Have you ever wondered how businesses plan and allocate their digital marketing budget, keep track of their marketing efforts and monitor their ROI?
In this article detailing how to plan and allocate a digital marketing budget for your Nigerian business, you will learn how and more.
Before we proceed;
If you are a business owner yet to understand or leverage digital marketing and its benefits to your business, we highly recommend you read this article first.
Planning and Allocating a Digital Marketing Budget – An Introduction
If you are running a business with growth and expansion in mind, there must come a time when you will need to have a marketing budget (if you don’t have one already).
A modern-day business leveraging digital marketing cannot be successful without a marketing budget.
Marketing without a budget is not only risky; it makes it difficult for you to track your growth. You will have money available without knowing where to channel it for maximum ROI.
What is this Digital Marketing Budget?
A digital marketing budget documents how much your business plans to spend on digital marketing over a specified time. This time can be a year, quarter, or month.
It is a critical part of any company’s operations, and not having one will make your business sail like a ship with a blind captain.
When planning and allocating a digital marketing budget, it’s essential to consider all costs associated with your company’s marketing. Everything from hiring costs, marketing tools, website maintenance expenses, paid ads, and every digital marketing channel should be considered.
As of February 2021, Deloitte’s annual CMO Survey reported that marketing budgets were roughly 11.7% of the total company-wide budget. This confirmed Gartner’s 2020 CMO Survey that stated that most marketing budgets were around 11% of the company budget.
Why you need a Marketing Budget for your Nigerian Business.
Now that you understand what a digital marketing budget is all about and the average percentage it occupies in most companies, let’s discuss why you need a marketing budget for your Nigerian business.
Let’s get started;
1. Digital Marketing Budget helps you allocate Funds to the Right Marketing Channels
This is the immense importance of a digital marketing budget. Developing a marketing budget plan helps you put your funds in places that will move the needle for your business growth.
Tracking how much you spend and where you spend it helps you know what’s working. This helps make upscaling easy and allows you to determine if you can handle hiring more talents for each digital marketing channel.
2. It keeps you On Track
A digital marketing budget keeps you on track financially. This is crucial if you have a considerable sum of money at your disposal. Spending lavishly without a corresponding ROI will cause the business to go downhill.
A marketing budget helps you track how much you spend on each strategy so you know when you’re overspending and when you need to spend more.
3. A Digital Marketing Budget aids Long-Term Planning.
Planning your marketing budget ahead of time gives you more certainty and helps you prepare adequately for the execution. This long-term planning helps prevent you from fighting for additional marketing spend throughout the year in view. It also enables you to buffer any change in funding that will typically demand campaign abruption.
A long-term digital marketing budget gives you a more consistent, flexible, and effective marketing strategy.
4. A Marketing Strategy helps You Set Benchmarks and Goals
A well-defined marketing budget outlines set benchmarks and goals that will move your business forward. You can set realistic expectations for the different marketing channels you wish to employ based on your budget. You also get to know the ROI you need to call your marketing campaign a successful one.
5. A Marketing Budget is an Investment in Your Business’s Growth
Marketing is not a cost to your business but an investment. When you invest in your marketing or anything that will make your marketing successful, you invest in your business.
Learning how to make a digital marketing budget and planning and implementing one moves your business to the next level.
6. How to Plan Your Digital Marketing Budget as a Nigerian Business
This section will discuss the activities involved in the build-up and planning of a goal-driven marketing budget.
As you now understand why you need a marketing budget for your business, we’ll proceed with some essential points you should figure out before planning and allocating your digital marketing budget.
7. Establish Your Sales Cycle (Sales Funnel)
The first step in planning your digital marketing budget (no matter the nature of your business) is to establish your company’s sales cycle.
Your sales funnel is critical to your marketing budget because it determines where your money is going and is where you will check if your effort is worth it.
The sales cycle/funnel is the stepwise process every lead goes through to become a paying customer. It applies to every business, and understanding how your company’s sales cycle works helps you determine where to invest your money.
Stages of the Sales Cycle
There are four stages in a typical sales funnel;
The Awareness Stage: Where your audience identifies a problem and actively starts seeking a solution.
The Consideration Stage: Where your audience starts looking at available options.
The Decision Stage: When a lead starts to narrow down their options and decide on the brand that offers the best solution to their problem.
The Action State: This is when the lead converts into a paying customer.
There is an extra stage in the cycle that involves follow-up and every other outbound effort to assess customer satisfaction, keep lead coming back, and recommending the business.
Understanding this sales cycle helps you discover where to put in more effort to increase your lead to conversion ratio.
With your sales funnel reviewed, you’ll know where your customers drop out of the funnel and take necessary reactive steps.
If you’re not generating enough expected leads, you might want to invest in lead generation strategies like blogging and content marketing, social media marketing, etc.
If you notice your leads falling off the funnel, you might want to invest in lead nurturing activities to help push them beyond the consideration and decision stages. These activities can include email marketing, remarketing and retargeting, video marketing, search, social media ads, etc.
8. Consider Marketing Operations and other Outside Costs
Knowing your sales cycle and where to invest in optimizing lead generation and conversion is one thing. It’s another to evaluate the operational costs involved in implementing the actions needed.
This is where establishing your external costs come in.
You need to consider every variable and know what each one costs your company and what any added variable will cost.
Some of the variables to consider include;
- Digital marketing operational costs
- Employing extra hands where needed (freelancers, contract workers etc.)
- Price of any tools required.
- The cost price of your product/service.
- And so on.
If you want to prepare a robust marketing plan, you should know these costs before creating your marketing budget plan.
Let’s say your product cost price is N10,000 and your selling price is N50,000. You’ll need to factor in every other expense, including marketing, and ensure it doesn’t trespass into your profit.
Knowing how much to allocate to digital marketing in your budget planning helps you adopt digital marketing strategies to get your desired outcome within your available budget.
9. Pen Down your Business Goals
What is the essence of a marketing plan and budget that doesn’t help you achieve your overall business goal?
The critical nature of business goals to planning and allocating a digital marketing budget is why most guides on planning and allocating a marketing budget will always mention it.
You need to know what you want to achieve so you can optimize your budget to achieve them.
Your business and marketing goals can be;
- To increase leads
- To earn more sales
- To earn more subscribers
- To increase brand awareness
- To retain more customers
- And many more.
No matter your business and marketing goals, you should invest in strategies that help you reach these goals.
10. Understand Your Market
To build an effective digital marketing budget plan in Nigeria, you need to know where you fit into the market. You need to know your audience and also understand how you measure up against your competition.
Knowing your audience gives you an idea of the best digital marketing strategies that’ll capture them more. Similarly, understanding your competition helps you see what’s working for them so you can build on it to topple them.
This is where competitors’ analysis comes in, and you can adopt different competitor analysis tools.
11. Have an Idea of the Various Digital Marketing Strategies Available to You.
An essential part of planning and allocating a digital marketing budget for your Nigerian business is choosing the digital marketing strategies that’ll work for you.
To do this, you need to understand the various channels of digital marketing available and have an idea of those that might be the best fit for your business.
Some of these strategies include;
- Content Marketing
- Social Media Marketing and Advertisement
- Email Marketing
- Google My Business (GMB) and Local SEO
- Affiliate Marketing
- Mobile Marketing
- And many more.
Before you continue, read this article that discusses digital marketing, the strategies of digital marketing, and more.
12. Research the Prices for Available Digital Marketing Strategies
The strategies to adopt for your marketing campaign will depend on what the strategy will cost you and if your budget can support that.
You will need to consider handling the marketing yourself or hiring a freelancer or digital marketing agency. You need to evaluate every form of expenditure involved when adopting a particular strategy and check if your budget can handle it.
The price for different strategies varies depending on the model you adopt and the talents involved. The cost for content marketing, for instance, can range from $2000 to $20,000.
How to Allocate Marketing Budget for Digital Marketing in Nigeria
When you have every groundwork done and ready, it is time to plan and allocate a digital marketing budget for your Nigerian business.
Below are six steps to allocating a digital marketing budget the right way.
1. Set Defined Marketing Goals
When you know how much you want to spend and where you want to spend it, it is time to set your marketing goals. This step is crucial in creating a digital marketing budget plan because it helps you determine how much you want to allocate to each channel.
Make your digital marketing goals SMART to increase the chances of achieving them. SMART is an acronym for;
2. Create a Plan for a Defined Timeline
Creating a rough plan for your digital marketing for a specific timeline – three months, a year, a month – helps guide your marketing budget allocation further.
Do well to keep your marketing goals in mind while creating your plan and also consider your buyer’s journey and job to be done. Having these in mind and recognizing every customer touchpoint helps you create a solid plan.
Remember that your plan highly depends on the strategies to wish to adopt for your digital marketing.
A good rule of thumb that will help you here is the 70-20-10 rule;
70% of your budget invested in strategies you know well.
20% invested in new strategies that will help your business grow.
10% invested in emerging strategies and A/B testing.
You can also decide to work with the 80/20 rule;
80% of your budget invested in strategies that generate the most results and
20% invested in research, growth and development.
3. Calculate the Expected Cost and Return on Investment
After creating your digital marketing plan, the next step is estimating the expected cost of each strategy and potential return on investment. Having a rough idea of your possible ROI helps you allocate your digital marketing budget aright.
It’s always tricky when doing a cost estimate for digital marketing budget planning. We highly recommend you look out for every little detail and account for all possible expenses.
Some of the expenses you should consider include;
- Software and tools
- Hiring cost (freelancers and agencies)
- A/B testing expenditures
- Logistics etc.
You can look at statistics and success benchmarks for each strategy and work with that as a guide.
A quick tip: You may want to invest higher in strategies with a high ROI.
4. Allocate Your Funds
After estimating the cost and potential ROI, you can then proceed with the next step in the process – allocating the spending to each strategy. Allocate your budget across the strategies adopted according to the expected costs and ROI, business goals, and available digital marketing budget.
5. Analytics and Re-strategizing
There should be a tracking tool for every digital marketing campaign to check if the ROI is being achieved.
Carefully track your digital marketing campaigns and take note of your KPIs.
If there is a success, note what you are doing right and find ways to replicate or scale them.
If a strategy is not yielding expected results, you can consider reducing the budget for that strategy and reallocating the funds to a more successful strategy.
Be careful, though, when making inferences from your strategies’ KPI. Some strategies require time before results start coming in, while others don’t.
We recommend you evaluate whether you should adjust tactics or reduce the funding before you take action.
Documentation is critical when planning and allocating a digital marketing budget for your Nigerian business.
You should compile your campaigns, strategies, and every step taken together with their ROI data. This will be useful when you are planning your digital marketing budget for the next cycle.
A Recap on Planning and Allocating Digital Marketing Budget
In this article, we have successfully explained;
Why you need a digital marketing budget for your Nigerian business
How to plan a digital marketing budget, and
How to allocate a digital marketing budget for your business.
We hope this helps you move your business to the next level.
Reach out to us if you need assistance with digital marketing services or want to train your in-house team on digital marketing.