links back to a post, and continually make that post better. Stop abandoning your old posts and starting over entirely – Google loves mature, upgraded content.
Type 2 Content Upgrade: You can also find creative ways to offer ‘content upgrades’ – in the sense that you can offer a bigger, better version of what they just read – in a downloadable format by providing their email address. For instance, on our site, after people read ‘5 ways to change their website based on Google Analytics – you’re invited to download 10 ways in a PDF. Or after doing a basics guide for “what you do” – you might offer a checklist.
5. Paid search ads – paid pre-roll video on YouTube, heavy remarketing on Facebook
Certainly not revolutionary here – but paid search is still one of the top highest ‘perceived R.O.I.’ for marketers’ marketing spends.
So, of course – look at the data and find what’s been working for your company to create ‘marketing qualified leads’ and double down there. The crucial reason not to ONLY look there is that there are some things you might not have done yet – and you can’t double down on what you haven’t done before.
Video might be confusing as a point of emphasis here because it’s been around for businesses to participate in for 15 years. So, why am I so passionate about it now?
Simply because the tools are available to do it WELL – and to actually provide a lot of value. And, it’s fun. But you’d have to hang out with me sometime to really hear the nuts and bolts of why I’m so gung-ho on video, what do you say – grab coffee sometime? 🙂
What does all this mean for you?
Whatever your budget – focus on marketing that is native, meaning it doesn’t interrupt people’s lives – and is genuinely useful.
This doesn’t mean you can’t promote your content, or put serious ad budget towards your content – but making that content intentional about adding value first and foremost. Whether this is with your T.V. commercials, printed materials, or with Content marketing and SEO, this should be the guiding principle.
What should you spend on a website?
Of course, if you’re just starting your business – you should probably choose a do-it-yourself builder like Squarespace or a pre-packaged WordPress theme.
If you’ve been in business longer and have over 100-200k in revenues, it’s probably time to find an inexpensive, but professional provider. Perhaps 5-10k.
If you make over 500k, you will want to spend at least 10k on a website, but it doesn’t need to be a lot more than that if you make 2-10 million. (10-20k).
Once you start getting into the 10 million and up the range, you should really consider your website as a serious investment that you should not only spend at least 20k on but something where you have internal people focused on the ongoing success of that website as well.
Creating an effective website is really a matter of making ongoing changes to a solid initial structure and design.
What should you spend on P.P.C.?
Before you spend 10k a month on P.P.C. – consider trying to spend a few thousand dollars in tests and moving the money back and forth between tactics to try to find something that produces results.
It’s like a metal detector – you wouldn’t start digging in if it’s not beeping. If your test of ads starts converting real leads and sales, the degree and frequency to which the test is beeping is your indication of whether you should dig in or not.
When it comes to using P.P.C. to generate leads – it’s crucial there is a strong component of lead qualification in your team when you’re doing tests. Make sure there’s the communication of what percentage of the leads are closing, otherwise in the metal detector analogy all you’ve got is an old rusty wagon.
Whether you should spend 50% of your digital marketing budget on paid ads, or 10% depends on your business model and tests you implement in step one.
SEO is pure magic for some industries and a waste of time for others. For instance, I had a client who didn’t have very many competitors – and was already dominating on his local market for the terms he wanted to go after (1st or 2nd for every term.)
In this case, it made more sense to get in front of more people with 70k yearly in Facebook ads instead, using videos and nicely curated photos that pushed the current promotion or the exciting aspects of their business, so that people were more likely to interact.
What should you spend on email marketing?
Email marketing is highly effective when done properly, and a total flop when squandered.
Emails are getting opened less these days, and not everyone has done the intensive legwork to curate a list.
“Production of an individual email can cost anywhere from $300 to $10k or more depending on email complexity, dynamic elements, number of content areas, number of links, originality of artwork, templates, segmentation, testing, and so on,” according to Trendline Interactive. Trendline charges 10-100k for projects, and 20k per month and up for recurring monthly retainers.
What should you spend on social media marketing?
Social media marketing is awesome, but many companies should do this in-house – perhaps with an administrative assistant, themselves if they are a sole proprietor – or a recent college grad with a passion for marketing.
The key is to stay regular and consistent and learn some of the things that work best at getting attention to videos of a process, photos of culture, and guides and resources created to drive traffic. So if you’re a medium-sized company perhaps 35k for a recent college grad, or if you’re a smaller company – 10k as part of an admin’s salary allocated for that purpose.
What should you spend on SEO?
For many B2B businesses, they’d rather BUILD something of substance that can serve them for the foreseeable future – in the form of their website, and the organic reach of that website with SEO.
I think companies that spend heavily on this see a substantial return and depending on their industry; this can be the primary digital marketing effort. Spend anywhere from $1,500 – $5000 to get serious results, and learn about SEO yourself, to make sure you’re working with the right partner.
Real SEO specialists are few and far between – so don’t think you can just hire this internally and see the same type of return. The benefit of hiring an agency is that they are consistently learning and growing with the types of clients and the kinds of experiments they get to do with it as a full-time pursuit.
If you can find someone who’s serious about SEO and passionate about driving quantifiable results – and your company can afford to hire them, do it now.
Commonly Asked Questions About Digital Marketing Budgets:
How much do companies spend on digital marketing?
It’s becoming more and more common for companies to spend 50% or above 50% of their total marketing budget on digital marketing in particular. Total marketing budgets usually fall within 5 to 15% of total revenue according to several industry-specific surveys (lower for the high cost of goods companies like construction or manufacturing, and higher for services and tech.) So a quick snapshot of a company making 3 million dollars and spending the average – they might spend 300k on marketing – half of that could be print, events, vehicle wraps, and trade shows and the other half could be search engine optimization, Google paid ads, social media, and email automation.
How do you allocate a budget for digital marketing?
Start with the things that have paid your company back significantly in the past by looking at where your current best customers come from. Then double down on the approaches that work. If you’re somewhat new to marketing, look at competitors – but mostly look where the ATTENTION of ideal customers is. Find the events, websites, and social sites where they spend their time – and push your efforts into that first.
What does digital marketing include?
Search Engine Optimization, Paid Search Ads on Google, Ad networks on other sites, Facebook ads and social media marketing in general, email newsletters and automation, content marketing + video marketing, as well as any website partnerships you could all fall into digital marketing. Other avenues within digital marketing may be lesser-known – but the key is finding where the attention is, and where people are actually searching for what you offer and making your company as visible as possible there. This is why so many small businesses work with a digital marketing agency like us, Hook Agency, to increase their professional visibility online. Send us a message now for a free consultation.