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Digital Marketing Cost

There are already hundreds of books, blogs, and marketing budget pdf sites on how to develop digital marketing for your business. This is not one of them. Instead, our focus is on how to deal with the cost of digital marketing cost formula, where it will generate costs, and how to budget for them in your organization. Digital marketing is very much about services: the services you contract for, the ones you automate, the marketing cost services you outsource, and the ones you do yourself. How this marketing expenditure mix is put together for your business will have a big say in how much the overall function costs your business. And when every dollar is sensitive and matters, which it should even in good times, you’re going to want to make sure you’re getting every dollar’s worth from your marketing cost definition and example models applied. In that regard, this page will go through a lot of the key steps and marketing expenses budget pieces you can use to ensure you can see what your digital marketing is delivering as well as where it is falling behind cost-wise versus an empty marketing budget ppt slideshow.

Believe us, it’s really easy to run with the bandwagon and just hope that digital marketing generates more business organically with no marketing budget formula involved. This is the great promise so many companies engage in without any clear idea what they are doing and where their investment is going. The famous automaker Ford has been one of the most notable in this bunch, spending millions and then later chalking up early social media to being a big waste of time. So, learn from their lessons and avoid being a statistic in a marketing cost pdf or case study. The bottom line is, your digital marketing should be increasing awareness about your product or service to new buyers and thereby increasing your revenue streams. If that’s not happening, something isn’t functioning correctly. Managing marketing costs isn’t about having the most Facebook friends or Twitter followers or the most detailed marketing budget software; it’s about increasing your gross and net revenue reports.

Paying for Digital Marketing: How Much Do Companies Spend on Marketing?

There isn’t much of an argument in most companies today, big or small, whether they should be doing digital marketing. Alternatively, the real question causing a lot of discussion is how much is their marketing budget breakdown. Part of the problem is that digital marketing suffers from the same issue as traditional marketing: unless one develops a really good relational formula between effort made and results measured, most folks have no idea how much should a company spend on marketing. In the old days, the most direct method on how to manage a marketing budget was to have customers fill out a feedback card and literally ask them if anything they saw, heard or read convinced them to buy a given product or service. In fact, the tool is still used by many companies today. In comparison, many of the modern measurements on how to set a marketing budget online have nothing to do with actually generating sales and revenue. Instead, they are very good at tracking how many people were impacted but say nothing about revenue changes. So, what is one to do?

The trick is to build relationships between investment and output as you build your marketing budget allocation plan. We do know this for sure without any further calculations needed: if you go cheap on marketing investment, your target consumers will never know about you much less buy from you. On the other hand, there are plenty of examples of companies paying way too much for the effort and not seeing any real return either.

So, let’s break down the question to what really matters for your digital marketing. These are:

  • How much money is sufficient to spend on digital marketing this year versus any other time?
  • What type of digital marketing should be engaged in?
  • Typical marketing budget percentage categories
  • What sort of resources and tools are going to be needed to make each type happen?
  • What else is going to generate a cost to make this program a reality as expected?
  • How to spend marketing budget resources smart
  • Marketing – Starts With Setting Goals

To get started with a digital marketing budget plan, you need to set your company goals. What exactly will be the focus of all your marketing activity online? What exactly are you hoping to achieve? If your company answer is, “Because our competitors are doing it,” that’s not good enough. Instead, you should have more concrete answers focused around improvement from your current situation. These can include marketing budget example goals like:
Building brand awareness to in turn increase sales
Growing the existing customer base by set percent to increase revenue
Improve the current customer experience to in turn increase the rate of customer return sales

Are we starting to see a pattern here? Instead of just simply stating marketing is done to create a presence, the goal defined above involves a desired output as well, and end result, namely producing more income. With your goals defined clearly, then you can begin to build your marketing budget, comparing and adding the costs of what will be needed to achieve said goals.
There is a temptation to copy someone else’s goals via a marketing budget sample pdf file or marketing budget template xls workbook as people tend to find being creative a hard task. It’s a far easier to look over a shoulder and see what someone else is doing who seems to be successful. This is a critical failure risk, however, because it doesn’t take into account your company’s situation very well. And if that happens, you could miss out on very important factors that make your marketing effort and related budget very different from the other player. It also becomes very hard to explain to others in management why you’re doing what you’re doing if there is no relation to the home business plan. When it becomes clear that your marketing plan is just copied from someone else, you’ll be the laughing stock on your way out of the conference room.

Instead, take the time to build from your initial goals you strategy and ultimately your task steps. Then you can begin to cost out your digital marketing effort. A marketing budget breakdown example works like this as the first step:

  • Goal
  • Strategy
  • Task

Follow this tree structure, and you’ll be building a marketing budget with sales and marketing expenses definition details in a snap. For example, your goal is to increase revenue with your online marketing effort. Now let’s refine it into a strategy; what needs to be done to increase your online sales by 100 percent? Well, if you calculate that 1 out of every 3 online contacts is a sale, then you need to increase your online conversions by 300 percent probably. So now that we have a target, next you refine what you need to do to increase conversions, whether that’s through more information, a discount sale price, a loyalty program or something else. We’ve just gone from a goal down to a strategy and finally to a specific task.

And remember, your goals will change over time as well. What your original targets were the first year will be very different just three years later. But in every cycle or update you have to define your goals first, then prioritize what is needed to make them happen. The budgeting side isn’t very hard from here; you simply determine your total budget and how to split up or allocate the funds to the given activities you know need to occur in your plan. As you can see, copying someone else’s plan wouldn’t make much sense here as it would probably be very different than what you come up with for your company.

The Real Cost of Digital Marketing

Ideally, you’ve already been engaged in marketing and there is an expense already happening. This is your baseline budget. What your company adds to this then becomes an additional investment. Otherwise, it is the budget you are working with, and many marketing offices find that they simply have to decide whether they redirect their existing budget from traditional marketing to digital marketing efforts with the same total.

One method of allocation is past performance. Again, this assumes you’ve already been marketing and have some ability to gauge performance. By allocating based on success, you’re placing ongoing investment where it is producing results versus just blindly budgeting. But keep in mind this won’t account for those resources that may start off free. Online social media, for example, doesn’t cost anything to create accounts. But you do have to spend personnel time to maintain them. So, there are downstream costs eventually. Within this method is also the termination of those efforts that just aren’t producing. Don’t get sympathetic; if your given effort isn’t doing anything or reaching an expected target, cut the budget and move the funds elsewhere. Your staff or coworkers will argue otherwise, but don’t fall for the sympathy trap. Either an effort needs to produce, or it needs to be shut down. Your marketing budget is precious, so treat it that way.

If you haven’t been running marketing already, then you have to build from scratch. How much that starting budget should be depends on whether you want to arbitrarily allocate starting funds or use a benchmark.
Marketing – How Much to Spend?

If you ask the government (which always a bit of irony since the government doesn’t operate for profit), the U.S. Small Business Administration will suggest that your marketing budget should be something near 8 percent of your overall business revenue. This level also comes with a caveat: your business net profits should be clearing at least 10 percent of gross revenue after all costs. That’s a pretty high figure to achieve for a small business, especially when many are just trying to break even. So, what do you do if you’re not quite making the net income figure expected? Not market at all? Of course not. Marketing is essential for a business to connect with customers proactively.

So, realistically, your digital marketing effort should be starting out a set figure that your company can afford and treated like an investment. If you budget $10,000 for marketing, you should expect it produces $25,000 in revenue. This is a bit arbitrary, but it gives you a measurement target to go after (remember goals?), and it makes your marketing results-driven.
Within your marketing budget, at least half should be in digital marketing by most marketing budget allocation template opinions. Some would argue what to include in marketing budget for digital should be more, but this becomes a bit of preference as the real fight is whether everything should be online or not. In reality, good businesses are shaking hands and meeting in person just as much as they are pushing content online through social media daily. But don’t stop with a simple split. Regularly measure the performance of either side of your marketing effort and then shift back and forth as one side does better than the other. Your marketing mix depends a lot on your specific company and its direct market versus that of industry quotes. And remember, most industry benchmarks are from a few years’ behind, which means whatever they thought was the reason for a particular split probably doesn’t apply anymore today.

Marketing – Small Business Costs

The small business model is hyper-sensitive to cost. In many cases, micro and small businesses are bootstrapping every dollar, and there isn’t really a lot to spread around for marketing since every effort and resource is dedicated to product creation or service delivery. That’s obvious because those two are were the actual money comes from. But marketing is essential for growth and creating more demand for the product or service, so it needs to be done. No surprise, small businesses have very adept at utilizing free tools where the cost involved is primarily time versus anything else. This is why social media has been such a godsend to small business right after the Internet in general and the website tool. The cost is minimal if anything to set these up, and the return can be tremendous if the right traffic is reached. Unfortunately, everyone else has figured out the same secret as well. As a result, there’s an LA freeway traffic jam of information and websites to get lost in.

Again, we are back to marketing to create the differentiation that makes a small business stand out. It’s not enough to have a social media account or website; you need to be distinct. One of the smartest ways to do this is through a very well-produced YouTube channel of videos. By taking time to develop some really good commercials and post them as videos, one can reach thousands quickly and develop a following by viral sharing. And that same video channel can link back to social media and a website for conversion to online sales. The typical cost of a good video for a small business is about $3,000 to $5,000. The payoff can be 10 times that much if the video hits the right nerve. Clearly, this is the primary cost path for the small business that needs to watch its dollars carefully.

Marketing Cost Calculator

Have no idea how to even get started mathematically? FIrst, go free. Use Google apps. But don’t just copy someone else’s Google sheets budget template. However, you can use basic element calculators if you know which components of marketing you want to engage in. You have a good idea of what these components likely should be because you already defined your goals and developed a strategy how to reach them. So now you’re just detailing the specific tools in your toolbox on your own simple budget template google sheets. And you can also refine them with by monitoring activities via a Google sheets expense tracker template, making changes as you go.

The marketing budget calculator provided by Leadgenix is a great place to start. Their budget calculator provides easy to understand categories based on how you answer a few questions versus a complex marketing ROI excel spreadsheet. These queries essentially frame out how you want to put together a basic marketing approach. Then the calculator runs the numbers from a reference table. Those figures come from various industry trends versus what you’re deciding you want to do with your specific Google sheets project budget template. Some of those factors include the same figure from the government that your marketing budget should be near 8 or 9 percent of your sales revenue. Your digital marketing is also a notable portion of your overall budget. And you should have included some of the key elements in your marketing budget template Google sheets, which include search engine optimization, social media, online website content, and paid-per-click marketing. Other ways of calculating costs in terms of tools include online versions of an ad spend calculator, a facebook ad spend calculator, and a ppc budget calculator. But these all work off the same premise of knowing basic input and multiplying it against unit costs for total price.

Marketing – Percent of Sales Metrics

Going back to how to track marketing ROI performance for moment, your original plan is a start, but it will need monitoring and changes as you go. Using metrics is a way of realizing when a change to your plan is needed. Metrics can be easily determined by using key performance indicators, or KPIs. A KPI can be derived by using basic business math. So what is a good marketing ROI? A simple KPI would be the percent of marketing cost/effort to overall sales. This is determined by:
Dollar cost of the marketing program
divided by
Overall gross sales for the same period

What you get is a decimal result and if you multiply that by 100 you get a percentage. So, if one’s marketing program costs $50,000 and overall sales for the same operational period was $500,000 then the KPI for the marketing cost would be 0.10 or 10 percent when changed to a percentage. But it’s not enough to just generate a percentage. That percentage needs to reflect a performance level by definition. So, to get to 10 percent, that means your company sales need to $500,000 as your marketing budget is already set as a constant. So, the only thing that can change is the amount of sales generated. If, in fact, your sales produce only $300,000, then the percentage produced is 16.7 percent which is below target, meaning something needs to improve. On the other hand, if your sales reach $600,000, then your production percentage is 8.3 percent, well above target, good job!

There are lots of standard KPIs one can use for marketing cost analysis. The point is, they can be used as a mathematical target to reach, singling out what needs to be changed to reach the desired percentage goal. Many companies include KPIs in their business and marketing plans, making it explicit what is expected of the organization over then next operational year in terms of performance.
As a caveat, a KPI needs to be meaningful. Just generating a percentage is not enough. So, context matters a lot. One can also increase an income performance by reducing operational costs through layoffs, for example. It doesn’t mean the company sales actually increased, only the net income did. And when no one is around to do the work, then overall the company suffers. Many marketing offices and their management use multiple KPIs to drill down on various parts of operations versus just relying on one metric. Common marketing KPIs for a digital marketing ROI calculator or schedule include:
Number of new customers over base in a given time window
Number of new customers via transfer of market share from a competitor
Percentage of customers returning feedback
Net sales versus gross sales
Growth in net sales
Percentage of operating costs versus gross sales
Customer contacts growth versus sales growth

In short, with a bit of thinking a KPI measurement can be made from just about any two elements of a business operation or more. Marketing budget allocation best practices refer to these metrics as quotas or benchmarks as well. Again, the objective of marketing cost analysis or marketing ROI formula is that the metric actually needs to mean something, not just measuring for the sake of measuring.

Marketing – Budget Components

Now we’re getting down to the building blocks level on how to create a marketing budget. Every company’s digital marketing plan should be unique to that company. We said it before, don’t copy someone else’s average marketing budget for small business plan verbatim. That said, your digital marketing plan should definitely consider the inclusion of certain key elements that have proven to be valuable for online marketing.

So what are some expenses in marketing budgets or are key elements in how to prepare a marketing budget?

A Website

While it might seem corny or old-fashioned now in the hyper-movement and evolvement of technology, a company website is a must in components of a marketing budget. It provides your business a foundation and fundamental starting point for your online presence. Everything else can change, come and go, or be updated regularly in daily posts, but your website provides anyone the static place to go to always get information about your company, what you sell, and most importantly how and where to buy it. Your website can also be your launching pad for anything you want to update about your business as well as a central connection point to all your other online activity through cross-linking and referencing. It literally becomes Grand Central Station for your online presence if designed right. And that’s the second part about a website – it needs to be professionally designed. Don’t go half-baked on this. A simple, professional looking website will say more about your business to customers than 100 white papers or dozens of web pages with context. Just take a look at There are probably less than 200 total words on their home page, but you definitely get the feeling you’re dealing with a corporation right away. That’s how your website should come across at first glance.

Not sure how to get started designing a site? Hire professional help. It’s well worth the money. An investment of $10,000 to $25,000 will pay dividends later with a good design ready for growth and add-ons.

Search Engine Optimization (SEO)

Along with your website, the text on it should be reflective of what kind of search engine queries people are using to find the product or service you sell. This is identified through SEO analytics, measurements of those search queries and how often they occur versus other words. By building SEO into your website, the results then improve your ranking in search engine as your website becomes more and more relevant to related searches. However, it’s not enough to just have the words. Today’s search engines demand valuable content on a site to rank it high. So your SEO work is just the first step; there also needs to be good, regularly updated content on your website to fully meet SEO expectations. Serious results will run between $2,000 and $5,000 for professional design help impacting elements of marketing cost.

Search Engine and Facebook Advertising

How much do small businesses spend on advertising? Small Internet ads have been around for years, but they still catch attention and provide an easy means by which customers can travel digitally to your website. A typical social media pricing sheet for a Facebook ad campaign runs between $5,000 and $10,000. But if the experts are believed, each dollar generates 100 visitors which in turn could produce more in sales. But it is an unknown. So, this is where your metrics on performance really come in handy. Try a starting social media marketing budget breakdown. If the results pan out with real sales, then continue. If not, move to something else. Don’t sustain online ad budgets just for the sake of following a marketing budget breakdown template and not getting real results.


The biggest types of marketing cost choices for influencers are YouTube and Instagram, both being social media in nature. The influencer is essentially someone who already has a big following audience online. You, the company, pay the influencer to positively reflect your product or service. In doing so, the assumption is that the audience will then trust the influencer and buy your product or service. Again, measure with performance monitoring. Small businesses typically work with a social media marketing cost of $1,000 to $8,000 on influencers and then check back on results every few months. Again, if the performance doesn’t pan out, cut the cord and move on, adjusting small business budget percentages accordingly. Well-designed types of marketing budgets always include flexibility.

Paid Advertising

This can be online or off. Paid advertising is not limited to just the Internet. Many small businesses still use local radio, newspapers ads, Yellow Page phonebook placement (now more online), and transportation route displays (i.e. billboards). Even direct mailers are used regularly as they are extremely cheap for the amount of people they reach. The average advertising costs for small business varies tremendously.The key factor here is that with a bit of feedback, customers can quickly tell a business which tool is working or not by identifying how they found your business. And that tells you which paid advertising to keep ongoing.


Part of building product of service awareness with customer is branding. “Intel inside” and Intel’s logo was a classic brand of computer identification in the 1990s, and it equated to a high quality computer. So did Apple’s logo with laptops. But brands only go so far in generating customer loyalty for repeat sales. Their ongoing faith comes back to producing a good product or delivering a good service. So, spending funds on branding only goes so far. If your reputation stinks because of poor quality, branding could actually hurt your business until damage control solves the problems. Many a company has had to go generic to stay alive once their brand became associated with poor quality perceptions.

Content Marketing

Back to your website resource, content marketing is the other element needed that makes your website and social media valuable. It’s not enough to post. Your material needs to provide value via information. That’s what brings people back for more. If you’re not a good writer, photographer, video-producer or similar, then hire someone to generate your content on a regular basis and focus on your business instead. But definitely make sure your content marketing is maintained and updated regularly. This will directly affect your SEO performance, your search engine ranking online, and your customers’ interest in your business and brand. A good writer can be retained online for website work for anywhere from $500 to $5,000 a month per social media freelance rates 2018 figures and common content marketing spend 2018, depending on what you need and how much content should be developed regularly. Keep in mind as well, as your website grows you will need to add resources for storage and additional web pages. Your site will eventually become portal to the library of your information, so plan accordingly with additional website support. The cost will run anywhere from $50 to $500 monthly for expansions.


Your software and tools that generate small business marketing budget statistics will come with a cost, most likely software licensing. Many small businesses try to start with just the tools that came on their computers, such as Office. Excel and Access work fine for small database work, but over time your company will quickly realize you need more. Initial business licenses of Office365 can run anywhere from $100 to $500, but the big package you want for good marketing work will be Adobe tools like Indesign and Illustrator. These can cost thousands of dollars per license, but you don’t need to pay it up front. Getting started, you can use their CC approach, paying a small monthly fee for each tool instead. It’s far cheaper and allows you to scale up while still using the same powerful software tools for your marketing efforts and design work.

Marketing – Startup Budgeting

Technically, one could generate an online marketing startup budget for less than $100 a month as an early stage startup marketing budget, well below the average marketing budget by industry and clearly under b2b marketing spend by industry. It’s an extreme bootstrap approach on how much do startups normally spend on marketing, but many micro-businesses have done it effectively. The key to startup marketing on a budget is in knowing what tools to use and what their limits are in various social media management pricing packages. It also involves heavy personal work and trying to get things for free. At some point, your business has to project a “ready for prime time” image, and that’s when your costs start to rise getting closer to marketing budgets by industry figures. The free tools won’t let you go further or take advantage of large amounts of data transfer without paying for it. So, your typical marketing budget for a startup itty-bitty budget can suddenly grow to $2,000 per month pretty quick, especially when paying for a marketing budget for new product launch work. The Internet cloud has a number of tools and startup marketing budget template ideas that allow such scaling, which is really effective when you want to pay for just what you need to use and no more, but even it starts to rise in cost with an ecommerce marketing budget. To offset this effect, many companies working out of share-space facilities use multiple cloud tools to keep OE&E at a minimum and produce maximum revenue in their marketing budgets by industry 2018 standards. Just understand at some point scaling up means just that, you have to grow and pay for it. So free doesn’t last forever, especially in the b2b marketing budget breakdown world. But definitely work the tools as much as you can.

Marketing – Agency Cost

On the other hand, once you have the latitude with increase revenue, your company may choose to go with an agency cost for your marketing instead, generating a related marketing agency cost. This is a professional level of outsourcing. The agency chosen essentially delivers professional services based on your monthly budget allocated to them on a contract basis. It can be part-time support or full-time. It really depends how much you want to engage contractors, for what activities and for how long. Many companies pick up agency work for website content delivery and social media development. This lets the company personnel focus on what they do best, and the marketing gets done by those who understand the digital world better.
Most agencies will produce a social media management pricing structure with set services and delivery for a given price per month. That can range from $2,000 to $10,000, depending on what is desired. And the account can fluctuate due to changes as a relationship builds over time. Smaller service packages might just focus on website support and SEO build, while bigger packages develop and implement full marketing campaigns. The key benefit is that the social media marketing pricing plans are done by experts, and it is tailored to your business’ needs versus a generic social media marketing budget calculator.
Aside from the agency retainer, depending on the strategy used, clients may have ancillary costs to cover for the tools the agency wants to use. These costs get added on to the package cost as subscriptions for the platforms to be used. This is common with online campaigns. And, if your personnel need to engage with the agency in given software tools, training expenses will be incurred as well. These are usually one-time but show up at the beginning of the engagement. So it’s important to window shop to get a good social media advertising cost comparison before committing.


Remember, marketing expenses are not driven by function. They are driven by your need. And with today’s digital marketing, scalability works in your favor. So use it. Don’t fall for the common trap of keeping up with the “Joneses.” Use the marketing tools that make sense and produce real results. Try a lot, drop plenty, and keep the few that perform. Stick with that strategy, and your digital marketing will produce big returns instead of being a financial hole in your accounting books.

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