I don't think there is a single person in the workforce today that isn't concerned about their budget. People are spending money more cautiously than ever. Business owners are combing through their operating budgets to see where they can trim costs, while consumers are cutting back on unnecessary purchases so they can afford to buy groceries and put gas in their vehicles. This is why your advertising budget is more critical than ever. Here's the truth about how your digital advertising budget and what to do and not do.
What the Recession is Doing to Consumer Buying Habits and Business Operations
It's a known fact that consumers are more likely to buy from people they trust. Brand recognition and authority foster this trust. During recessions, consumers set stricter priorities and reduce their spending. As sales decline, businesses typically cut costs. Marketing expenditures are often slashed in haste. This knee-jerk, cost-cutting is a mistake.
Why is an Advertising Budget Important?
The short answer is that you will miss out on some crucial inbound marketing opportunities! According to Dataportal an estimated 5 billion people worldwide use the internet. That's the equivalent of 63% of the world's population. This is where people are searching for answers to questions (like you searched about advertising budgets and found this article). Another thing to consider is the ability to reach your audience wherever they go, thanks to mobile devices. In a recession, consumers still have needs. Even though their needs have changed, that doesn't make them less important. Responding to shifting demand in your overall inbound marketing tactics is key. Ignoring your digital advertising budget as part of that strategy is dangerous and will leave your business at a disadvantage.
The 7 Advantages of Digital Advertising
Digital technology has given marketers a plethora of tools to allow marketers to be more focused and strategic in getting their message in front of the right people at the right time. Here are some of the ways digital advertising goes to work for you:
- Digital advertising is targeted
- Provides flexibility across channels
- Invites mobile engagement
- It's faster to market
- Easily measurable
- Maintains top of mind awareness
- It can go viral
Here's a great resource on how to increase brand awareness with paid search advertising. You're probably still thinking, "I can't afford to spend money on advertising." But I'd argue that you can't afford not to! If that's the only thing you take away from this article, then I've done my job.
How Much of My Budget Should I Spend on Digital Advertising?
This is probably the biggest question we get from clients when strategizing their advertising plan. It's not a simple answer because there are a lot of factors to consider. You can't throw so much money at it that other vital parts of your operating budget are neglected. And every business is different. What works for one won't necessarily work for another.
According to the experts at HubSpot, here's what you should think about when deciding how much you should spend on digital advertising:
- How much investment is needed to hit my revenue goals?
- What percentage of my marketing budget can I realistically afford to spend?
- What is the lifetime value (LTV) of my average customer?
- How well am I converting website visitors into leads and leads into customers?
- How much money am I spending on each bid?
Whatever you decide you can afford to spend, plan to allocate that budget for a minimum of three months. This time frame will provide you with reliable data so you can evaluate what is working and what isn't and make adjustments. Seeing big results takes patience and time.
The Biggest Money Wasters of Your Digital Advertising Budget
One of the best ways to maximize your advertising budget is to spend it wisely. It's very easy to just throw an ad campaign together without proper prior planning. And we all know what kind of results that yields. Here's where businesses most often fail with digital advertising.
- Overlook doing the proper research before creating ad campaigns. This includes buyer personas and demographics, buyer's pain points, buyer's journey stage, competitor research, etc.
- Design ad creative based on the designer's taste, not what might resonate with prospective buyers.
- Create only one version of the ad creative and not have a backup plan if that one flops. (A/B testing is a valuable tool)
- Neglect to check on the performance of the ad campaign.
- Set up the ad campaign to run for a few days, then decide it isn't working based on scant data.
How to Get the Most Bang Out of Your Digital Advertising Budget
This is really going to depend on how you approach it.
First things first, determine how much you can afford to spend. Know your goals and do your research on buyer personas and demographics, buyer's pain points, buyer's journey stages, and your closest competitors. You will need this information no matter who does your advertising strategy. Check out these three tips for paid search advertising to generate leads online.
If you don't have any experience with digital advertising, it would be a good idea to hire an inbound marketing agency that has experience with marketing strategies and digital advertising. That way, your budget will be used effectively, and you will begin to see results from your digital advertising efforts. HIVE Strategy can help decide what's the best option for you. We'd love to chat! Get in touch with us here.