How much should I be spending on digital marketing [WITH EXAMPLES]

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It depends.

Ha, there I said it.

I know, as a business owner myself, how frustrating that answer can be when I am looking for a ballpark estimate.

So, let me try and explain why you probably get that answer when asking “how much does online marketing cost?” or “how much should I spend on online marketing?”.

Let’s start with the foundation before we get into the possible fees and costs for online marketing.

Your website is very much like a bucket. Each time you get a visitor to your website, it is like adding another drop of water to your bucket.

Now, imagine you had to carry a bucket filled with water from one point to another point.

Would you choose the bucket with holes to carry the water? Or would you choose a bucket that has no holes?

Pretty obvious answer.

But when it comes to websites, many businesses are pouring water into a leaky bucket (spending thousands on online marketing to a website that is not set up correctly).

So, what can you do to avoid a leaky bucket website?

There are some standard things to include on a website. The list is far too long to include here, so I will share some resources from other smart people.

Here are a few resources that will help you determine whether your website might have a few holes:

12 Critical Elements Every Website Homepage Must Have [Infographic]

5 Psychological Principles of High Converting Websites (+ 20 Case Studies)

Elements Of High Converting Websites

The Anatomy of a Successful Highly-Converting Website

On top of these elements, you need to be very clear on what lead magnets you can offer (to convert the 80-90% of traffic that is not ready to buy), plus you need to have a Sales Email Sequence and Nurture Email Sequence setup as bart of your online marketing foundation.

Let’s assume your website has zero holes (which is pretty much impossible, since all websites are living and breathing things that should change and adapt as your business also needs to change and adapt). But for the sake of this article, we need to get into the cost of digital marketing.

The factors that influence your digital marketing budget

Before I get into more details on each factor, here is the list for quick reference (more details will follow below the list):

  • Your business goals
    • Bigger goals = bigger budget
  • Your budget
    • Yes, you do have a say in what you spend. But your set budget will impact on all of the above factors.
  • Your customer lifetime value
    • Higher lifetime customer value = bigger budget
  • Your industry
    • More competitors = bigger budget
  • The geographic area you want to target
    • Larger area = bigger budget
  • The platforms you choose to market on
    • Some platforms are more expensive than others
  • The number of platforms you choose to market on
    • More platforms = bigger budget

NOTE:

  • Marketing is integrated.
  • Marketing can be complicated.
  • Below I make some suggestions, but these should not be treated as a comprehensive marketing plan for any of these industries.
  • Your website plays a MASSIVE role in the success of any marketing campaign. It is the bucket into which you pour water. Expensive water. Treat it as such.
  • Your copywriting (the words you use) on your website and in your marketing materials is the single most important factor. Forget pictures and pretty colours. WORDS MATTER MOST.
  • Pricing and fees below are just guidelines and should be seen as a guideline for budgeting purposes (and NOT for quoting purposes). These are more or less aligned with the prices we charge, although we don’t offer all of the services mentioned below.
  • You will find cheaper providers, and you will find more expensive providers. Your call to make when it makes sense to pay more (perhaps a specific company specialises in providing services to your industry, and have a winning recipe, and they can charge more). Sometimes you have to look for a cheap provider to suit your budget. Always ask yourself if you feel your marketing investment will be getting a return.
  • Some of the numbers below might look scary to you. You might think you would never be able to make that money back. That’s the secret of marketing. Your marketing should pay for itself. Every R1 you spend should bring in R3 or R5 or R10 in new business. See marketing not as a click-button-make-money process, but rather starting on a journey of starting small and growing your marketing efforts and budget over time.

Your business goals (#1 factor)

Your business goals should be the most significant determining factor in what your online marketing budget should be.

If you are serious about growth and have some lofty goals, you should allocate more budget to your marketing. Just like in offline/traditional marketing.

Want more clients? Spend more on marketing.

Guide (amounts are ex VAT)

  • Plumbing company that wants to just stay top of mind
    • Social media (should include posting and design of posts)
      • R1 500 – R2 500 per month
  • Plumbing company that wants to get 5-10 phone calls per day
    • Google Ads (should include management fee and budget to Google)
      • R10 000+ pm
    • Google My Business
      • R2 999pm
    • Local SEO (Search Engine Optimization)
      • R5 999pm (if it includes Google My Business)
      • R2 999pm (if excludes Google My Business)

Massive difference, right? Both are plumbing companies, but one wants to REALLY grow. The other wants “awareness”. Not that I am a believer in awareness for small businesses.

Your budget (#2 Factor)

The second biggest factor should be your available budget.

Only have R500pm available? Forget about online marketing. Spend it on airtime to call up old clients asking for repeat work or for referrals. Even better, join a business networking group where you can educate fellow business owners about your industry, and they can refer their friends, colleagues and family members to you.

Keep in mind that your budget will dictate what is possible, and what is not possible. Both in which platforms you can use, as well as how fast you can expect results.

HINT: I am part of a local business networking group. The cost is ridiculously lower than any online marketing method mentioned on this page. And the results are much better. Why? Because these are not leads, these are warm referrals for people in the market for my products and services.

Guide (amounts are ex VAT)

  • Garage door company with R500pm budget
    • Forget about online marketing.
    • Buy airtime and call up old clients for repeat work and referrals
    • Join a local business networking group
  • Garage door company with R3 000pm budget
    • Google My Business optimization
  • Garage door company with R6 000pm budget
    • Local SEO (Search Engine Optimization campaign, should include Google My Business)

Your customer lifetime value

The higher your customer lifetime value, the more you can spend on marketing. Why? Because effective marketing is really the act of profitably buying more customers.

And the more revenue you generate from each client, the more you can afford to pay to buy another customer. And another. And another.

Guide (amounts are ex VAT)

  • Local hairdresser
    • A local hairdressers that does all the fancy colouring, and blow waves (and all the other stuff I have no clue about) probably have a pretty decent customer lifetime value.
    • Initial sale might only be a cut and blow (R450?), but if they do it right, they should have a repeat client for a long time (coming back every couple of months for a cut and blow, plus the occassional other treatment. They might even buy some haircare products).
  • Local barber
    • Initial sale is much smaller than the hairdresser (maybe R130 per client).
    • Again, if they do it right, they should have a returning client.
    • But their competition is alot tougher, so not only is their average sale smaller than the hairdressers, they also face much stiffer competition, and probably overall have lower customer loyalty.

Your industry

Imagine the following two businesses:

  • Mobile dog groomer
  • Plumber

The plumber is likely competing with 100s of other plumbers if they are based in a large city (Pretoria, as an example). With 100s of competitors, there are likely to be a few dozen companies who are spending decent amounts on their marketing, which makes it tougher to make inroads into that marketplace.

The mobile dog groomer probably only competes with about a dozen other similar companies. Of those dozen companies, I reckon maybe 3 really have good marketing. Which means in terms of online marketing, this company can spend a good deal less than the plumber.

Guide (amounts are ex VAT)

  • Plumber
    • Google Ads
      • R10 000+ pm
    • Google My Business
      • R2 999pm
    • Local SEO (Search Engine Optimization)
      • R5 999pm (if it includes Google My Business)
      • R2 999pm (if excludes Google My Business)
  • Mobile dog groomer
    • Facebook Ads
      • R5 500pm

Geographic area

Imagine the following two businesses:

  • Accounting firm (10 employees) looking for clients across South Africa
  • Accountant (single man/woman operation) looking for more clients in same city

Should they spend the same amount on online marketing?

No.

Should they be using the same channels?

Probably not.

Guide (amounts are ex VAT)

  • National accounting firm
    • Google Ads
      • R15 000pm – R25 000pm
    • National SEO (Search Engine Optimization)
      • R9 999pm
  • Local accountant
    • Google Ads
      • R7 500pm
    • Google My Business
      • R2 999pm
    • Local SEO (Search Engine Optimization)
      • R5 999pm (if it includes Google My Business)
      • R2 999pm (if excludes Google My Business)

Which Channels

Certain channels will cost more than others. It all depends on your requirements. Your budget, your goals and your industry will be the most important factors to consider before choosing a channel.

Guide (amounts are ex VAT)

  • Plumbing company using Google Ads
    • R10 000+ pm (includes management fee and budget to Google)
  • Plumbing company using Local SEO (Search Engine Optimization)
    • R5 999 (should include Google My Business)

Same company, different channels on Google, different monthly costs.

Number of Channels

This one is pretty straightforward, the more channels you choose to advertise on, the bigger you budget should be.

You don’t want to split a small budget over different channels.

It is critical to start on the right channel for your business, budget and industry. Why? So that you get the fastest possible return on your marketing. The sooner you get the results, you can increase your budget (remember we are buying clients here).

Guide (amounts are ex VAT)

  • Clothing eCommerce shop (local) wanting to improve brand awareness
    • One channel
      • Social media posting (should include posting and design of posts)
        • R1 500 – R2 500 per month
  • Clothing eCommerce shop (national) wanting to drive sales
    • Three channel
      • Social media posting (should include posting and design of posts)
        • R4 500 – R10 500 per month
      • Social media ads (includes management fee and budget)
        • R5 500 – R10 500
      • Google Ads (includes management fee and budget)
        • R7 500 – R12 500

Wrapping up

So, to answer a basic question like “how much should i spend on online marketing?” took many thousands of words. Just to come back to the ‘it depends’ answer.

Sorry about that. But that is the reality. Marketing should be less a question of “how much should i spend”, and more about “how much should i spend to get enough results so that my marketing starts to pay for itself?”.

If I have managed to confuse you even further, perhaps it is time to consider a Growth Mapping session where I help you to come up with a detailed action plan for your business, your budget and your industry.

Click here to learn more about Growth Mapping

Eben

Father of 3. Enthusiastic reader of books. Moderately proficient braaier of meat.

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