How Much Businesses Should Invest in Digital Marketing?
How Much Businesses Should Invest in Digital Marketing?
By Shamsher Singh Bhullar
8th July 2022
This is one of the hottest questions that businesses are asking experts. A lot has been said about marketing. The writer Milan Cundera said, “Business has only two functions – marketing and innovation.”We do not want to exaggerate the marketing, but it is true that many businesses still do not pay attention to marketing. As more and more businesses are becoming aware of marketing and its importance, the first question that comes to their mind is how much businesses should invest in digital marketing? Let’s find an answer to it.
Understand the Digital Marketing Investment
If we go by the approach of statistics, which seems to be more reasonable as it is backed by the data, a business should spend 6-9% of the annual revenue on marketing. Now, in this range, it is often recommended that services-based businesses should try to be on the lower end of the range, whereas product-based businesses should be on the higher end of this spending range.
Now, if we look at the share of digital marketing as per the report by Gartner, the digital marketing budget of the company is 2.5% of the annual revenue. However, the industry is witnessing a shift in the overall spending of the marketing budget. The spending on digital marketing is increasing every year.
CMO Council reports that more than one-third of chief marketing officers believe digital marketing will account for at least 75 percent of their spending within five years. The Gartner report also confirms the same trend. It says digital’s share of the overall marketing budget is on the rise and expected to increase by 9% this year.
However, despite all this information, there is no single right answer to how much a business should invest in digital marketing. It depends on your company, objective, niche, and a range of other factors.
Digital Marketing is Not All About Advertising
There are many businesses that restrict digital marketing to advertising only, but it is very important to know that digital marketing includes any activity that is focused on enhancing the online presence of a brand. It may include all the activities such as building a website, social media ads, email marketing, pay-per-click advertising, developing apps, mobile marketing, etc.
How is the Marketing Budget Allocated for Each Activity in a Digital Marketing Campaign?
This is a very important thing business owners new to digital marketing should understand because the right marketing mix is required to create an effective digital marketing campaign. Although most businesses often outsource digital marketing to a digital marketing agency that creates the digital marketing strategy for you. It is a good idea to learn how industry trends work because it will assist you in decision-making.
As per the available statistics by Gartner, the top three digital marketing activities on which businesses spend money are digital or online advertising, content creation and management, and search marketing, including paid search. Content creation is predicted to overtake digital advertising in terms of spending.
How to Start Digital Marketing for a Business?
The answer to this question is directly related to the marketing budget you have. For example, if your company’s annual revenue is $ 1 million and you start a digital marketing campaign by allocating 2.5% of the revenue to digital marketing, then you have $25,000 to start your digital marketing campaign.
There are two ways to start digital marketing for your business: build an in-house team or hire a digital marketing agency or freelancers.
Building an in-house team is not a viable option for small and medium-sized businesses because it is not financially feasible. Most companies opt for hiring a digital marketing agency, while some choose to go with freelancers. In the case of hiring freelancers, you need an in-house digital marketing manager or yourself to work with a freelancer. Hiring a digital marketing agency is the best way to start digital marketing for your business.
How Does a Digital Marketing Campaign Work?
Digital marketing includes all the activities related to the digital presence of your company. The digital marketing strategy depends on your current digital presence.
Building a digital presence from scratch
Building a digital presence often starts with building the website of the company. While you are developing the website of the company, you can create the Google My Business listing for your business, social media accounts on various platforms, and a digital presence on other platforms. Once you have created the website, you can focus on SEO, PPC, and social media advertising to create a strong digital presence.
Working on the existing digital presence
Working on the existing digital presence starts with the audit process. The digital marketing experts audit your current online presence and build a digital marketing campaign to grow your business. In many cases, companies have a negative digital presence. You require online reputation management and public relations to fix and improve your digital presence. Your digital marketing agency will figure out the right strategy for your company.
Digital marketing is the best investment one can make to expand business in 2022. At Deftsoft, we can help you create a result-driven, effective digital marketing campaign using our more than a decade of industry experience. We can help you with everything from SEO to app development, website creation, and paid digital advertising. Get in touch with one of our experts.