As we near the end of 2024, your business is most likely busy planning for the upcoming year. This annual planning can involve a wide range of topics, and one of the most important items to address is your 2025 digital marketing budget. Implementing a successful digital marketing strategy is critical to your ability to achieve your growth goals in the upcoming year, and setting a proper budget for these efforts should be determined through thoughtful planning.
A surprisingly large number of businesses either don’t create a digital marketing budget or fail to allocate enough resources to this budget each year:
- 47% of businesses spend less than $10,000 per year on digital marketing
- The level of spending on marketing is even lower for small businesses, as 66% of small business owners spend less than $1,000 on marketing every year
- 45% of businesses doing digital marketing don’t have a defined strategy for it, making it virtually impossible to establish a proper budget
- Many small businesses often underestimate the costs associated with running successful digital marketing campaigns, making it challenging to set a proper budget for their needs
Importance of Creating a Digital Marketing Budget
Every successful business relies on a digital marketing strategy to generate the quality leads necessary to grow and thrive over time. However, simply creating a digital marketing strategy is not enough to achieve your desired results. You also need to know how much to spend on these efforts. Without a digital marketing budget, you risk overspending on your marketing efforts, or even worse, underfunding the campaigns most critical to your success.
Creating a digital marketing budget for the upcoming year will provide several important benefits for your business:
- Makes it easier to get your leadership team to buy into your overall strategy and understand why these resources are being allocated to your marketing efforts
- Helps your business allocate resources strategically across the platforms and initiatives that will deliver the most impact
- Reduces wasteful spending that can be devastating to your profitability
- Allows you to more easily track marketing expenses and determine the ROI for each campaign
- Creates greater accountability among team members by requiring them to justify their spending decisions based on performance metrics
While setting an appropriate budget for your digital marketing efforts plays an important role in achieving your business goals, there’s no tried-and-true formula to ensure you get this critical aspect of your planning right. There are a wide range of factors that must be evaluated and steps to take when determining your digital marketing budget for the upcoming year. The following guide will help you navigate this process.
Important Factors Impacting Your Digital Marketing Budget
There are several important factors that will impact how much you spend on marketing next year, as well as where you allocate this money. Evaluating the following factors during the planning process will help you set the proper budget for the needs of your business.
Marketplace Trends
Make sure to identify the latest trends impacting your industry, as well as the current state of the broader economic landscape. These trends may help you identify growth opportunities that will impact your digital marketing budget for the year.
You should also conduct a competitive analysis to see what the other leading businesses in your industry are doing. This can potentially help you determine gaps in the marketplace where your target audience isn’t being served by your competitors. If your offerings address these needs, allocating more resources to marketing these specific offerings can potentially help you attract new customers and boost revenue.
Company Growth Goals
Your projected target revenue and overall growth goals for the upcoming year will play a major role in how much money you need to spend on your marketing efforts. If you’ve established aggressive sales and revenue goals to spur company growth, you’ll likely need a substantial digital marketing budget to properly support and achieve these goals. Similarly, if you plan to introduce new product or service offerings next year, you’ll need to make sure you allocate enough marketing resources to properly raise awareness for these offerings.
Your growth goals may also impact your decision regarding whether to increase your digital marketing budget next year or keep it similar to where it has been. In general, you’ll most likely want to increase your digital marketing budget when you have aggressive growth goals. However, if you’re primarily aiming to maintain your current level of sales and customers, you may be able to establish a similar budget to what you’ve been using, provided that your data indicates this budget has been sufficient to achieve your goals.
Target Audience
The needs of your target audience will also impact the size of your digital marketing budget as well as the channels you devote resources to. Knowing the needs, concerns, motivations and preferences of your target audience will help ensure your marketing dollars are being spent properly.
If your growth goals involve targeting a new audience this year, it will be important to dedicate sufficient marketing resources to connecting with this audience. This will involve conducting market research to better understand how this new target audience makes decisions, where they consume information, and the types of messaging that best resonate with them. You’ll need to plan for the resources necessary to complete this market research when you establish your digital marketing budget.
Steps to Take When Creating Your Digital Marketing Budget for 2025
While there’s no tried-and-true formula to determine your digital marketing budget for the upcoming year, there are certain steps you should follow to ensure you identify the proper amount of money to support your goals, as well as the right places to allocate these resources.
Review Your Current Performance and Spending
When you’re developing your digital marketing budget for the upcoming year, you should always start by taking a look back at the current year to see what worked well, what didn’t work, and what areas can be improved:
- Break down exactly how your resources were allocated across different campaigns and different aspects of your digital marketing strategy.
- Which campaigns and platforms drove the most leads, conversions and sales?
- Which campaigns and platforms underperformed?
- What was the ROI of the resources devoted to each marketing channel?
- What was the ROI of the resources devoted to each phase of the marketing funnel?
This information will provide important insights that drive the decisions you make when determining how much money to spend on digital marketing in 2025 and where to allocate these resources.
Set Clear, Measurable Marketing Goals for 2025 and Develop Your Digital Marketing Strategy
In order to determine your digital marketing budget, you must first establish your marketing goals for the year. Your marketing goals should align with your overall business goals. In addition, make sure your marketing goals are SMART (specific, measurable, achievable, relevant and time-bound).
Once you’ve set clear goals and established success metrics for each one, you can use these goals to craft your digital marketing strategy for the upcoming year. It’s critical to have your overarching strategy in place before setting your budget so that you’ll understand the resources that are required to implement your strategy and achieve your desired results.
If you’re uncertain of how to develop an effective digital marketing strategy, we’ve got you covered. Read our step-by-step guide to developing a digital marketing strategy.
Leverage Data When Making Budget Decisions
The digital marketing landscape is becoming more complex every year, as new channels, tools and approaches are developed. Simply relying on what has worked in the past without objectively assessing the effectiveness of these methods in the current marketing climate can have devastating consequences, resulting in resources being spent the wrong way. Similarly, just relying on your instincts to determine your marketing budget can lead to equally disastrous results.
One of the greatest benefits of relying on digital marketing instead of more traditional marketing methods is that you’re able to acquire a wealth of data regarding the performance of your strategy. This data is an extremely valuable tool that will help guide your marketing budget decisions. Some of the ways you can leverage your marketing data include:
- Use customer segmentation data to add personalization to your campaigns
- Use ROI tracking to ensure your marketing resources are allocated to the highest performing channels
- Use lead attribution data to make sure you’re allocating resources to the channels that deliver the highest quality leads
- Monitor real-time data to make adjustments to your strategy and your budget based on the results you’re achieving throughout the year
Identify the Marketing Channels You’ll Use as Part of Your Strategy
There are too many digital marketing channels to include all of them in your strategy. Instead, the most effective digital marketing strategies identify the channels that will most effectively reach your target audience and deliver the results you need to achieve your overarching goals. Once you’ve developed your digital marketing strategy and reviewed your performance data, it’s time to identify the marketing channels you’ll prioritize over the upcoming year.
When determining which channels you’ll use:
- Research the channels where your target audience spends their time, and make sure these channels are included in your strategy
- Experiment with a mix of channels (social media, organic search/SEO, paid ads, email marketing) to ensure you reach your audience in multiple ways and remain on top of mind as they make their purchase decisions
- Allocate a portion of your budget to testing newer platforms that have emerged in the last year or two and haven’t been part of your previous campaigns
- Track performance to determine which channels have traditionally yielded the best results for your business
Once you’ve determined which marketing channels to focus on and evaluate the performance data for each channel, you’ll be able to make informed decisions regarding how much money you need to devote to each channel to achieve your desired outcome.
Allocate a Portion of Your Budget for Content Creation
Choosing the right marketing channels is only part of the equation – you’re also going to need to post quality content on each of these channels. When you create engaging content that resonates with your audience, delivers the important information they need, conveys your brand messaging and establishes your business as a trusted thought leader, you’ll have a powerful tool that drives leads and helps you grow your customer base.
While it may be tempting to simply rely on the latest AI-powered content tools for all your content creation, this approach typically won’t provide the high-quality content you need to engage your audience and grow your business. These tools can be a part of your content creation approach, but it’s also important to include a budget for human content creators that can make sure all the content you produce is factually accurate, on brand and addresses the needs of your audience.
When determining your content marketing budget, consider the following factors:
- Costs associated with any content marketing professionals (writers, videographers, designers) that will be tasked with creating your content
- Costs associated with any AI content platforms you’ll use to assist with your content creation (most of the best platforms require a monthly subscription)
- Types of content you’ll need to create throughout the year (web pages, blogs, infographics, videos, social media posts, paid ad landing pages, email newsletters, etc.)
- Frequency you’ll need to post content on each of your marketing channels
- Any additional costs associated with creating and posting content on your various digital marketing channels (stock image subscriptions, design platform licenses, video creation tools, etc.)
Allocate Marketing Resources to AI Tools
AI has become an integral part of the marketing process over the past few years. There are many AI automation tools available that will streamline your processes, improve your efficiency and save you time. Leveraging these tools can help take time-consuming tasks off the plate of your team, freeing them up to focus their time and energy on the creative and strategic aspects of their job. When determining your digital marketing budget, identify which AI tools will most effectively elevate the results of your team, and make sure to include the cost of these tools in your budget.
Just keep in mind that AI tools should be viewed as an assistant that helps your team be more successful. They aren’t a substitute for human professionals who have extensive experience in marketing. You’ll still need a team of individuals to wield these tools and ensure they’re being used correctly and in a manner that enhances your marketing results.
Build Your Budget
The final step involves putting all this information together to build your digital marketing budget. Once you’ve gone through all these steps, you should have all the insights you need to determine how much money it will cost to implement your marketing strategy and achieve your goals. You should also understand how to best allocate your budget across the different channels and tools you’re using for the campaigns you plan to run.
In a perfect world, you’ll have plenty of resources to devote to your digital marketing efforts in the upcoming year. However, most businesses don’t live in a perfect world. If after crunching all the numbers, you find that you don’t have a large enough budget to implement your entire proposed strategy, it’s time to dig into one final piece of planning:
- Identify the components of your strategy that are most critical to your success and make sure you budget the resources needed for them
- Make a list of the items you can do in-house and which items can potentially be outsourced
- Research the cost of outsourcing the components of your marketing strategy that you can’t afford to implement in-house
- Look critically at the remaining items to determine what you can keep in the remaining budget available and what may need to be cut due to insufficient resources
Webolutions Can Help You Plan and Implement Your Digital Marketing Budget
If this process seems overwhelming to you, you’re not alone. Many businesses struggle to establish the proper digital marketing budget to achieve their desired goals. Often, it can be helpful to work with an experienced digital marketing agency that can guide you through this process. At Webolutions, we have you covered.
Webolutions has been Denver’s leading digital marketing agency since 1994. During this time, we’ve worked with businesses of all sizes in a wide range of industries, providing the comprehensive digital marketing services they need to grow and thrive. This experience helps us understand the important factors that will impact your marketing budget. Our team will work with you to identify your marketing goals, create an effective strategy to achieve your desired outcome, and establish the budget necessary to implement your plan.
You’ll benefit from our transformational Intrinsic Multiplier™ Approach focused on helping you grow your business smarter, faster and easier. As part of this unique approach to digital marketing, we’ll engage your team on a collaborative journey to establish your competitive differentiation based on your company’s purpose, core values, mission, strengths and culture. This information will be used to formulate your industry leading market positioning and create a brand platform that conveys the messaging that will resonate with your audience. We use this process to craft a comprehensive marketing strategy that will position your business for ongoing success.
Contact us today to schedule a free consultation. Webolutions provides comprehensive digital marketing services to clients nationwide from our offices in Denver, Colorado.
