Digital marketing budget: Optimize with these tips

27 Jun 2022 | Sales & Marketing

About the author

Hooshang Bakht

Brego Business was started with a mission to make entrepreneurship easy. Our goal is to help business owners grow and scale without having to deal with the day-to-day stress of running a business. We specialize in providing services that help business owners grow their businesses, including search engine marketing (SEM), social media marketing (SMM), LinkedIn marketing, video production, accounts receivable (AR), accounts payable (AP), internal audit, VCFO, and recruitment. We have helped more than 500 brands grow their businesses. We work closely with the clients to understand their unique needs and develop customized strategies that deliver measurable results.

Read More
How To Allocate Your Digital Marketing Budget?

Digital marketing has become oxygen to enable sustenance in the rapidly evolving and competitive business landscape of today. It is probably why 95% of businesses have increased their digital marketing budget in recent years. Most business and marketing leaders are already allocating separate budgets for things like blogging, email marketing, social media and paid marketing. They’re already doing bits and pieces of it, depending on the return on investment and budget available. Based on the Litmus report, email marketing ROI stands at 4,200%. This means, for every rupee you invest in email marketing, you’ll receive Rs. 42 in return. Another report states that blogging is 13% more likely to have a positive ROI.

As digital marketing is gaining traction, it becomes important to plan the right mix of digital marketing budget allocation strategies. Failing to have a digital marketing budget is just like aiming an axe in complete darkness. In our digital marketing world, it translates into a wastage of money, time and effort. Here is a holistic approach to designing a digital marketing budget to consistently increase awareness, generate leads and meet sales goals.

But, why is it so important to allocate a budget for your digital marketing activities?

Know the scene from ‘Wolf of the wall street’ when Leonardo Dicaprio throws money in the street? That is exactly what you should not do with digital marketing. Even if you have that much money, budget your digital marketing activities to avoid running on empty soon.

So what is budgeting for digital marketing activities exactly? Simply put, it is a set amount that a company uses only for its digital marketing activities such as SEO, PPC, Social Media Marketing, Website Development, etc. Now, the question that arises is why budgeting for digital marketing activities is important?

A digital marketing budget actually serves many purposes, but mainly helps you attain a clear direction and track your efforts to share. We have listed a few compelling reasons in favour of budgeting for digital marketing activities.

Our tailored customer-centric approach in marketing maximizes sales.

Search Engine Marketing:Drive traffic, boost conversions & grow your business

Social Media Marketing:Maximize your social media potential & engage with your audience

LinkedIn Marketing:Unlock the power of LinkedIn!

Video Production & Photography:Elevate your business with captivating visuals

Get Started!

Avoids overspending and underspending

Are marketers spending too much on digital marketing? The simple answer is yes. In the U.S. $6 of every $10 of media spending is already allocated to digital. According to a survey done by eMarkters, an average of 26% of marketing budgets are wasted on ineffective strategies or channels. A marketing budget is just like a yardstick with which you can easily measure their ROI and easily plan your marketing expenses.

Brings clarity to the allocation of funds

Digital marketing is deep. There is SEO, content marketing, social media marketing, paid marketing and a lot more. Budgeting for these digital marketing activities will give you a clear insight into your budget allocations across different channels. Suppose you get a higher return on investment from Facebook than Google Ads, you can simply allocate more funds to that channel which gives you optimal revenue.

Gives you a clear picture of the return on investment

While budgeting for digital marketing activities, you will take into account the latest marketing trends. Doing so will help you with customer acquisition and provide the desired return on investment.

Sustain your business growth and profitability

A successful marketer knows that a marketing budget is not just a cost but an effective investment into business growth. Allocating funds to your digital marketing activities will help utilise funds wisely and churn out the maximum results.

How does your budget link to your marketing strategy?

To earn something you’ve got to give something. Marketing experts say money carefully invested in marketing can have a high return on investment, provided that they are backed with the right strategies. This can be especially true in the case of digital marketing because the cost of entry is often much lower than other channels like broadcasting, printing, etc.

Typically you should invest anywhere from 3-10% of your annual revenue on marketing. If your annual revenue is 10 lakh, around Rs. 30,000 to Rs. 100,000 should be invested in your marketing efforts. As digital marketing is growing and is likely to give a better return on investment, half of your annual marketing budget should be dedicated to digital marketing.

Digital marketing does not only consist of your advertising efforts. Essential elements such as website development, search engine optimization, copywriting, social media marketing and planning are aspects that fall under the marketing budget.

Having a dedicated digital marketing budget not only has the potential to expand your consumer base but also establish your business as a reliable and trustworthy brand. Additionally, if your business goals are set at the top of your priority pyramid, a dedicated budget can help you tie your marketing with business goals and keep tracking the progress along the way. The marketing budget will outline exactly how much you want to spend on various activities that fall under the digital marketing umbrella. A digital marketing budget gives you clear insights so you can drop unprofitable campaigns and invest more into those that pay something.

Digital marketing budgets are a little different because the digital space is full of channels. Therefore, developing a digital marketing budget can be an overwhelming and tedious task. When planning a marketing budget, there are a lot of things to be considered and if you miss out on anything by chance, it can have catastrophic results.

Thankfully, there are several budget techniques that you can implement for a good start.

Let’s check out the most effective methods for budgeting your digital marketing activities

The average marketing budget differs from one industry to another. Let’s take a look at how this method applies, along with other budgeting techniques that are effective and result-driven.

The 70-20-10 budgeting rule

It is always tempting to stick to the tried-and-tested budget methods that generated revenue in the past. However, in digital marketing, the scenario is different. Regardless of your industry, 70% of your annual marketing budget should be spent on standard digital marketing activities that have yielded successful results in the past, for example, search engine optimization and affiliate marketing for retailers. Whichever activity falls under this section, should already be successful. Additionally, 20% of the annual digital marketing budget should be dedicated to activities that are new to your business but are result-driven and automated in response. Putting money into innovation helps your business thrive & grow. The remaining 10% of your marketing budget needs to be responsive, agile and more experimental. A small portion of 10% of time & money should be invested in evolving technologies and strategies to stay ahead in the competitive landscape.

Profit-focused budgeting

This is another effective budgeting technique which primarily focuses on your marketing efforts for the most-earning campaigns. While implementing this technique, your marketing budget should highlight two things: the type of marketing campaign you’ll be running and how profitable they are to your business.

You can get better insights by filling out some basic details in the following table.

Campaign Method Number of leads Cost per leads Budget needed Months to mature Average annual profit per lead (Rs. 100) Customer lifetime value

(Rs. 500)

Google Ads Foundation 100 Rs. 70 Rs. 7,000 1 Rs. 3,000 Rs. 53,000
SEO Foundation 100 Rs. 35 Rs. 3,500 6 Rs. 6,500 Rs. 56,500
Social Media Supplemental N/A unknown Rs. 500 3 Rs. 0 assumed Rs. 0 assumed
Content marketing Supplemental N/A unknown Rs. 500 3 Rs. 0 assumed Rs. 0 assumed


This marketing budget provides insights as follow:

  • Which campaigns you are investing in
  • Which campaigns are profitable amongst foundational and supplemental methods
  • How many leads do you need from each campaign to earn profits
  • Whether or not you should increase your budget
  • How long each campaign takes to mature

Along with these two popular budgeting methods, there are percentage methods, goal-and-task methods, what’s in my wallet method and so on. You can also adjust your budgeting techniques depending on the activities you have in the campaign.

If you want optimal results you cannot miss out on the following things while budgeting for digital marketing activities

Budgeting for digital marketing activities today is way different than it was earlier. As you start budgeting for digital marketing in 2022, you should consider the following activities, identify the main marketing channels and align as per relevancy.

  1. Search engine optimisation
  2. Pay per click advertising
  3. Email marketing
  4. Social media marketing

Analyse the results to check what is working and what is not

So you have just allocated a huge fund to digital marketing. Now the next step is to see what has worked and what has not. Even if you have planned the finest details, there are many elements of surprise. The only way to eliminate unforeseen results is to always measure your performance across all channels. Some of the factors that you should measure are cost per acquisition and lifetime value.

Tracking the performance of your marketing budget will give you insights that you can further use to allocate your digital marketing budget more effectively.

Strategising, budgeting and executing your marketing strategy is a mammoth task. If you’d like to work with a digital marketing agency that can help with the entire process, Brego Business can help. Reach out to us by dropping in your details on our website, or direct message us here!

Click To Know About Our Accounting Services

Ready to grow your business?

Drop in your details and schedule a free consultation with our team!

Get Started!

Looking to Increase Revenue Through Performance Marketing?

Generate more business through our performance marketing services.

Get Started!

Book a free consultation with the best

Drop your contact details into the form, and we’ll reach out to you immediately!

Frequently asked questions

What is a digital marketing budget?

A digital marketing budget is the amount of money allocated to marketing initiatives that leverage digital channels, such as social media, email marketing, search engine optimization, and digital advertising.

Why is budget allocation for digital marketing important?

Budget allocation for digital marketing is important because it enables businesses to optimize their marketing strategies for maximum impact and return on investment. By allocating the right amount of budget to the right channels, businesses can reach their target audience more effectively and efficiently.

How do I determine my digital marketing budget?

To determine your digital marketing budget, you should consider your business goals, target audience, and the channels that are most effective in reaching them. You should also assess your competitors' digital marketing strategies and allocate your budget accordingly.

What factors should I consider when budgeting for social media marketing?

When budgeting for social media marketing, you should consider the size of your target audience, the frequency and type of content you plan to post, and the cost of any paid social media advertising. You should also consider the level of engagement you hope to achieve and adjust your budget accordingly.

How should I allocate my digital marketing budget across different channels?

You should allocate your digital marketing budget across different channels based on the channels that are most effective in reaching your target audience and achieving your marketing goals. You should also consider the cost-effectiveness of each channel and adjust your budget allocation accordingly.

How much should I budget for digital advertising?

The amount you should budget for digital advertising depends on the type of digital advertising you plan to use and the level of competition in your industry. Generally, you should allocate a significant portion of your digital marketing budget to digital advertising, as it can provide high ROI if executed effectively.

How often should I review and adjust my digital marketing budget?

You should review and adjust your digital marketing budget on a regular basis, such as quarterly or bi-annually, to ensure that your budget allocation aligns with your business goals and marketing performance.

What are some cost-saving strategies for digital marketing?

Some cost-saving strategies for digital marketing include using organic social media strategies, leveraging user-generated content, and focusing on email marketing and SEO. You can also consider collaborating with influencers or partnering with other businesses to share marketing costs.

How can I measure the ROI of my digital marketing budget?

You can measure the ROI of your digital marketing budget by tracking key performance indicators (KPIs) such as website traffic, conversion rates, cost per acquisition, and social media engagement. You should also use analytics tools to track and analyze your marketing performance.

How can I optimize my digital marketing budget for better ROI?

To optimize your digital marketing budget for better ROI, you should regularly review and adjust your budget allocation based on the channels and tactics that are most effective in achieving your marketing goals. You should also experiment with new channels and tactics to identify new opportunities for growth and engagement.