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Importance of an online advertising budget

Importance of an online advertising budget

Online advertising is arguably the most important, rapidly evolving and effective means of marketing today. It is possible to target specific audiences based on their preferences, allowing you to reach anyone with an internet connection, in virtually every part of the world.

What is online advertising?

The term online advertising refers to using the internet to send sales messages to targeted markets, using a wide range of mediums from Google Ads, email campaigns to social media, websites, landing pages and App messaging to name a few. The messaging is usually geared towards driving sales via a specific call to action or to raise brand awareness, thereby engendering familiarity and trust.

Benefits of paid online advertising

Most of the digital marketing strategies Redline creates for retainer clients include online advertising, more specifically PPC Google Ads, as this is the most effective method of online lead generation for businesses across most fields of industry.

There are many benefits to incorporating online advertising in marketing strategies. From a marketing perspective, online advertising is often recommended, due to affordability, measurability and effectiveness, which are important main marketing objectives.   Part creativity and part science, online adverts are highly flexible, they can be crafted to target (and retarget) specific prospects and make it easier for websites to rank in organic searches.

Every business is different

The amount of money required is different for each campaign, depending upon the client’s business goals, target audience and the online platforms used. As with most things in life, the more you pay the more you get, the same maxim is generally true with online marketing. The larger the budget, the greater the opportunity to reach a wider audience and create more effective campaigns.

Every day millions upon millions of people are online searching for products and services, so online advertising is a great way to get your business seen, and to ultimately reach potential new clients. The beauty of online advertising is that in the right marketing agency’s hands, it is a tool that can be effectively used by any type or size of business, from a sole trader to SMEs and large organisations.

How to determine your online marketing budget?

The shift towards a greater reliance on online resources, means that discounting online advertising would be a huge mistake. On the contrary, the emphasis of most marketing strategies should be firmly focused on digital marketing, and the allocation of a realistic budget.

When deciding the right budget, factors such as the size of the business, goals, revenue and overall marketing budget should be taken into account. The amount of budget can vary not only between different companies, but also different industries.

Successful organisations such as Bottomline Technologies, Salesforce, MindBody and Oracle spend over 20 to 50 percent of their revenue on marketing. There is no right or wrong amount, and don’t worry, unless you are in the same league as Apple, no one expects you to spend more than 10 percent of your overall marketing budget on your digital marketing strategy.

What budget should I allocate as a small business?

As briefly touched upon, the question of how much money to allocate to online advertising will depend largely on your business goals, target market and the industry in which you operate. Some industries are extremely competitive, which drives up the costs of digital marketing.  For example, your budget as a small company selling relatively inexpensive T-shirts will not be the same as a real estate agency selling expensive luxury property.

To give you a very general idea of how much budget you should commit, a good place to start would be to allocate between 5 and 10 percent of your company’s revenue. It is recommended that to grow a business you should commit a percentage of revenue back in to marketing, taking into account these three points below.

  • Cost of the product: The more expensive the product or service for sale, the more expensive the ads.
  • Size of target audience: The cost of targeting one city will be different to targeting an entire country.
  • Business goals: What are the goals that you want to achieve?

Are bigger budgets always better?

It is a universal fact, the more money you have the easier life is and this applies to online advertising. Large organisations with big budgets seem to flood every platform with ads, allowing them greater reach, higher frequency, more precise targeting and more opportunities to be creative.

  • Reach: The bigger the budget, the greater the audience impact, which can translate in to more clicks, leads and potential sales.
  • Frequency: A larger increases the frequency that the add is shown, for branding or repeat business ensuring your ads are seen regularly is crucial.
  • Targeting: A larger budget allows a greater degree of targeting of your ads based on demographics, interests, and even past behaviour. This means that your ads will be seen by people who are more likely to be interested in what you have to offer.
  • Creative: If you can allocate more budget to the campaign, you can develop more creative and engaging ads. Making your ads more likely to stand out from the competition and attract attention.

As a small business it can be daunting competing with the big guns, but there is no need to throw in the towel. It is not essential to have a big budget, instead you just need to be smarter: do your homework, identify your target market and craft messaging that will appeal to them. It’s more a matter of being wise about how your marketing budget are spent, being very targeted rather than broader approach that many big companies do.

Smaller businesses can be more flexible, than larger organisations, allowing you to adapt your strategy quickly. For example, if you spot specific customer pain points, you can adapt your ads to offer them a solution.

Reasons to increase your digital marketing budget

Bigger doesn’t always win. If you’re a small business with a limited budget, you can compete with careful research, planning and campaign management. It is essential that the campaigns are closely monitored and optimised to deliver the best results.

Redline’s Recommendations

In conclusion, no matter the size of your company or budget, the focus of your campaigns should always be on the quality of the leads, not the quantity. In order to achieve optimum results, Redline’s digital marketing experts can create an online marketing strategy outlining the most relevant platforms for your product and target market. A dedicated account manager would then work with you to establish the correct budget based on your specific business, set up, implement and manage the campaigns, including research, planning, tracking, optimisation and reporting.

If you would like to outsource your digital marketing, Redline Company can become your external marketing department, giving you access to a full team of professional marketers, including online advertising experts.

In addition to digital marketing, Redline Company offers all types of marketing services, including website design and development, search engine optimisation, lead generation, social media marketing, content marketing, photography and videography and much more.  To find out how we could help to manage your marketing more efficiently, contact us on info@redlinecompany.com or visit our website: redlinecompany.com

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