A lot of clients, particularly small businesses or start ups grapple with this question and it seems to be yet another of those ‘chicken and egg’ scenarios. The answer, as you might imagine, has many variables and often depends (as with most things in life) on your perspective and expectations. The key though seems to be, initially at least, whether digital marketing spend is viewed as a cost or an investment. If your start point is that it is a cost then inevitably the answer will be that any amount is too much.
Is it a cost or an investment?So, what’s the difference? The fundamental and important difference is that a cost is simply expenditure whether it is money, resources or time whereas an investment is expenditure (with a varying degree of risk) with a strong possibility of a return. Whilst some costs are inevitable with an investment you arguably get more opportunity to expect and evaluate a tangible return. Ultimately what any business, irrespective of size or maturity, is looking for is a return on investment. The measure can be any number of factors, for example additional leads generated, more traffic, a new client, increased sales and revenue. Whatever the measure or level of risk, the bottom line is that it needs to positively impact your bottom line by generating measurable results and driving revenue.
% of revenue spent on marketing set to increase in 2015Typically around 10% of revenues are spent on marketing activities (both online and offline combined) with a recent Gartner reporthttp://www.gartner.com/newsroom/id/2895817 finding that digital marketing currently accounts for around 2.5% of that total. Whilst it is expected that overall marketing budgets are likely to rise during 2015 interestingly the share of the budget allocated to digital marketing activities look set to rise at a faster pace. This shift in focus mirrors the changes being seen in consumer research, buying habits and spending and the recognition that online, as well as being a more targeted and cost effective medium, is also able to provide measurable and tangible results.
It’s not about how much you have but what you do with itLike most things in life, it’s not about what you do but how you do it, and not how much you have but how wisely you spend it. Whether you have a limited budget or not, spending it wisely is the key. That means understanding who your customers are and what their needs are and then having very clear objectives. By understanding your customer base (both prospective and existing) you can identify the best channels and methods through which to reach them. All costs (and indeed investments) are not created equal and making your budget work smarter and harder is the way to go. Finding creative ways to provide high quality, relevant and informative content to engage customers is fast becoming a more productive way to achieve this rather than with a hard sell advertising approach.
You can’t afford not to…..can you?On the assumption (provided that there is a clear ROI) that you can’t afford not to invest in digital marketing the question remains how much is too much? On the face of it provided there is demonstrable ROI, by whatever measure or measures is right for the current stage of development of your business e.g. visibility, brand building, leads, conversions, sales and revenue, imposing an artificial limit may seem counter intuitive. What does seem feasible is some basic common sense in terms of ensuring that any action undertaken delivers against your business objectives, is measurable and prioritized within the context of a wider holistic approach to your overall marketing strategy.
Top tips to make sure you are not spending too much on your digital marketingWhether you choose to use an outsourced digital marketing partner such as the team at Digital SPS or prefer to undertake this increasingly important activity in-house there are a few ‘top tips’ to ensure you prioritize and ultimately optimize your digital marketing spend.
- Make sure that you have a documented business plan which includes a marketing strategy and plan with clear objectives and deliverables.
- Seek advice from the experts – the digital landscape is a rapidly evolving one so be sure that you have the right team (either outsourced or in house) on the job.
- If you outsource then be sure to get multiple proposals and quotes and be sure that they not only have the expertise and experience to deliver but also a good understanding of your business.
- Ensure you have clear objectives and realistic expectations for any digital marketing activity
- Make sure you have key performance indicators agreed and that any activity can be measured, monitored and reported on.
- Have regular reviews and be prepared to be flexible and adapt based on performance.
It’s all about the ROISo, whether you spend $100 or $1000 is not the issue it is about making sure the investment is directed in such a way as to ensure that it is working smarter not just harder and that the return on any investment made is optimized.
Jim Kane has 35 years’ experience of international business development in over 40 countries whilst working with 2 global organisations. During this time he helped hundreds of businesses with their marketing strategies and growth plans. In 2004 he formed his own business in Dubai which focusses on helping companies achieve success through digital marketing channels. Since 1979 Jim has built an enviable reputation for trust, reliability, and professionalism across the UAE and beyond.