By Saher Shodhan
Setting up a marketing budget for your small business used to involve a whole lot of guesswork. Simply trying out different marketing activities to see what would work is now a thing of the past.
In 2020, with the advent of the COVID-19 pandemic and with small businesses having to adjust to the new normal. A trial-and-error, unstructured approach to digital marketing will no longer work.
The U.S. Small Business Administration suggests a business should spend between 7% to 8% of their total revenues on marketing. In this article, we will outline how small business owners can learn to spend their marketing budget in for their business in 2020 and beyond. Particularly, this article will outline suggested formulations of marketing budgets for the digital space.
Media Spend (also known as Ad Spend) on Paid Channels
Media spend is the dollars spent into paid digital marketing channels; this represents the amount of money spent into running ads on digital platforms. This includes running ads on social media platforms such as Facebook, Instagram and YouTube. It can also include PPC ads platforms like Google and Bing.
In these ads, you are paying for each click, or view, every time a potential customer sees one of your advertisements on these channels.
Businesses should expect to spend between 20% to 40% of their total digital marketing budget for paid media channels. This is necessary to fuel these acquisition campaigns and retargeting campaigns.
The proportion spent on media usually increases for B2C companies that need to spend a lot more money in running digital ads to get more customers. For B2B companies, there can be higher return in investing in content build on unpaid channels, as outlined below.
Spend on Unpaid Channels
Unpaid channels refer to channels in which you do not need to pay for each customer’s view or click.
Unpaid channels include all sorts of content marketing activities, such as writing a blog (such as this one), podcasts and newsletters, as well as creating engaging organic content for your social media channels.
Businesses should expect to spend between 10% to 30% on talent to build content on these unpaid channels. This amount increases if you are a B2B company that typically invests more in content to educate their audience.
Note that unpaid channels do not mean that it is essentially free to investing in these marketing activities.
Unpaid simply means that you do not have to pay for each click or impression, unlike paid ad channels above. For example, once you have written a blog article, the content is now on the internet in perpetuity. You do not have to pay every time clicks to view your article; in a typical digital ad, you have to pay the platform every time you get a view or a click.
For unpaid channels, you are paying for the right talent to build engaging content that will resonate with your audiences. The goal will then be to convert these audiences into customers.
Spend on Specialist Talent
Specialist activities include search engine optimization (SEO), where an expert will optimize your website to appear on search engines result pages (SERPs) and to optimize your online reputation. This is especially relevant for small businesses with a local presence, such as local dentists or restaurants. It ensures that your customers can find you online easily. It also helps you appear on search engines more prominently than your competitors, thereby helping you book more appointments or in-person visits.
For B2B businesses, you might also consider looking into lead generation. Lead generation refers to a series of marketing processes to help you get leads (potential customers).
You should look to spend 10% to 30% of your digital marketing budget on these specialist needs, which would cover activities such as keyword research, analysis, and an SEO site audit.
Spend on Designing Creative Assets
Companies should spend up to 10% of their digital marketing budget on designing the creative assets for their paid and unpaid channels. This can be done by hiring freelancers on freelancing platforms, or easily DIY (do-it-yourself) through free-to-use design tools like Canva.
Hire a Part-Time Digital Marketing Expert
As a small business owner, chances are that you will want to be involved in all aspects of your business operations, from strategy to running your own Google ads campaigns. This desire is understandable, but there is also the great likelihood of business owners stretching themselves too thin.
This is why hiring a part-time digital marketing expert is often a time-saving, and cost-efficient endeavor. While it is possible to be self-taught in the different components of digital marketing as explained above, your time will be better spent on core business activities and managing different freelancers and expertise.
Due to the depth of expertise required in each digital marketing vertical, it is very unlikely that a digital marketing expert will be able to do all of the activities outlined above — from SEO to content marketing, and from designing ads to running paid ads — proficiently. As such, it makes more sense to hire different specialists for different components on a part-time basis.
Adjusting to the New Normal
Traditional marketing is increasingly becoming phased out by digital marketing. While some small businesses still see some benefit with traditional marketing, COVID-19 means that we are now accelerated further into a digital phase.
While traditional marketing can still play an important role in many people’s lives, small business owners need to look into digital marketing and adjust their marketing strategy, in order to continue remaining relevant in this age.