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May 9, 2024

Planning Your Digital Advertising Budget

By John Caruso 5 Minute Read

Why is Digital Advertising Important? 

Digital or online brand visibility is one of the most important factors in any successful business enterprise today. Whether it’s B2B or B2C, ensuring your product or service offering is in front of the most captive audience is a recipe for increased sales and measurable ROI for any advertising investment. As digital marketers, we know that a successful, multi-channel approach to reach audiences in various stages of the buyer’s journey is what captures the best inbound sales leads. Digital advertising can be one of the most cost-effective ways to reach your audience when done well. In this blog, we’ll help you define your goals, and prepare you for what you can expect from a campaign when it comes to costs and ROI. 

Planning for Success 

A successful advertising effort always starts with a solid plan. As a former advertising mentor once told me, advertising is an investment, not a cost, so it has to pay off. This mantra still rings true in today’s rapidly changing digital landscape. The foundations of a successful digital marketing plan always come back to identifying your target audience and planning for key metrics or performance indicators that will detail your campaign’s success. 

Starting with audience discovery, we suggest developing key buyer personas for your audience(s) if you haven’t already. This exercise helps everyone understand exactly who buys from you, why they choose your solution, and what attributes this person may display. Once you’ve worked through this exercise, you and anyone involved in the campaign development process will gain alignment on exactly who you’re targeting, and a better understanding of where they spend time digitally. This key information helps a marketing professional develop their initial campaign strategy. 

Once everyone is briefed on the target audience, the next foundational step is to lay out a plan for success. If you're unfamiliar with what goes into a digital advertising campaign, it's important to consider the labor and costs that will be required to develop ad copy, artwork, landing pages, and associated forms and follow-up emails. If you don't have a team who is equipped to develop these elements, you may have to outsource this work and that will factor into your overall budget as well. 

As you compile those items and start to prepare them before the launch of your campaign, another area you’ll want to focus on is what success metrics should be measured.  Key performance indicators, or KPIs as some of us know them, are measurable metrics that determine the performance of your advertising efforts. These indicators will allow you, and the team that is deploying your advertising campaigns to understand your effectiveness and make changes if needed. We always suggest using a tool such as HubSpot, which will provide you with even more detail in reporting on these campaigns. A tool such as HubSpot provides the ability to see exactly which ad a new client clicked on, allowing your team to leverage your success down to a specific ad or offer. This helps you further optimize your campaigns and advertising strategies. 

The most popular KPIs in digital advertising include views, clicks, conversions, and most importantly sales transactions. While you may not be able to determine what happens in each ad interaction, each of these metrics will provide an expert with inference into the success or lack thereof at every part of this campaign. For example, If your ads are generating views and clicks, but not conversions, you may have a problem with your offer, your message, or your forms on the landing page. By knowing this, you can make revisions and refine these campaigns over time. Testing different ad formats, key messages, calls to action, and variations tend to generate the best responses over time.      

Developing an Advertising Prospectus 

After you’ve developed your audience and key performance metrics, you or your marketing partner will want to start planning your campaign. Some of the most important facets of this include where you’ll likely target your key audience. What platforms, devices, or channels do they spend the most time on? A true digital advertising pro will help you determine these ahead of time. 

Once you’ve identified what platforms you’d like to explore, it’s always suggested to look into what potential advertising costs may include. Each platform can carry a widely different cost depending upon your goals. This is where the expertise of a seasoned pro can be extremely beneficial. In my experience, a lot of people interested in advertising will tell me that they want to advertise on LinkedIn, simply because they are aware of the capability. This isn’t always the best suggested use of their advertising budget, when other options may be more affordable, or their audience may be using Google to do more research around their product. Your audience may be closer to making a purchase using a search engine, and costs may be lower, than someone aimlessly scrolling through a social media feed where costs could potentially be higher. This isn’t always the case, but a great example of how the strategy and advertising exploration prospectus can help you avoid wasted dollars and time while avoiding failures. 

While working through this feasibility exercise, a digital advertising specialist should be able to tell you roughly what the campaign budget should look like from a monthly standpoint. Take this rough estimate, and compare it with your average transaction value. If you can make the case that the investment of advertising can be covered by generating leads and converting them within your budget, continue with your campaign. If you can’t, digital advertising may be cost-prohibitive, and there may need to be further discussion on ways to target your audience affordably.   

Budgeting and Timing 

So how do we develop our advertising budgets? Should you look at these per year, per campaign, or another way? There are a lot of different ways to approach this budgeting task, and each organization will be different. I always joke that not everyone has a Nike-sized digital marketing budget, but even though they spend roughly 4 billion per year on digital advertising, they have to develop and determine their ad spend budgets. If you’re new to digital advertising, I’ll share with you a rationale that our team suggests when getting started. If you’re planning to explore digital advertising, and are looking to spend a small amount of money, or only looking to run ads for a month, you should probably hold onto that money and spend it elsewhere. Digital advertising requires time for campaigns to optimize, and mature in frequency with your audience. Set aside a healthy budget of no less than $1,500 per month to start, and plan to advertise for several months before determining the overall effectiveness of your efforts. If you’re currently advertising, using past performance and a review of your KPIs will help you determine if you should increase, decrease, or keep your budgets the same. A strategic approach we like to explore as an agency is to develop multiple test campaigns to start. After a month or two, when reviewing their success, we’ll determine to either cancel a particular campaign and move its budget to a better-performing one, or try a different strategy depending on the results. This process keeps your campaigns generating results within your budget or may suggest that we need to add budget due to the overall success.   

Another important factor to consider is the costs of a digital marketing partner. If you’re working with an agency, make sure to factor their compensation into your budget. Each digital marketing agency approaches digital advertising compensation differently, review this with them, and determine if they are the best fit within your budget before proceeding. Our agency aims to build campaigns that effectively pay for themselves over time. By this, we mean that we can track our overall advertising investment to see that for each dollar spent, you’re receiving more return on investment. Decide on what you’re willing to spend overall for your advertising efforts, allow for additions and subtractions to your budget once you see test data, and trust the process. If done correctly, you’ll see successful advertising efforts that generate revenue to cover your investment. 

Overall, digital marketing can be a vital and critical part of a digital marketing strategy, especially when paired with inbound marketing efforts that help cover every aspect of the digital marketing ecosystem. Of course, this blog may not have covered every facet of the budgetary side of digital marketing, but I hope you found it insightful and helpful. If you have any questions about digital advertising, or how our agency could help, please reach out and we’d be happy to chat! 

John Caruso
About the Author
John is the Director of Business Development at Vendilli Digital Group. Outside of work, you can find him fishing, hunting, or canning vegetables from his garden.

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