With Fall in our midst and Winter just around the corner, we may not be ready to say goodbye to 2017 just yet. But a savvy businessperson knows that planning ahead isn’t just an option, it’s an important ingredient for future success. Now is the time to start evaluating what has worked over the last year, what hasn’t worked, and how to improve your digital marketing budget and plan in the year to come.
We’ve put together important strategies to budget for in your 2018 digital marketing endeavors. As you begin to put together a budget, first evaluate the last year:
Identify Recurring Transactions and Periodicity; Evaluate and Project.
Get a grip on your current digital marketing expenses. Identify the costs that fall into one of three categories:
- Fixed Costs. These are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries and agency fees per month, and are often referred to as overhead costs.
- Variable Costs. A variable cost is an expense that varies with production output. Variable costs are those costs that vary depending on a company’s production, or often in marketing, spend; they rise as paid placement increases and fall as paid placement decreases. This could also apply to any web design or SEO work you may have hired out on a non-regular basis.
- Mixed costs involve a combination of fixed costs and variable costs, like for example a flat fee that accompanies the variable cost of the services you buy.
When planning for next year, it’s important to predict the future based on the hard numbers from the past. First assess what digital efforts were successful and which weren’t. Cut funds going to your poorly-performing efforts.
Remember that different mediums will have different evaluation metrics. You can’t see impressions from print sources, and your awareness campaigns aren’t designed for direct conversions. Nonetheless, evaluate and prioritize what appear to be the most successful and important efforts.
If your goal is to increase your profits through an increase of leads or sales, project the future using marketing statistics from the past. Of the efforts you wish to keep, look at past costs and returns. Calculate the rise in costs that you may spend to fuel more conversions, conservatively estimate the rise in revenue that will result, and assess the projected margins. Compare this with past years.
If you are just starting your digital marketing efforts, this should be a conversation that you have with your trusted agency. Ask them what sort of ROI and ROAS to expect, and when to expect it. Ask how returns will be effected based on the amount that you invest or spend. Don’t hire an agency that makes a percentage of fees based on your paid placements. This creates an incentive structure that does not revolve around ROI.
Your budget going forward should then be clearer and you will be able to weigh investments more realistically.
Know your Margins.
While it is good to have an aggressive marketing plan, you need to set limits for your cost per acquisition. You should never spend more gaining a prospective client than what that client will actually be worth to you. This tenet is elementary but must be revisited periodically as it changes with time.
It’s often helpful to set a standard limit. Calculate the lifetime value of the client; if you are a home services provider with the average customer using your services 10 times in their lifetime at $100/service, the lifetime value of an average customer is $1,000. Subtract all costs associated with servicing the customer. If it costs an average of $40 to service the customer each time, then the $60 you earn each time leads you to $600 profit over time per customer. Your efforts to obtain and retain the client should never cumulatively exceed (or come close to) this profit margin.
Choosing Marketing Platforms
Which marketing platforms you should choose highly depends on your current situation, personas, capabilities, and budget.
Your digital presence largely trickles into your website, so make sure it is sleek and effective. Aesthetics, user experience, and conversion optimization are the foundation to build upon.
You should then focus on choosing the right platforms for your goals. If you have a smaller budget, rather than spread yourself thin across many platforms, choose just one or two. The more you spend on a respective platform, the more data you will gather, which will allow you to optimize your campaigns. At a very cursory glance, you should consider the three most-popular digital strategies:
Pay-per-click (PPC) and Display advertising. Research shows that 81% of shoppers conduct online research before making big purchases, and 65% of smartphone users agree that when conducting a search on their smartphones, they look for the most relevant information regardless of the company providing the information. This platform is effective to build up conversions from search engines.The display network allows you to retarget site visitors with ads on Youtube and websites that support Google ads (which is a massive network). But, if not managed well, it can drain your budget very quickly with underwhelming returns.
Search Engine Optimization (SEO). Search Engine Optimization is the art of improving a web page’s organic visibility on popular search engines like Google. No matter how informative, educational, or entertaining your site content may be, the first step in any customer’s journey is finding that content. Successfully continuing to rank high on a search engine results page (SERP) depends not only on having the right content for the topic but providing people with the right value at the right moment. It is that behavioral value that signals back to the search engine that a page is particularly authoritative on that topic. A good SEO program buttresses a paid program because it is a long-term play.
Social Media Marketing. Paid social media placement is all about getting the right content in front of the right audience at the right time. Contrary to PPC placements, running social media advertising can provide your company with the opportunity to reach customers long before they are aware they need to buy. When talking about paid placement in social media, you won’t find better targeting capabilities nor a lower price than Facebook Ads. While it does not perform for every company (no platform does), its 2 billion user-base makes it effective in many industries. As a sidenote, check out our webinar on how to audit your social media efforts here.
Presenting Your Budget:
Presenting your budget to investors or your higher-ups needs to concisely show your rationale with an inspired eye to the future. Begin by defining realistic goals for growth and show how you will get there based on past numbers and estimations. Be clear about which tactics are priorities and be honest about the riskier or unknown strategies.
Remember that it is better to under-promise and over-deliver rather than vice versa. And if you are unable to put the time in to effectively optimize your strategy, don’t keep throwing money at low-performing campaigns. Get an agency or expert involved to do it right.
Some agencies will provide you with consultations. Feel free to contact us for a free, no-obligation look under the hood.
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