How Much Should You Spend on Digital Marketing in 2018?

by on October 5, 2017

Most Effective Digital Marketing Strategies 2018 - How much should I spend on Digital Marketing 2018?

How Much Should You Spend on Digital Marketing in 2018?

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Most Effective Digital Marketing Strategies 2018 - How much should I spend on Digital Marketing 2018?

Many companies are planning their marketing budgets for 2018 – and may be looking for industry averages for marketing spending so that they can inform their next steps.

How much should my company spend on marketing?

According to the U.S. Small Business Administration, they’ve suggested 7% to 8% of your gross revenue should be spent on marketing – this being the standard for companies making less than $5 Million a year in sales, and if your net profit margin (considering expenses) is around 10 to 12 percent.

For companies doing less than $25 Million the average was 11% according to American Marketing Association and Duke University – companies with $25 million to $99 million were spending 9% on marketing.

In short, the answer might be anywhere from 7% to 11% of your revenue and skewing on the lower side if you’re a smaller business

How much of your marketing budget should go to digital marketing?

In 2017, companies have put 30% of their marketing spending to digital marketing. This number is expected to increase in 2018 to 35%.

To give a little sense of scale – let’s consider a company with $3 million in revenue.

At 7% you may spend $140,000 total on marketing – 35% of that would be for digital marketing.

How should I spend digital marketing money 2018?

Where should you spend your digital marketing budget?

In the case of our hypothetical company above – they could hire a low-level digital marketing person who doesn’t have any real expertise, or they could have a digital marketing agency do a couple of things:

  • Create a compelling and effective website that can convert customers – average budget: 15k for a company this size.
  • Roll out an aggressive SEO strategy built to drive targeted traffic with content and earning links from high authority sites – 36k (or 3k a month.)
  • If you incentivize an employee with other duties to do social media marketing in-house, you can create some efficiency there.
  • You could allocate some of this budget to paid ads as necessary – depending on your industry.

Migration from traditional to digital marketing

Forward-thinking companies or companies that lean heavier on digital marketing might also spend the majority of their marketing/advertising budget on digital.

It’s all up to you – many companies will customize these general principals to their specific needs, and the realities of their market. So if your company has seen serious results from leads or sales from digital marketing in the past – that might be the only thing you spend on, though usually there’s at least some spend on non-digital marketing efforts.

Future Trends that Digital marketers are anticipating

Where will marketing efforts trend in the future?

To be sure – as the concentration of people’s attention starts migrating even further from traditional media, companies will evolve to marketing better via alternative video platforms, rather than traditional TV commercials – and will likely involve what is called ‘permission marketing.’

Permission marketing – is the alternative to ‘interruptive marketing,’ in that permission marketing (as coined by Seth Godin) is all about creating content that people invite into their lives – even though you’re using the content as a trojan horse for your brand message.

Content marketing is growing in importance.

For most brands, this is about creating guides, resources, and tools – as well as answering the most often asked questions people have about their company in a detailed and visually compelling way.

If you have the best answers – the easiest to understand solutions, you can earn more attention.

As opposed to the interruption style of advertising that has previously dominated, permission marketing – in the form of content strategy (often on company blogs and guides) is becoming bigger and bigger.

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 TV 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 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 PPC?

Before you spend 10k a month on PPC – 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 PPC 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 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 e-mail marketing?

E-mail marketing is highly effective when done properly, and a total flop when squandered.

E-mails 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.

Finishing up – a few notes on this 2018 Digital Marketing Budget Guide

It’s difficult to suggest a clear guide for digital marketing budgeting, without knowing the specifics of your situation.

Of course, utilize the realities of your business to get a clear picture of what you should spend on digital marketing in 2018.

If you’d like to chat about budget – I’d love to consult if you’re just looking for another perspective on where you should emphasize in your digital marketing budget. Contact me using the contact form below, or call me at 763-221-5525.


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