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Where and How to Spend your Digital Marketing Budget

Contributors: Chandala Takalkar
Published: August 14, 2018

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How to decide on your Digital Marketing Budget when it comes to spending on different platforms

Advertising and boosting social posts has become an important part of many business’ marketing strategies.
But for those with little experience of managing digital marketing budgets and running campaigns, it can be difficult to judge exactly how much you should be investing into social media advertising.
There are various things you should be considering when setting your budget if you want to get the best return on investment and boost your sales effectively.

Social Media Marketing 

Social platforms bring the promise of an enormous engaged base, with 14.64% of all Indians having a social profile out of the 375 million using internet. This density of users leads to an oversaturation of content.
Social media platforms use algorithms to provide consumers with a better experience by de-cluttering the massive amount of content, highlighting topics and information that is deemed most “relevant” to each user.
Based on announcement by Facebook in recent years, business posts would be displayed less often in user news feeds compared to friends’ posts.

Today, only 2-3% of posts created by businesses are shown to their fans, a trend that is guaranteed to remain as Facebook has warned the organic reach of posts will eventually decline to 0%.

Marketers can no longer rely on creating engaging, relevant posts that will be automatically fed into followers’ timelines, but must rely instead on paid campaigns. As Facebook, Twitter, Instagram and other social media channels expand on these practices, the need for well planned, well executed and well targeted paid social campaigns will become increasingly necessary.
If we look at the latest trends of 2017, Telegraph UK quoted that, the average internet user spends nearly two hours browsing social media networks daily. As more and more research is conducted online by consumers, the product reviews, shared by the users usually guide the potential buyers while making their purchase decisions.
A recent study by Deloitte pointed out that, customers acquired through word-of-mouth (such as influencer marketing) are retained at a 37% higher rate than those acquired through other means). Such is the influence of social media in the lives of consumer.

Content Marketing

Content for any digital marketing strategy is the most important parameter for its success.
The most successful brands usually give their complete credit to the content which they host through various social media platforms.
A research by CMI, says that, 85% of the successful marketers deliver content consistently. So the consistency of bringing out new content to engage the customer is of paramount importance.
Content marketing is not a one off activity which can be done for a month and forgotten.
Consumers have a very short attention span as the internet is flooded with content being bombarded on them through all available mediums and channels.
So it goes without saying that, the company must be able to adapt and adjust their content marketing strategy as per the needs and wants of the consumers and also their competition.


Companies are now allocating just as much of their ad budgets to digital and mobile advertising as they do television ads. That’s the recent finding from a new Accenture report, “The Future of Digital Marketing: Overcoming the Challenges to Higher ROI and Revenues.”

The report indicates that advertisers now spend 41% of their budgets on digital and mobile, which is about the same as they spend on TV ads. Print advertising is significantly lower at 10%. The share of ad budget for all other types of advertising combined is 12%, Accenture finds.

Ad spending will likely continue to shift to digital over time. Nearly all respondents in the study said they expect digital advertising to comprise more than 50% of their total digital marketing budget within the next two years. Some said that digital could account for as much as 60% of their digital marketing budgets.

The move toward digital is driven by a few factors. The biggest reason, according the report, is the lure of greater returns. Ad buyers polled say they believe that the convergence of digital and traditional marketing, and the large amounts of data that are available, will help them target an audience with even more accuracy. Respondents said that doing so will lead to greater returns on their ad investments.

Those who sell ads had similar reasons for making the digital shift. According to the report, sellers think convergence and data will help them maximize the use of inventory, boosting revenues as a result.

Moving on…

Moving on from the statistics and all the facts available and the reports published, every business has a question.

How to plan for a digital marketing budget and which are the best practices?

Well the answer to this question cannot be justified in one sentence. It is usually employing a multipronged strategy to utilize the digital marketing budget in gaining maximum screen on time and also engaging customers, so on and so forth.
Things always does not depend on which social media platform to use and which one will provide maximum eyeballs.
Marketing department of any company must focus on how they can extract maximum value from a given customer throughout their engagement. Because after all, the shenanigans are done so as to gain profit and in turn provide the customer more value.
The concept of customer lifetime value is so alluring and also being adopted by many industries. Customer Lifetime Value or CLV as it is called is being extensively studied by researchers and academicians, but finds it practical implementation in almost all type of industries.

Customer Lifetime Value (CLTV)

For CEOs, CMOs, managers and marketers alike, the power to calculate what customers might be worth is alluring. That’s what makes customer lifetime value (CLV) so popular in so many industries. CLV brings both quantitative rigor and long-term perspective to customer acquisition and relationships.
“Rather than thinking about how you can acquire a lot of customers and how cheaply you can do so,” one marketing guide observes, “CLV helps you think about how to optimize your acquisition spending for maximum value rather than minimum cost.”
By imposing economic discipline, ruthlessly prioritizing segmentation, retention, and monetization, the metric assures future customer profitability is top of mind.
To provide a basic perspective on the use of CLV you can refer to the calculator provided in the link below. It will provide you a perspective on how to maximize the earnings per customer.

CLV Calculator

So by now, you must have tried by yourself and seen the potential in retaining a single customer and getting repeat business from him/her.
Some seasoned entrepreneurs may say “break even” or some other number is the most important metric, but I believe “lifetime value” is perhaps the most significant measure to benchmark. I also know it’s one of the most overlooked and least understood metrics in business — even though it’s one of the easiest to figure out.
Why is this particular number so important? Mainly because it will give you an idea of how much repeat business you can expect from a particular customer, which in turn will help you decide how much you’re willing to spend to “buy” that customer for your business.
Once you know how frequently a customer buys and how much he or she spends, you will better understand how to allocate your resources in terms of customer retention programs and other services you’ll need to keep your customers — and keep them happy.

Back to Digital Marketing budget

Now CLV helps the marketers ascertain the lifetime value customer will provide them, it also shows a whole new perspective on how the marketers can plan for their digital marketing budgets.
Just because all the companies are jumping on to the bandwagon of digital marketing, the companies must not follow the suit blindly.
It also makes more sense to hire or consult, experts and professionals, who are better equipped to provide consultation on the digital marketing.
Some questions which trouble the CEOs, CMOs and marketers in general are,

1. How much are companies spending on marketing?

There is no single answer for this question. What others or competitors are doing may not hold true for your company. The competition may have got the first mover advantage. But it does not nullify your stake in the industry. You can always devise a digital marketing strategy which can be more niche with engaging customers on one to one basis, or you can have blanket strategy for customers who might be potential users or even non-users of your product and services.
So what, other spend on their marketing, is not going to answer your questions. A growth hacker, who is a professional with expertise in this area, can guide and provide useful insights with measurable results.

2. What marketing strategies and tactics are getting results?

This depends on where your customers are spending their maximum online time. The online users who are also the buyers of your products and users of your services, must be scattered across but may share similar online habits. Whether they are engaged on diggerent sites, or blogs or videos, etc. will provide answers related to which strategy will get the maximum results.

3. How to Allocate Marketing Budgets Across Channels?

There is no thumb rule, which says X amount must be allocated to a specific channel. Similarly, what works for competition may not necessarily be true for you,

Let’s see at the example below:
Arthur business school, used to get full enrolment for their MBA course ever year. They were active on social media platforms, like Facebook, twitter and LinkedIn. Now the faculty members of Arthur business school, used to indulge in research and regularly update the same on their professional network on LinkedIn.

The top management body of Arthur’s was active on social media platforms like Facebook, Instagram and Twitter. This ensured maximum people following the owners of Arthur, and also resulted in engagement with the potential students. LinkedIn served as a surprise platform for them. Potential students used to look at the faculty members and their research. Potential students also read the blogs written by the faculty member. Hence resulting in maximum enrolment.

Against this, Rivers Institute of Management, they decided to adopt the similar strategy to that of Arthur business school, in a bid to cash in to the potential students on social media platforms. Now at Rivers, the faculty used to work hard on their teaching abilities and provide best education possible.
The top management at Rivers believed in old school approach and were orthodox and absent from social media. The dean at Rivers decided to start an online campaign on the similar lines of Arthur. The issue was, the potential candidates for the MBA course were not keen to get enrolled at Rivers as they had no previous record of faculty’s research prowess and neither provided any information on their legacy. This resulted in miniscule increase in their enrolments.
Such examples are common across industries where companies try to imitate competition but end up spending huge budget for miniscule increase in ROI.

4. Which Marketing Strategies & Tactics Are Getting the Best Results?

Social media marketing
is not one off task as said earlier. It is a honest effort to engage customers with meaningful content and building their trust over time.
The strategies and tactics can change over time, as customers may move on from certain social media platforms, so the tactic providing the best results must also change. Hence the inception of a growth hacker is mandated.
He/She will alter or tweak the marketing strategies based on the latest trends and results. 

About the Author


Chandala Takalkar is a young content marketer and creative with experience in content, copy, corporate communications, and design. A digital native, she has the ability to craft content and copy that suits the medium and connects. Prior to Team upGrowth, she worked as an English trainer. Her experience includes all forms of copy and content writing, from Social Media communication to email marketing.

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