How much money should a company spend on digital marketing?

This is a question that comes in the mind of every Start-up and SME. Though every company spends as per the working capital and the capital in hand,90% of them are still confused about the actual cost involved and the most helpful platforms when it comes to digital marketing.

The ideal digital marketing budget

The digital marketing budget must be decided based on the specific purpose that it serves for the company. This blog focuses on the marketing budget of a start-up that has just come up with a fresh idea/concept in the market. It is also relevant for a pre-existing SME that wants to venture into digital marketing.

I would not discuss the marketing budget and needs of the large corporates since they have huge budgets and perform extensive research prior to taking any step. Therefore, this blog is not for them. I would surely take their case up in my next blog.

Ideal Digital Marketing Budget

How to decide the right digital marketing budget?

In my experience, the marketing budget of a company can be decided based on the following marketing goals:

  1. Sharing Information in the Public Domain
  2. Increasing Brand Visibility
  3. Generating business or sales

In the first case, whenever a start-up comes up with a new idea or concept, they need to inform the people about their idea from scratch. For instance, they must communicate thoroughly about the product/service that they have come up with and what impact it has on the target audience. Here, digital marketing can help them share their idea to their larger audience or customer base. In such a case, Facebook is the right platform to reach the maximum number of people.

In the second case, if you are an SME, into a running business having a well-maintained brand presence and are now looking for digital presence, you don’t have to talk about your core idea repeatedly. You can straightaway communicate about your product/service. To reach the right target audience, platforms like google ad words, Facebook and mass mailers are the right choice for you.

The last case would be of corporates who want to reach out directly to the buyer of their service or product. Here, you need both – market presence as well as communicating the right information to the target audience. Therefore, you must incorporate the use of all digital platforms such as Google, Instagram, Facebook, etc to achieve the marketing goal.

Ideal Digital Marketing Budget

What should be the actual digital marketing budget?

I have very clearly discussed the 3 scenarios based on the marketing goals of the company.

To begin with, the one thing that is common to all the above-mentioned marketing goals is the use of organic marketing. Every organisation must engage in regular activities over digital platforms such as Facebook, LinkedIn, Instagram, Quora, Pinterest, etc. and all other relevant platforms. Such activities lead to public engagement and increase in brand credibility in the long run.

Accordingly, the following cases arise for the allocation of the marketing budget.

For Start-ups:

Ideally, a start-up that has come up with a new innovation or venture should communicate their core idea within a specified geolocation or specific state. Being a start-up, the resources for allocation to different activities are also limited. Therefore, the start-ups should begin with telling their idea via organic marketing as well as paid marketing starting a city, town or maximum a state.

Say, you have a breakthrough for a tier2 city, you can begin with targeting the city where your main office is located. This way, you can meet people in person and convince them about your idea/concept. Ideally, I recommend spending 1-2k rupees per day on Facebook marketing activities for a period of 30 days at the minimum. This must consist of both organic as well as paid activities. The reach can be up to 3-8 lac people in this budget in the targeted location, industry, demographics or the targeted behaviour.

For SMEs:

An existing SME’s marketing budget depends upon its real-time presence in the market. The marketing activities should target the people or behaviours mostly in locations where the company’s offices are located. It is so because, in a running business, people are already looking for your services or products. Therefore, I recommend using Google AdWords for SMEs. They must start with targeting selected 2 or 3 states initially. They must ideally spend 4-5K daily on google marketing activities. It will surely help them reach potential buyers and also increase their brand presence.

For Large Corporates:

For any large corporation to be able to generate valid business and sales in the market, it should have an existing marketing activity going on since a minimum of 6 months. Here, the budget is not a constraint in maximum cases. Therefore, the budget can’t be specified in this case. It must be selected as per the company’s internal decisions and allocation.

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Author – Kunwar Devender Singh