There are many factors that go into determining a holistic budget for digital solutions. These initiatives can include marketing, business intelligence and analytics designed to help grow your business. Here are a few things to consider when setting budgets for your digital initiatives:
What are the ultimate goals for your business next year? If you are a start-up, brand development costs might need to be allocated. This can include developing sales and marketing assets for promotion, or a website, blog and social channels. For more established businesses who already possess these, perhaps the focus is increasing efficiency throughout the business with data enrichment or investing in competitive analysis to better compete in the digital space. Setting these goals will allow you to make the best decisions on where budgets should be allocated (more on that next week).
Here’s an example: Last year, a B2C spent $100,000 on pay-per-click ads and management. When assessing their success, they were able to attribute $220,000 worth of revenue to these campaigns. Therefore, they made $120,000. Simple, right? But this business wants more. So for the next year, they will increase their budget for SEM, but also invest in data analytics that will help them determine more about their customers. In turn, they will be able to analyze captured data about their consumers’ behaviors and make informed decisions about inventory, staffing and marketing budgets accordingly. They can project to perform better in SEM, but also cut costs in day-to-day operations.
Ideally, data enrichment and analysis happens in conjunction with all running PPC campaigns, but if it is not something that your business is currently doing, it can greatly improve your bottom line across the board.
Being competitive in the digital landscape can prove difficult depending on your industry. It is important to educate yourself about what your competitors are spending, which can be achieved with competitive analysis. This does not mean you have to match this number to compete, however. There are plenty of ways to put your brand ahead of the competition without blowing out your budget. Finding out what they spend versus what they make (public companies often release this information quarterly or annually) can be very important for determining the marketing-to-sales ratio for your industry.
Volume and margins
Is your business built on a volume or margins structure? If your products are low-margin (as in, the revenue generated from the sale of the product is not much more than the cost it takes to acquire and maintain the product), you need to sell large volumes of the product to generate healthy revenue. If your products are high-margin (the revenue generated from the sale of the product is much more than it takes to acquire and maintain the product), the volume can be less. Though successful businesses can run on both of these structures, it is important to know which you are so that you may determine budget accordingly. Generally speaking, those that operate with high profit margins spend fewer dollars on marketing and sales. This is because they do not need to sell large quantities of the product to make money. On the other hand, if you need to move large volumes of products, more marketing initiatives are needed.
Explore new avenues for maximizing budgets
The wonderful thing about the digital lanscape is that it is ever-changing. There are always new avenues to be explored (such as the aforementioned intelligence solutions like data enrichment and analytics technologies). Explore the newest fields to find out if they are the right fit for your business. Visual social media marketing platforms like Pinterest, Instagram, YouTube and Viddy can all be leveraged in new ways to maximize your marketing budget. Budgets can also be maximized by integrating online and offline campaigns and continuing optimization tests.
Determining next year’s budget can be a little intimidating at first, but once you understand the basics, you can make informed decisions. The most important factor is thinking critically about what your business intelligence and analytics solutions can offer you. Improving efficiency–not just your marketing campaigns–is the ultimate goal. Allocating budgets to these efforts is paramount for your success in the coming year.