Tips for Planning Your Digital Marketing Budget [INFOGRAPHIC]

You know that if you want your business to grow, you need to dedicate a budget to marketing. Otherwise you could have an awesome product or service but no way to tell consumers about it. But how do you determine the amount of money you should be allocating to your marketing budget? And how do you decide on the size of your digital marketing budget compared to your offline marketing budget?

There’s no easy answer to the question, “What should my digital marketing budget be?” However, this infographic and blog post can help you choose a strategy to plan a marketing budget for your business.

Digital Marketing Budget Tips Infographic

Using a Tactic-Based Approach

One way to map out your digital marketing budget is to break down the costs of individual tactics, line by line, and add them up to get your total cost per month and per year. This approach can be good if your business is new and you don’t have a lot of historical data to work with.

It’s straightforward to calculate your internet marketing budget if you outsource your efforts to freelancers or a marketing agency on a per-project basis. However, it gets a little more complicated when you need to calculate the cost of marketing efforts that you keep in-house. You’ll need to start by estimating the number of man-hours for each project and the cost-per-hour for each employee assigned to the project. When calculating cost-per-hour, you’ll need to account for the cost of benefits, training, and vacation days.

Once you’ve determined the cost-per-hour for an employee, multiply that by the number of hours you expect them to work on the project. Repeat that for all employees who will work on the project to get the total cost of labor. In addition to labor costs, you’ll also need to factor in other resources (such as subscription-based software) to get your total cost for a tactic or marketing campaign.

Determining your Budget as a Percentage of Revenue

Most businesses determine their annual marketing budget allocation as a percentage of their revenue. Different sources will give you different estimates for what percentage of your gross annual revenue you should dedicate to marketing, but as a rule of thumb, businesses that are less than five years old should spend about 12-20% and businesses that are more than five years old should spend about 6-12%.

Businesses that are less than a year old and haven’t established their annual revenue can still use the Percentage of Revenue method, but they’ll need to use their projected revenue when crunching the numbers.

One thing to keep in mind with the Percentage of Revenue method is that it can help you determine your overall offline and online marketing budget, but it won’t help you determine how much you should spend on different strategies. You may find it helpful to research how much other comparable businesses in your industry are spending on different strategies (such as SEO and email).

Basing your Marketing Budget on ROI

If you’ve already established an annual marketing budget but are looking for a way to maximize it, consider adjusting the budget throughout the year based on your return on investment (ROI) for different tactics. For example, if you exceed your ROI goals for a paid search campaign one month, you could increase your ad spend the next month. This budgeting method will allow you to grow your revenue quickly and adjust your web marketing budget accordingly, rather than waiting until the next quarter or year to make changes.

The Tied to ROI budgeting method works best with direct-response strategies, such as pay-per-click (PPC) ads and social media ads. This method is more challenging to use with branding strategies, which may be more difficult to measure.


Looking for more advice on planning your online marketing budget? Download our 2017 Guide to Planning Your Digital Marketing Budget to learn how to audit your marketing efforts and determine costs for different internet marketing strategies.

Madeline Jacobson

Madeline Jacobson

Digital Content Team Leader at Leverage Marketing
Madeline is a writer and Digital Content Team Leader for Leverage Marketing. After receiving her B.A. in English, she moved from Washington state to Austin, Texas, where she worked as an AmeriCorps volunteer and college prep coach before pursuing a career in content marketing. When she's not writing, she enjoys running, attempting to cook, going to trivia nights, and exploring Austin.
Madeline Jacobson
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