top of page
  • Writer's pictureROMI

A Guide to Budget Allocation for Digital Marketing

Concept of financial management: stack of coins sitting on a smartphone with a pie chart on background.

Do you know how to allocate your budget for digital marketing initiatives? Not just your media spend, but a budget for all your digital marketing related items!

Well, if you don’t, we can help. It’s an important part of setting your team or business up for success.

Without it, you can end up with haphazard spending on campaigns that neither achieve your goals nor get you ROI.

Now, let’s be honest: creating a marketing budget often requires a lot of guesswork. It’s common to just proceed on your best assumptions of how money should be spent, what new ideas are worth a wager, and so on.

Finding the perfect mix of tried and tested budgets and leaving enough room for new ideas is a difficult balance. Fortunately for you, we can help you get closer to that balance in this guide.

What’s involved in digital marketing costs?

Let’s start with a note that every situation will be different. Different organisations use different digital marketing strategies, which means their expenses will be different too.

Still, we can offer some general examples of the things that go into your average business’s digital marketing cost sheet.

1. Content Production Costs

Man using software in computer.

This refers to the expenses you incur in order to produce various types of content for your marketing.

“Content” can be text, visual, aural, and so on. Examples of content would be videos, social media stories, and images.

Note that this content may come into play in different digital marketing techniques. You may need images for a pay-per-click or PPC ad, for instance, just as you may need them too for a blog post.

In order to produce content, you may need to pay for different professionals or tools. You may need to hire a graphic designer to do logos, for example, or writers to do articles or promotional emails.

2. Distribution Costs

"Boost Post" button on Facebook App

By this, we mean what you spend in order to deliver your marketing content to your target audience.

A simple example would be what you spend in order to publish a Facebook sponsored post. A sponsored post is essentially an ad, so the cost of getting that ad to go live on the platform is the distribution cost.

Distribution costs aren’t necessarily single-shot affairs, mind. Going with our example, let’s say you want to help the sponsored post reach even more people and boost it to do so.

What you pay to boost the post is still a distribution cost.

3. Agency Fees

Agency team members having a meeting

This represents another common slice of the marketing cost pie for businesses. That’s because most businesses now let third-party agencies do their marketing for them.

Obviously, if you do your marketing by yourself, you can skip this. That’s not always advisable, however, as you may well just end up trading it for another expense.

To be exact, doing your own marketing may mean no longer paying an agency, but it also means paying for the work with your own time and effort.

If you don’t have a lot of free time or that much familiarity with marketing in the first place, this can easily go awry.

You may waste time and other resources trying to do things incorrectly. At the same time, other parts of your business fall apart for lack of attention that only you can give.

But what if you use your current employees or hire new ones to do the work for you? Well then, in that case, you’d still be trading agency fees for another cost: the cost of those employees or the in-house headcount expenses.

As a final note on this common cost, by the way, agency fees can and often do vary. They’re typically a function of the agency’s experience and your goals as a client.

4. Digital Tools and Platforms

Asana mobile app login page is seen on an iPhone.

Here’s another common source of expenses today. A lot of digital marketing now relies on software to simplify the work, and most of that software costs money to use.

Think of tools like automailers, social media automation tools, keyword research utilities, tools for analytics, and so on. Even things like Asana or Trello, which are team management tools, count here.

A good tip for this part of your budget is to try and find tools that your whole team (or nearly your whole team) approve of. Tools are meant to simplify work, so if people don’t like to use them, they’re a waste of money.

How to Put Together Your Budget

Black minimal calculator on solid yellow background

Now that you have an idea of what goes into it, let’s talk about how to allocate your budget for digital marketing.

If you’ve been following our guides before this, you’re probably familiar with The Marketing Flow by now. If so, that’s good: budget-setting actually has some parallels with the first stage of that process.

That’s because budgeting requires that you ask yourself a lot of questions. These include ones like what, who, where, and how.

1. What are your goals?

Top view dartboard with arrow in center

You start with your goals. What are you trying to achieve with your digital marketing? Which goals are most important, and which ones are dependent on others?

Determining goal hierarchies is a good way to identify priorities in your marketing spend. It tells you what portion of your budget to allocate where, based on what you consider most important to achieve.

2. Who is your target audience?

Red figure of a man made of wood, standing out from the crowd of different people.

You follow with your target audience and knowledge of their buyer’s journey. You ask yourself what they go through or experience and how you can use those to achieve your goals.

The answers here affect your budget allocations in several ways. For example, by knowing who your target audience is, you have a better idea of what media they prefer to consume.

Why does that matter? Because it tells you what sort of media to spend on for your content production, whether that’s visual or textual or something else.

What’s more, knowing your target audience also helps you figure out on which platforms or channels to focus.

If you know your target audience is usually on Facebook, for example, it would make sense to allocate a good amount of your marketing budget to strategies on that platform.

In any case, bear in mind that there may also be a cost just to identify your target audience or learn more about it. Doing properly representative surveys that give you strong marketing data costs money, for instance.

3. How can you realise your goals or improve on results?

Put another way, this means asking yourself what you need to achieve your digital marketing goals.

Do you need a writing team to pump out content for a text-based strategy? Paid ads to increase your visibility on a particular platform?

Or is it a marketing tool that your in-house marketers can’t live without? Perhaps even training for your new employees involved in the marketing process?

Whatever the case, the idea here is to assess exactly what’s required to realise the goals you’ve set. Using goal hierarchies, you can figure out how much to spend on utilities and strategies focused on each goal.

Pie chart: 70% proven strategies, 20% new strategies, 10% experimental options

Some people also further refine allocation based on their familiarity with a strategy and its past results. This is especially useful if you already have ROI data on some strategies.

A popular elaboration of this rule is the 70-20-10 model used in different disciplines. Here, it means using 70% of your budget for the most proven strategies, 20% for newer ones, and 10% for experimental options.

This helps you minimise risk while still allowing for a modicum of innovation.

Build a Budget for Your Own Digital Marketing

Young woman calculating monthly expenses, managing budget

As you can see, budgeting for digital marketing involves a lot of thought and has many considerations. You have to think about ROI, which technologies can actually boost efficiency and their cost-to-benefits ratio, strategy prioritisation, and so on.

All of this can be overwhelming. It’s also hard to track if you’re new to the task, which is why so many business owners end up overspending on their marketing without anything to show for it.

But we can help. We have extensive experience in formulating carefully budgeted marketing plans to suit different clients’ needs and resources, matching budget allocations to both their goals and funds.

Should you need that sort of help, contact us for a chat. We can talk with no obligations to you about your possible digital marketing needs and some solutions.


bottom of page