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How Much Should You Spend on Digital Ads?

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Digital Ads have already evolved in different shapes. As the rapid changes happen marketers came in some time that they could not prove the ROI (Return-on-Investment) of digital marketing. It is now a proven fact that investing in digital marketing generate profitable results.

As a marketer, let us say you have made a decision in investing in digital marketing and set a marketing budget. How much should you spend? What percentage of your total revenue should put in digital marketing? Is there an industry benchmark? What is working for others? The answer to these questions is vital for your digital marketing success.

 

What is Digital Advertising?

Digital advertising, also called Internet advertising is when businesses leverage Internet technologies to hand over promotional advertisements to consumers. It includes promotional advertisements and messages delivered through email, social media websites, online advertising on search engines, banner ads on mobile or Web sites as well as other associated programs.

Starting companies typically spend up to 20% of revenues on marketing. While well-established companies in local markets may spend not that much. The most important thing to keep in mind is that you need a marketing budget based on more than whatever is left over after the utilities, payroll and other expenses are paid. Even the best products and services won’t sell themselves they need to be marketed properly. That is why considering a marketing budget is the same way important to other marketing factors.

For businesses with revenues of $5 million or less, the Small Business Administration recommends distributing a marketing budget of 7-8% of revenues. This would be divided into branding activities and promotions. This proposal assumes margins of 10%-12%. A company with lower margins might need to spend more on marketing.

$2 million revenues = yearly marketing budget of $140,000 to $160,000 is necessary.

 

Digital Marketing Budgets are Increasing Every Year

According to information from Marketing Charts, digital advertising in the US is now a $30 billion larger than TV advertising. TV ad spending will decline by 2.2% to $70.83 billion this year, largely because there are no elections or big events, such as the Olympics or World Cup.

In 2020, plan on spending more about 55% of your marketing budget on digital marketing. Many tech-savvy businesses spend largely more on digital marketing.

The trend of shifting more marketing dollars to digital channels will continue into the foreseeable future. According to some sort of survey, spend on digital marketing is projected to increase from 44 percent to 54 percent of the marketing budget by 2024.

 

You Need a Digital Marketing Strategy

How will you define digital advertising if not the best way to reach customers where they spend the vast majority of their time? The Internet. This form of advertising enables you to reach the right people with the right message at the right time. You may think you’re doing this already through newspapers, flyers, or radio ads. But upon familiarizing such digital campaigns together, you’ll realize just how much digital is raising the bar in advertising.

When done right and effectively, digital marketing seamlessly integrates into your target customer’s user experience on that website, guiding them back to your own site and business. It does so in a natural and non-interruptive way.

Moreover, digital ads can be personalized to maximize the connection to your target customer. This will result in a much-maximized conversion rate. And since it is digital, you can virtually trace every move your customer makes in relation to your ad.

This allows you to achieve an ROI not possible through other means.

Each company will have distinct specific goals in mind, but almost all are trying to reach more consumers and convince them to purchase. But always keep in mind that developing an overall plan and strategy is a critical thing. Not giving this thing significance will result in you running out of money long before you run out of the year.

To do this effectively, you have to take advantage of all the most valuable marketing resources and technologies, and in the modern world, the internet tops that list. Online is where people are. To reach them as a small business, you need to be there, extending your service, generating brand awareness, increasing leads and making sales. That’s why digital advertising is so important.

 

Conclusion

If the trend continues, marketing spends in 2019 will look similar to spend on the preceding year, notwithstanding with more emphasis both on digital channels and technology investments. Creating your own strategy with proper analysis is the best way to bring out what suits your business. Hopefully, this overview of digital advertising will help you determine how much to spend on marketing, how important it is and where to apply those investments. Learn more about Digital Marketing with us. Click Venture and Grow for our free demo.

 

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