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How to Plan a Digital Marketing Budget

Wilson Lau

Sr. SEO Marketing Manager @ AdRoll

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Established businesses and ecommerce newcomers alike perform best when they create and stick to a strategic plan for the brand. In the ecommerce world, your digital marketing budget is where you decide exactly how you’ll meet your goals for the year for everything from increasing sales and developing new products to boosting web traffic and growing social media engagement.

Setting and successfully managing a digital marketing budget for an ecommerce brand that aligns with your business goals and available resources will help you stay on track throughout the year and get the most from your marketing investment. The key is creating a budget that supports the entire customer experience, from the first moment of brand awareness to the final conversion and beyond.

For a marketing budget template to help you get started:

Step-by-Step Guide to Planning a Digital Marketing Budget

Let’s run through the main steps involved in building a digital marketing budget for your ecommerce brand.

Step 1: Set your business goals

The goals you set in this stage will shape your marketing budget, helping you decide where to allocate resources. It’s important to choose realistic and trackable goals relevant to your brand’s long-term success. If you’ve already developed a marketing strategy, you might have already set your marketing goals, but you might not have included goals for the rest of your business. Sales teams, product designers, managers, and business development leaders should all be at the table for setting a digital marketing budget. This allows you to synchronize your marketing goals with the benchmarks set by other departments. Here are a few examples of helpful business goals that can drive your marketing spend:

  • Your sales team wants to increase the number of purchases and overall revenue from a specific set of products. The more granular you can make your budgeting by product, the better.
  • Your business development and executive teams want to collaborate with similar brands offering complementary products to grow the brand’s audience and prestige in its niche.
  • Your product design team wants to create a new product and needs marketing to develop campaigns to prepare customers for something new. This could mean devoting a specific dollar amount or percentage of the digital marketing budget to campaigns of this nature.

For more on marketing on a budget for small businesses:

Step 2: Assess the customer journey

Your marketing budget must account for the entire customer experience, so any budgetary planning should include a high-level review of your brand’s marketing funnel. Make sure you include all marketing channels, strategies, and tactics that impact how your customers interact with the brand and parts of the journey where customers tend to fall away from the funnel. 

Here’s a potential outline for an ecommerce customer journey. As you build your outline, make a note of the steps in the customer experience that have the most impact on the goals you’ve set so that you can emphasize those areas in your budgeting.

Initial touchpoint: This is where your customers first enter the conversion funnel. The first touchpoint could lead directly to a sale; more often, it will lead the customer further into the journey where they will choose other interactions on their way to making a purchase. Common initial touchpoints include:

  • Social media
  • Organic search
  • Paid advertising
  • Referrals/link clicks from other websites

Other marketing channels: From the first touchpoint, the user may choose from a range of actions to continue their engagement with the brand, such as seeking more information about a product or concept related to the brand’s niche. These might occur through one of your other marketing channels, such as:

  • Email marketing
  • Content marketing
  • Influencer marketing

Website interactions and transactions: This is where the customer makes the actual purchase decision by exploring product categories and assessing individual products to determine which best suits the consumer’s needs. From there, the customer journey will include elements like:

  • Shopping cart
  • Checkout pages
  • Transactional communications (order confirmations, shipping notifications, etc.)

Post-purchase interactions: Brands usually want customers to continue to engage even after the purchase and delivery of the product. Ideally, these interactions can include:

  • Leaving a product review
  • Interacting on social media or creating user-generated content
  • Receiving future email marketing
  • Returning to make more purchases

Step 3: Allocate your resources across the channels you outlined in the customer journey

With your goals set and your customer journey analyzed, you’re ready to start creating your digital marketing budget. Comparing your goals against your current marketing mix and your available resources, assign spending to different channels and tactics according to their importance and impact toward meeting your specific goals. Usually, a brand’s digital marketing represents between 5% and 12% of its total revenue. That percentage may be higher if your ecommerce business is smaller, as you’ll be working hard to attract more customers. Focus spending and resources — including your own time and energy — on the areas with the highest potential ROI for your money. 

Setting You Up for Success

Setting your digital marketing budget may be one of the most important decisions you make for your ecommerce business each year. However, avoid the temptation to make budgeting a once-per-year task. The world of ecommerce is evolving every day, and you’ll need to be flexible with your budgeting to respond to new trends and capitalize on opportunities to grow. A tool like AdRoll can be handy for keeping an eye on the conversion funnel throughout the year, allowing you to review campaign performance and make adjustments in your spending on the fly. Whatever tools you use, your digital marketing budget should reflect your overall goals and the entire customer experience.

For more on calculating your marketing budgets, visit our Return on Ad Spend Calculator.

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