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How Online Marketing Budget is Money Well Spent

Stored in Marketing and tagged
Local Search Optimization

An online marketing budget is money well spent if it results in more profit, revenue and audience.

Many websites don’t spend a dime to market themselves. They depend on “free” options such as search engine optimization and social media. (But they still require labor, so in that sense they aren’t free.)

A small percentage grow large audiences if they have been around for many years, have a unique attraction or just work extremely hard at building eyeballs.

But even a small marketing budget makes a difference if a website publisher uses it carefully.

It is important to distinguish between a launch budget and a maintenance budget.

A launch budget is a separate amount of money dedicated to making the public or target audience aware of the new site. The marketing campaign usually begins on the day of the launch and continues for a matter of days or weeks. Once the money is spent, that budget ceases to exist forever.

Smaller companies often spend money on building or rebuilding sites for launch but don’t spend money on promoting their launches.

Site Maintenance Budgets

The maintenance budget takes over after the end of the launch budget. On a periodic basis, such as a single month, it usually is smaller than the launch budget. Its goals include:

  1. Creating awareness for the site with audiences that weren’t reached with the launch campaign.
  2. Building enough audience to generate revenue from advertisers, subscriptions or ecommerce.
  3. Targeting specific sections, features or audiences.
  4. Encouraging return visits.

We have to note the difference between discretionary versus non-discretionary expenses in an online marketing budget.

Marketing people would love to see the promotional budget that accounting treats as a necessary or non-discretionary expense. That means it doesn’t get cut back much or at all during times of weak financial performance.

In reality, the promotional budget — which is the money spent to advertise the site — is one of the first items that management cuts when profit and revenue misses start to loom.

Marketing Budget Tips

Online budgets often have about 30 to 35 percent of revenue dedicated to sales and marketing, including staff. Look up the financial reports for major online companies to see their pattern.

The amount a publisher should dedicate to the promotional part of marketing often depends on the age of the site. The percentage is usually higher for young sites and lower for older ones.

A site that relies heavily on advertising revenue will have a larger part of the sales and marketing budget devoted to sales. The biggest piece of that pie often goes to the salaries and commissions of salespeople and managers.

As a general rule, a promotional budget at 5 percent of total expenses is enough to grow an online audience at a healthy pace for an existing content-rich website. That number also has some downside cushion in case of budget cuts.

Even if the cut takes it down to 1 percent, the money is well spent if it targets features or audiences with a high return on investment. Again, that ROI is usually advertising, subscription or ecommerce revenue.

Best Time to Spend

The money is best spent in the spring and fall. Avoid the summer in particular when school is out, people go on vacation and site traffic tends to get soft.

Limiting or avoiding expenses in January and February have the benefit of saving money in case revenue misses target later in the year. It protects the more important profit margin as well as protecting the job security of the manager responsible for the budget. However, those two months tend to have dips in online ad rates.

January and February Tip

Some business see a plunge in revenue during those months because retailers cut back on advertising after spending quite a bit on their Christmas promotions. Others may actually see an increase, such as travel to warm destinations for people wanting to escape northern winters. Caribbean travel guides are a good example of this trend.

Finally, when you do spend it, spend intensively over multiple channels with the widest possible reach and an ideal frequency of three to six impressions per person. We have always found that a single large campaign gets a better response than several smaller ones that use the same amount of money.

Look at the results, judge the best return on investment and revise the online marketing budget according to those numbers. It’s also a good opportunity to review tactics to see which ones are falling short and whether revisions are needed.

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