Digital marketing typically refers to marketing campaigns that appear on a computer, phone, tablet, or other device. It can take many forms, including online video,display ads, search engine marketing, paid social ads and social media posts. Allocating a budget for digital marketing is key to your success.

1. Outline Your Sales Funnel

Before diving into the numbers, take some time to step back and look at the big picture of your marketing to sales funnel. What steps along the process are important touchpoints? Knowing how customers find you and what they need to understand about the brand before they convert helps you know what activities are priorities to invest in.

2. List Your Operational Costs

Operational costs are non-negotiable in a budget. These costs need to be taken care of and should be set up first so you know how much budget is available for other activities. Operational costs can include website hosting, SaaS subscriptions, platform costs, or other taxes and fees.

3. Review Last Year’s or Quarter’s Results

One final set-up task you’ll want to do is looking into the metrics and reports from previous quarters and years. Were certain campaigns successful? Did you reach goals or receive an ROI for initiatives? If you know what worked and what didn’t, you can start to add or eliminate specific activities.

4. List Your Goals

Knowing your goals for the year is crucial to allocating a budget for different activities. What do you want to achieve, and how much revenue do you need to bring in? Are you looking for leads, conversions, or sales? Having goals in place helps you understand which types of activities are most beneficial for your budget.

5. Drill Down to the Details

After setting your goals, it’s time to drill down into the details. How do you want to achieve those set goals? What types of activities have proven or do you believe are going to be the best ways to go about reaching your goals? Detailing out your marketing plan gives you direction on how to allocate a budget.

6. Select the Best Channels for Your Business

There are many different types of channels that you can use for your marketing initiatives, but not all brands need to have an active presence in each channel. Pick what channels are the best fits for your business and look at the costs associated with operating in each channel.

7. Determine the Cost of Marketing Activities

Once you know which channels you want to focus on, take a look at the costs of marketing activities within those channels. Do you want to grow on social media? Then how much does it cost to run ads and promote posts? Make sure your marketing activities fit into your set goals.

8. Scope Out the Competition

Your competitors can be a great resource when it comes to determining how to allocate budget for digital marketing. What methods of marketing are they investing in? How do those methods help them gain a bigger audience and close more sales? Examine their marketing and advertising strategies to help you know what channels and campaigns work in the industry.

9. Create Your Marketing Plan

With all the pre-planning and research out of the way, it’s now time to actually create your marketing plan. Whether you are planning for the year or for a quarter, build out each of your initiatives based on the goals that you have, the tools you’ll need to achieve those goals, and the channels you need to focus on to reach your audiences.

10. Estimate Your Budget

Once your marketing plan is built, you need to go through an associate an estimated cost for each activity. Take a look at what is required to get a reasonable ROI and then an exceptional ROI. Estimate as close to the dollar amount as you can for every step of the plan and finalise your budget.

11. Make Every Decision Based on the Data

You’ll likely be required to present your budget to upper management or leadership in your organisation. That’s why it’s important to have clear data to back up every decision. Don’t just say that you think it will cost a certain amount to run ads — have research and studies and past data to show exactly how much a successful ad campaign costs. This helps create trust in your plan and your leadership skills.

12. Measure Results

After your budget is approved, you still need to monitor your spending closely and look at the results you are getting.