Tag Archives: marketing budget

Digital Marketing Budgets

Internet marketing is concerned with creating a Digital Footprint which serves the organisation’s marketing needs. It consists four distinct elements

  • Providing information and education to the various stakeholders, whether they are potential customers, journalists, future employees etc. on the website;
  • Brand building through developing on-line communities, creating digital profiles etc;
  • Other on-line collateral to enhance “findability”; and
  • Direct response advertising.

Budgets need to be divided along the same lines for the best results.

Budgeting for a website

The budget for a website is normally informed by the website strategy as it translates from the organisational strategy. Most of us have built brochure websites in the past, and budgeting is relatively straight forward. The following components should be found in a website budget.

  • Scoping and specification in order to ensure that the site is fit for purpose and easy to use;
  • Design and development;
  • Hosting;
  • Software – there is some question of whether the software budget belongs with Marketing or IT. My suggestion is that if it is a discreet web based software that only relates to marketing, for example a bulk mailing app, then keep it in the marketing budget. However if it is an enterprise software like Microsoft’s’ SharePoint, budget for it in IT and reallocate the relevant portion to marketing, in that way marketing can quantify its returns more effectively;
  • Technical maintenance;
  • Content development and management – this is usually where most website’s fail, because this part of the budget is included in technical maintenance and allocated to the web company who it maintaining the site. Content generation and management is a marketing function, not a technical function and should be allocated to an internal marketing resource or an outsourced content management partner;
  • SEO – budget for the time for developing and tweaking the meta-data which is associated with the web page so that search engines can identify what your website is about and whether it is useful; and
  • Constant and never ending improvement, the modern website is in a constant state of flux and the organisation reacts or pro-actively engages with its environment. The website must be budgeted for in such a way that it can be dynamic and serve the organisation’s best interests.

Budgeting for Brand Building

On-line brand building is the use of social media to create communities, whether they are fans on Facebook, followers on Twitter or registered members of specialist communities such as the Pampers’ mums who blog and message each-other about all things baby.

These communities are used by marketers to create positive associations with the brand, to make the organisation more accessible to its target market as well as to educate them as to the brand attributes etc.

Brand building, while quantifiable is difficult to relate directly into sales generation and so we see fixed marketing budgets in this area. The budget can be determined as a percentage of sales or at the discretion of a pro-active marketer. Marketers do, however, need to understand that the investment is not only a Rand investment into design and development, but there is a far higher investment in terms of human resources. Maintaining healthy brand communities is a labour intensive activity and requires dedicated time to be allocated to the community. It is important to remember that on-line brand building creates a launch platform for enhancing the effectiveness of direct response marketing and increasing conversion rates, as such it is an essential part of the on-line marketing strategy.

Budgeting for “Findability”

A large part of creating a digital footprint is concerned with “Findability”, in other words, making sure that the brand is served up to the potential consumer on-line, at the point when they require the brand’s products or services.

The additional on-line marketing collateral that enhances findability includes blogs and thought leadership articles on specialist forums, the personal profiles of prominent employees on social media such as Linked-in, on-line press releases etc.

The budget for these activities is mainly concerned with the time that people spend on creating the content on the web which ensures that your organisation is found by the right people at the right time. There will be a direct financial implication if you outsource the management of any of these aspects to a professional content generation firm, in the same way as you can outsource your PR.

So far, the on-line budget has been very straight forward, it has included the financial aspects agreed to with the executive and the cost in terms of human resources who are allocated to these highly labour intensive marketing activities. But when it comes to budgeting for direct response advertising, we see an entirely new budgeting pattern starting to emerge.

Budgeting for Direct Response Advertising

The modern web offers numerous ways to create demonstrable and predictable ROI from direct response advertising activities. Well thought-out Internet advertising campaigns produce highly quantifiable results. The big opportunity for business is to recognise that a positive ROI from an advertising campaign means that profits should be maximised by investing more into the campaign.

Progressive marketers should not be constrained by limited budgets, rather, they should be accountable for revenues and net profits and any budget should be informed by the desired outcome. This is set to change the static, set-piece budget battles that marketers have had to fight with their financial counterparts in the boardroom.

In the past 5 years, advertising has been turned on its head by the rise of social media. This new media enables us to contextualise on-line brand messages and calls to action within our audience’s digital environment. According to Forrester Research, interactive marketing will represent 21 percent of all marketing spend by 2014. Those who understand and exploit the new marketing opportunities should not be constrained by a “percentage of sales” budget and be empowered to drive increased profits through marketing programmes that deliver predictable and demonstrable returns on marketing investments.

Advertising is becoming more complex and harder to execute. Audience fragmentation has accelerated making mass market targeting irrelevant to all but the largest brands. The democratisation of content in social media has replaced print, radio and TV as authoritative contexts where product advertising and endorsements drive sales and market share.

Direct response advertising is targeted and measurable. We can determine, with accuracy and predictability, the marketing ROI by campaign. It is the marketer’s job to quantify financial expectations and monitor the results very carefully. If you know you are going to make a profit from your campaign then the constraint is not a budget but the supply of profit drivers. On-line advertising enables CMOs to figuratively buy R100 notes for R50 each, by investing in on-line campaigns that create demonstrable profits at a predictable and repeatable rate.

Building marketing programmes with predictable and reliable profits is the original promise of Internet marketing. High performance marketers start with the premise that advertisers will reach the right customers (i.e., those who are in market with a demonstrable interest in the product or service). This enables advertisers to pay only for the action (click through, register, fill in the form etc.) that is positive proof that the potential customer is in the market and considering their particular offering.

In direct response marketing, the potential customer is interested in a product or service, the advertiser only pays for the click, proof that he is interested in the product or service. With the click, the conversation between advertiser and consumer begins. As long as an advertiser understands the profitability of each sale and the conversion rate from click to sale, he knows the value of each search click (Value of a click = profitability of sale X conversion rate of click to sale). As long as the advertiser is buying clicks from the likes of Google for less than the value of each click, he is guaranteeing a profit on his direct advertising spend. The new limits on marketing spend is no longer the budget, but rather how much can be spent while maintaining the conversion and sale values, or the capacity of the advertiser to deliver products and services.

While the principle is simple, execution is hard because online programmes have many key success factors. These include:

  • Managing a portfolio of multiple, evolving social media types with different conversion characteristics.
  • Purchasing the media so as to limit advertiser risk (e.g., CPA, CPC, CPL);
  • Targeting to ensure conversion rates and sale values stay satisfactory;
  • Developing creative for all consumer touch points (both advertising and user experience) that drive conversion;
  • Capturing, qualifying, and converting customer data. Advertisers need the right tools to transform customer information they gather into sales;
  • Responding rapidly to initial interest. According to an MIT study, responding to consumer interest within 5 minutes versus the following day increases conversion 100-fold!; and
  • Continuously optimising – Direct response advertising takes place in a dynamic marketplace, successful marketers will continuously optimise their media, creative, target segments and sales process to maximise profits.

For advertisers that understand well the value of a sale and how their advertising converts into sales, the marketing budget has been replaced with innovative, integrated marketing programmes that invest every Rand that drives a positive ROI possible.

The Internet has made marketing much more complex. But at the same time, it’s also much more measurable and accountable. Because CMOs can determine which parts of the marketing portfolio provide the greatest ROI, they can demand more from their marketing spend. Successful marketing is becoming less about bigger budgets and more about delivering ROI. Marketing requires being ruthlessly focused on delivering measurable profits.

Future winners in the on-line marketing space will understand that success means investing in continuous improvement that provide increasing and demonstrable profits.

About Digital Bridges

Digital Bridges creates high performance organisations by unlocking the business value of the web. We create digital strategies, user requirement and functional specifications for Intranets, websites and web applications. We also develop and implement social media strategies and create powerful digital brands using eMarketing and Communication.

Digital Bridges is technology agnostic and partners with great technology companies in order to ensure that our solutions are fit for purpose and deliver on organisational strategy.

Digital Bridges approaches the web from a management consulting position and relies heavily on rigorous academic thinking as well as business experience. It is headed up by Kate Elphick who has a Law degree and an MBA from GIBS. Kate has spent the last fifteen years of her career on the business side of the IT industry with companies such as Datatec, Didata, Business ConneXion and Primedia. Her skills include innovation and growth through marketing, communication, collaboration, knowledge management, human capital, performance management, process engineering and BI.

Digital Bridges has a broad range of experience working with significant, successful clients in the Financial, Gaming, Tourism, Pharmaceutical, ICT, Legal, Airline, Professional Services, Media and Public Sectors.

To find out more about Digital Bridges, please visit www.digitalbridges.co.za or contact Kate Elphick on katee@digitalbridges.co.za.

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