Digital Marketing is of great importance for entrepreneurs and companies of all kinds today. This is because many consumers spend much of their time connected to the Internet, which has also transformed the way brands are promoted and products and services are marketed. But in this scenario an important question arises: how much should you invest in Digital Marketing to maximize its benefits. Here we explain it to you:
It should be noted that to stand out from your competitors it is necessary to implement an effective Strategic Marketing Plan that will allow you to:
- Increase brand visibility
- Increase customer loyalty
- Build trust and credibility
- Capture new leads
A good investment in Digital Marketing is essential for any brand or company. Well, without an online presence and a good strategy you will most likely not be able to get enough customers and increase your sales volume. Even if you have a website or an online store you will need your potential customers to find it and if you do not appear in the search engines you will not have sales visits or conversions.
Another good reason to invest in Digital Marketing is the fact that your competition is surely doing it and, in many cases, positioning yourself above it, basically depends on having an effective Marketing strategy , not necessarily more expensive but well designed. and executed.
Knowing how much to invest in Digital Marketing can seem complicated especially for entrepreneurs who want to run their own brand. It is known that large companies can invest between 30 and 50% of their annual turnover in Marketing. But for medium-sized companies or startups this percentage will surely be out of reach.
A slightly more viable investment percentage can be between 15 and 25% of total turnover. But this will depend on several factors and the Marketing objectives that have been set. It will also depend on the strategy, the niche and the type of project we are working on.
Reasons why you should invest in Digital Marketing
table of contents [ hide ]
- 1Reasons why you should invest in Digital Marketing
- 2How much to invest in Digital Marketing
- 3How much to invest in CPC
- 4Areas in which to invest in Digital Marketing
- 2Web positioning
- 3Content Marketing
- 4Digital Advertising
- 5Marketing tools and techniques
- 6Social Networks
First of all it is important to note that in this dynamic, competitive, changing and always connected digital world, traditional methods such as newspaper ads, television and billboards are no longer sufficient to keep brands operating in the market.
Thanks to Digital Marketing, it is possible to increase visibility and generate more sales, and although not necessarily the greater the advertising investment, the greater the return obtained, the truth is that without investing at all, surely your business will not be able to take off.
Some of the most relevant reasons why brands and companies should invest in Digital Marketing:
- Digital Marketing channels have great segmentation power, which will allow you to reach your customers based on specific information, such as age, income, location and even personal interests.
- Digital Marketing provides a series of statistical datain real time that allow you to have a better understanding of the effectiveness of your Marketing actions. In addition, your budget can be optimized, since it allows you to adjust the investment in the campaigns according to the performance of the results.
- Digital Marketing techniques are much more profitable compared to traditional Marketing techniques. Indeed, according to some studies, companies that focus on online Marketing tactics or techniques have a lower cost per lead.
- Digital Marketing channels make two-way communication with your leads and clients possible. Answering questions or comments through social networks will bring you closer to your audience and you can provide an individual or personalized interactive experience.
- Digital Marketing helps local companies compete on the same level as large companies. Small brands have the possibility of boosting theirlocal and global traffic , managing to reach their target audience through different Marketing actions.
How much to invest in Digital Marketing
The ideal amount to invest in Digital Marketing varies from business to business and depends on many factors. Calculating or estimating the appropriate amount to invest will require a thorough analysis of the market, potential customers, the Marketing actions to be used and the objectives pursued.
It is not possible to determine an exact correct amount to allocate in the Digital Marketing of your business, since it will depend on the segment you are targeting as well as the objectives of your campaign. Part of the invested budget will be used to pay the professionals in charge of creating your valuable content, images, ads, etc. While another part will be used to pay for advertising on platforms such as Facebook Ads, Twitter Ads, Google Ads, etc.
An important factor that can help you determine the amount of your Marketing investment is the Lifetime Value (LTV). By measuring the net profit that you will obtain in the course of your relationship with the client, you will deduct its value. It can be calculated by multiplying the average income from the sale by the percentage of the gross margin of the sale x the retention rate.
Another relevant metric for both companies and investors is the CAC. Which is calculated by adding the investment in Digital Marketing and dividing it by the number of clients obtained in that period of time, due to that investment.
Knowing how much to invest in Digital Marketing is then reduced to determining if a client is worth more (LTV) than it costs to obtain it (CAC). Taking into account that the CAC must not be more than three times the LTV and that the CAC is made up of Marketing and sales costs.
The best practice is to start with a moderate budget, then evaluate results and then reinvest. Keep in mind that if your ads are of little value you will not achieve the expected results even with a considerable investment.
How much to invest in CPC
The amount to invest in cost per click can be determined by the return on investment you want to obtain. An income / advertising ratio of 5: 1 is considered acceptable for most companies. Which means that for every dollar invested in advertising, you will get 5 dollars in income.
It should be noted that much of the online ad platforms are auction based. It is the advertisers who determine what they are willing to pay. Those who are willing to pay more are the ones who will be able to better position their ads.
To calculate the cost per click it is necessary to multiply the income generated by sale by the conversion rate of the website by 20%.
Areas in which to invest in Digital Marketing
Before deciding in which areas to invest, it is necessary to be very clear about your priorities based on the strategy you want to implement. You should also consider relevant aspects such as who is your target audience, what are their needs and if your products or services respond to those needs.
Analyzed all these questions you can decide which are the areas in which you should invest. The most recommended are:
Keep in mind that your brand, whether personal or not, is one of your most important assets. The brand is your identity and is made up of a series of variables that will make your target audience identify with your project. So it is very important to invest appropriately in building the brand.
The SEO is definitely one of the priorities when making an investment in Digital Marketing. The primary objective is to place you at the top of the search engine results lists. To achieve this you will have to analyze costs and determine the amount you will need to invest in SEO .
The Marketing Content is another key area that need to invest because it will allow you to reach users to answer their research about a problem or need. In addition, the greater the number of keywords you use in your content, the better and faster they will be positioned.
With the exception of advertising, in online Marketing any action taken has results in the medium or long term. This is why you will need to allocate a part of your Digital investment to this area, since if it is well designed, this type of campaign will help you obtain very fast results, maximizing the return on your investment.
H ools and techniques Marketing
Investing in Marketing tools and techniques is necessary and also very important, since they will allow us to obtain data and useful information to analyze and understand if the Marketing actions carried out in the strategy are being effective.
Social networks are an excellent tool to generate close and friendly communication with your target audience. To make an investment in the advertising platforms of social networks it is essential to know what your objectives are and to design an effective strategic campaign that allows you to achieve them.
Now you already have a lot of information to decide how much to invest in Digital Marketing and in which areas you should prioritize the budget. In any case, each project is different and the changing dynamics of the digital environment make it necessary to constantly monitor the effectiveness of the actions in order to adjust the investment and maximize the results.
Article courtesy of Rubén Flores , SEO consultant and website designer. Focused on business growth and implementation of digital marketing strategies. Passionate and collaborator in various media to share experiences in the digital marketing community.