How Much Should You Budget For Digital Marketing? 

Modern advertising budgets can serve several purposes. Business managers often struggle to determine where to invest their advertising budget between traditional advertisements (print, events, etc.) and digital advertising (Google, Facebook, LinkedIn, etc.). 

Digital marketing allows you to measure results accurately and allocate your company’s advertising budget more precisely to the most profitable channels.

What makes up a digital marketing budget?

The advertising budget can be divided into two parts for digital channels.

1. Manual Tasks
2. Advertising budget

There is always a cost associated with manual labor. Generally, you can accomplish these tasks independently with your staff or outsource the advertising to an agency specializing in this type of service. The in-house team also incur salary costs for training and time spent on the advertising itself. Digital marketers need to undergo training regularly in order to be effective.

Both options are possible, and I recommend you consider carefully whether your company can afford to hire a full-time person to study marketing and master all the channels to run effective marketing campaigns. 

In general, the fastest and most efficient way is to start with an agency and later consider building up your own marketing team.

Competition in the digital channels is constantly increasing, and you are often up against big players whose marketing is handled by professionals. If you want to succeed in this competition, you have to invest a considerable chunk of your own time or money to achieve good results. 

Our experience shows, a more sensible and practical option is to use your advertising budget for an expert with years of experience and has the support of an extensive team in a digital marketing office.

Is it worth spending money on digital marketing?

It is possible to measure exactly where your advertising budget has been spent and whether it has delivered results with digital marketing. 

You don’t have to commit to annual contracts or invest large sums of money - you can start with just a few hundred dollars. You can also decide on a monthly, weekly, or even daily advertising budget. In this way, it is possible to allocate a higher advertising budget on other suitable platforms, for example, to promote your brand at a trade fair.

You can thus use a lower budget for online advertising in rush hours and a higher budget in off-peak hours to attract more interested potential customers to your brand and company website.

How much money should you spend on each advertising channel?

You should allocate your advertising budget to the most profitable channel, and fortunately, you can research this carefully before starting advertising. The most common channel for digital marketing in the USA is Google advertising, followed by social media marketing such as Facebook, Instagram, or LinkedIn. 

Let’s look at these channels and how to estimate your advertising budget before you start advertising.

Budgeting for Google Ads.

Google’s advertising budget is determined by the number of searches made in its search engine related to your industry. For example, let’s take a company that supplies geothermal heat pumps. First, it is a good idea to find out how often the word “geothermal heat pump,” for example, is searched for on Google.

The figure below shows the search volume for the word “geothermal heat pump” and the USA’s monthly search volume for this keyword.

Monthly searches for “geothermal heat pump” are around 8000 per month, with some variation from month to month. It is also helpful to search for more specific prices for each keyword and thus select only those most important words for the company selling geothermal heat pumps.

THE NUMBER OF SEARCHES ON GOOGLE

The figure below shows a more detailed breakdown of the search terms that one can use to select the most relevant and potential customers for the company’s website.

EXAMPLE CALCULATION ON GOOGLE ADs CONSIDERING YOUR ADVERTISING BUDGET

For example, you can select only the search terms “geothermal heat pump” and “geothermal heat pump installed.” In this case, you will reach a total of 2660 potential customers each month who do the most potential searches in Google for geothermal heat pumps in this simplified example. 

The average cost per customer is, therefore, $1.9 per visitor to the company’s website. You can therefore use this to calculate the necessary advertising budget on Google. So you can get 500 potential customers to your website for $950.

Budgeting for Social Media Advertising

Advertising budgets for social media differ slightly from those for traditional media. Typically on social media platforms, people search for the company name “Kubla,” or a person’s name like “Kalle Santalahti.” However, you can target potential customers who reside in separate subdivisions and are between the ages of 25 and 70.

FACEBOOK ACCOUNT

On Facebook, you can reach between 50,000 and 100,000 users for $500.

Facebook is the most common and effective way to reach customers with paid advertising. Most US adults use Facebook every month (almost 82% of the total US adult population).

INSTAGRAM ACCOUNT

On Instagram, you can reach 70,000 - 150,000 users for $500.

Instagram works particularly well for visual advertising, and you can also find most decision-makers on this channel. Still, Facebook is a more effective way to get visitors to your company’s website.

LINKEDIN ACCOUNT

On LinkedIn, you can reach from 15,000 to 70,000 users for $500.

In general, LinkedIn works better for B2B advertising, but you can also reach customers for B2C products using LinkedIn, especially for higher-value purchases.

How Much Advertising Budget Do You Need?

In the examples above, we have calculated an advertising budget using an example. Most often, you get results with digital marketing if you have an advertising budget of a few hundred dollars. You can always reduce or increase the advertising budget you invest based on the results you get.

Where can I track my advertising results and budget?

With the help of digital marketing, you can easily track the result of your advertising budget and produce a very accurate report on the results obtained. Below is an example of a monthly report we have prepared for Google Ads and social media advertising.

Simplified example of a monthly report for Google Ads.

Simplified example of a monthly report for social media advertising

What is the best way to start advertising?

Start with a modest advertising budget and increase it as necessary based on the results. In addition, we can help you calculate the advertising budget your company needs to succeed in digital marketing.

For more information, and to determine which channel is the best for your company, contact us now!

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