What Should My Budget Be for Advertising?
Have you ever wondered how much you should spend on advertising?
Digital advertising is set to become the largest channel for ad revenue globally by 2019. And that’s why it’s never been more important to review your advertising strategy.
One of the biggest misconceptions about advertising is that there’s a direct correlation between spend and success – when it’s actually the way you use your dollars that counts.
In this article we’ll break down the forms of digital marketing and how you can best utilise them for your business and budget.
Social Media Advertising
According to Instagram, over a billion Instagram accounts are active every single month, with double that visiting Facebook. So it’s no surprise that social channels allow businesses to quickly connect with large numbers.
Through Facebook and Instagram targeting you can reach demographics, physical locations and interests. And with LinkedIn you can target exact job titles, industries and companies – however this usually comes with higher costs than other social channels.
“Knowing what to spend comes down to setting yourself clear goals for each channel.”
Social media spend can be anywhere from a few hundred dollars to hundreds of thousands of dollars per month. Knowing what to spend comes down to setting yourself clear goals for each channel.
Your social spend can also be optimised by understanding more about the audiences who respond well to your ads and targeting them in future campaigns.
As you continue to test and learn, you are likely to see your spend decrease and results increase with future campaigns.
Search Engine Advertising
Search Engine Advertising (SEA) is designed to make your business easier to find and is a great way to drive customers to your eCommerce or service-based business.
Search engine advertising spend costs can vary greatly depending on your requirements. For example, a business may choose to invest $1000 per month to kick-start their search engine efforts, while another business (which perhaps offers a more niche service) may only invest $300 to achieve similar results.
“There are many factors which can affect how efficient your spend is and this can vary over different time periods.”
Remember, you’re often bidding against other companies for customers who are searching keywords associated with your industry. This means there are many factors which can affect how efficient your spend is and this can vary over different time periods as well.
A common scenario involves small businesses bidding against huge companies in the same space. In cases like this strategy plays a large part, as it comes down to using a modest budget wisely when there is opportunity.
Planning Your Budget
With this all in mind, your advertising budget should be driven by a few key factors:
- Who you want to reach
- How you want to reach them
- What is your objective
- How competitive your market is
- How your website performs
All of these factors will help to determine how much you need to spend; where you need to spend it and what you can roughly expect out of your efforts.
It’s important to note that many established companies spend about 5% to 15% of annual revenue on marketing, with 35-45% of that figure dedicated to digital advertising.
“Businesses are spending anywhere from 2% to 7% of their entire revenue on digital advertising.”
That means these businesses are spending anywhere from 2% to 7% of their entire revenue on digital advertising.
However, it’s worth noting that different industries will typically have variances in the amount they invest and the channels they use.
Ultimately, understanding who your target customers are is critical to ensuring you’re spending where it counts.
In order to get the best return on investment, you’ll want to keep in mind the timing and placement of those dollars.
And while we can’t magically make people click on your digital ads, Emote Digital do have plenty of flexible options to get your product or services in front of more potential customers and your sales conversions soaring.