What Is the Ideal Cost of Digital Marketing For Your Business?

Digital marketing cost

Have you been exposed to the overwhelming talks about digital marketing lately? Well, if you are aiming to take your business one step further, you should be. Although, the one question that is surely nagging at the back of your mind if you haven’t invested in digital marketing yet is, “What is the ideal cost of digital marketing?”

It is easy to talk about marketing and the variety of its offspring which have parted its ways from the traditional rut of field sales. However, no matter how much these help you take your enterprise to another level, as far as popularity, sales, and revenues are concerned, they still seem pretty tangent when it comes to making an investment.

How do you actually come up with the figure?

How much will you spend on marketing?

And for how long?

These are but some of the things that matter a great deal to the senior level executives and should definitely be looked into because, more often than not, a lopsided marketing budget can cause more loss than gain.  These losses are manifested through fewer sales or superfluous expenditures on marketing, but ultimately, a decrease in revenue.

So, let’s see how to go about spending on digital marketing.

What is the Exact Cost of Inbound Marketing and Digital Marketing?

This depends on a lot of factors that govern any business – overall business strategy, the revenue, the total investment, growth rate, and the current profit and loss accounts, to name a few.  However, if you do some research, it is possible to narrow it down to a percentage that is indicative. You may not have the exact figure in dollars right away, but you will have a tangible percentage to play with at least.

The Bifurcation

The way that digital marketing has evolved during the past decade, it is quite obvious that there is a clear bifurcation within the domain of marketing itself. The digital way that thrives on the inbound brand of marketing is now only a cousin of the outbound prospecting.

So, now when we talk about marketing cost, we are looking into two different investments – the cost of inbound marketing / digital marketing and that of outbound.


The Marketing Budget

Most companies allocate anything between 10-15% of their budget to marketing. This budget is inclusive of the cost of outbound prospecting towards sales and the cost of digital marketing/web development/SEO. More than 35% of companies in America expect their marketing budget to grow by 10% each year.

The Digital Marketing Budget

Now, if we look at the recent trends in expenditure on marketing, the investment in digital marketing has been constantly dipping each year by at least a percent over the past 5 years or so. To counter that, the investment in digital marketing has been rising at a consistent rate of 2% each year for the same time period.

Now, as we see the trend in 2018, 65-68% percent companies consecrate 25-30% of their marketing budget to digital marketing. So, 10 to 15% of the total investment budget is devoted to marketing, and then 25-30% of this 10% devoted to digital marketing.

Now that you know this basic bifurcation, there is some information that you need to consider before taking the plunge.

Let’s Breakdown the Cost of Digital Marketing

Sticking to the premise that all the figures here are only indicative and not a rule of the thumb, here is a rough breakdown of how much you should be spending on the various components of digital marketing:

The Biggest Chunk – Infrastructure and Team Costs

The recommended extent for expenditure on infrastructure and team is around 60-65% of the total digital marketing budget.

You must keep in mind that no matter what extent of your marketing efforts are automated, it does take people to automate it, and that it takes quite a chunk of investment to hire these people, make a suitable setup (in terms of technology, software, and maintenance), and to keep the efforts going (in terms of measurement, monitoring, research, posting, etc.).

So, you will need to hire people and provide them with computers, technology, and software, so that they can strategize and implement your digital marketing plan.

The Three Cousin Departments

Now, what we are left with is 35-40%, and you cannot make a random investment at that. So, let’s see how we go about it:

  • Around 13-15% of the remaining budget is spent by a business on digital advertising – online adverts (including those on the Internet, smartphones, tablets, and other handheld devices), as well as those on billboards.
  • 12-13 % is usually devoted to content marketing – creating and sharing online content like articles, blogs, videos, social media posts; also adopting social media marketing and Search Engine Optimization. This kind, though, does not promote your business explicitly, does create and sustain the interest of the prospective customers in what you are offering.
  • And the remaining 12-13% is spent on website development and maintenance – developing and maintaining an engaging website so as to always be on top of the Google results and to extend an engaging experience to your customers.

The Curious Case of Startups

This decade and the last decade, to an extent, has been all about startups. However, when it comes to startups, the story unravels somewhat differently. This is why the cost of inbound marketing differs. There are a couple of things to consider here:

  • Overall budgets are smaller than those of small and medium-sized enterprises.
  • Social media tends to be more effective than the traditional methods of marketing.
  • Startups need to attain brand image creation and popularity in a short span of time to be able to break even.

Consequently, the total marketing budget can go way above 10% of the total budget and the cost of the digital marketing budget, much more than just 25%.

We hope this post has given you a perspective about the practicability of inbound and digital marketing, enabling you to make better decisions.

Find out what your digital marketing budget should be and where you should be spending it.

Book your FREE marketing Assessment NOW!

Marketing assessment