How To Calculate Budget For Online Marketing?

June 23, 2017

Social Media, Email Marketing, SEO

How To Calculate Budget For Online Marketing?

It will be a daunting experience for a CMO to realize that the precious marketing budget has been spent with a leap in the dark.

Still lot of businesses follow the same path. As a marketing manager, you should always visualize the big picture. If I need to generate X amount of money in terms of revenue how much should I invest and which marketing strategy should I prefer. Quantifying your goals, so you know what to hit by numbers.

The nature of digital marketing is quite dynamic, it needs continuous monitoring and trade-offs. High volume automated clicks, or high traffic through PPC can make your marketing plan to fall apart. As the market trend changes, businesses should explore new opportunities that can be monetized. You should also decide how much to spend at different stages of the buyer’s journey.

In this article, you will learn how to calculate your online marketing budget based on your end goal: SALES.

1. Calculate Budget For PPC

The success of your PPC (Pay Per Click) marketing deeply depends on the strategy you implement. The concept behind PPC marketing is simple, invest more on the right keyword to earn a better ROI. Your end objective and the keywords you select plays a profound role in determining the campaign’s success.

If your objective is branding, then bid for a general keyword. If your objective is conversion then bid for a focus keyword which the target audience is searching for, and create a landing page to capture the conversion. If you don’t have a strategy in place projecting budget for PPC will be an ominous experience.

Assumptions: Let’s assume that you are going to bid for 50 keywords with an average search volume of 500 per day. In a month the number of search volume will be 15000 (500 x 30).

Past studies have shown that your ad will be shown at an average of 33% on the search engine, considering a CTR (Click Through Rate) of 50% (depends on the message and design your PPC ad carries). So the total number of clicks will be 2475 (15000 x 0.33 x 0.50).

Assuming that the average Cost Per Click (CPC) is $0.5, and you get a conversion rate of 10%. Out of 2475 clicks, 10% of the people will buy what you sell, 247 people will become your customers. And to get these 247 customers you need to invest $1238 (2475 x 0.5).

If you are doing it right your ROI will be directly proportional to the investment you make. Also make sure that you monitor your daily returns, and not to fall into ego based bidding. Your goal is to make money, not to be on top of search results.

2. Calculate Budget For Email Marketing

Email marketing gives you the best possible ROI. Email is one of the elite marketing channel used for business communication, with over 144 billion emails sent every day. So, it’s also a challenge to make your emails stand out from the general emails.

We are in an era of DIY (Do It Yourself) Marketing. We create the strategies and we implement them by ourselves. Statistics published on campaignmonitor.com says that email brings an ROI of $38 for every $1 spend.

For example: our objective is to generate $10,000. How much we need to invest? Based on the stats mentioned above you need to invest a total of $260 (260x 38 = 10,000). In reality, the whole 260 people won’t convert.

Considering a conversion rate of 5 percentage. Therefore the total number of emails you need to send is 260 x 0.05 = 5200. In email marketing, you are also in need of an effective email service provider tool for monitoring and sending the emails effectively. There are multiple email service providers with varying monthly charges like MailChimp ($475/ month), Campaign monitor ($1000/month), and Moosend ($300/ month).

3. Mobile app Marketing Budget

How To Calculate Your Mobile app Marketing Budget?

Mobiles have become an integral part of our life, and apps becoming famous for micro searches and micro-moments. Developers are in a race to unveil new apps, but most of the apps are labelled as obsolete even before they hit the market. An app can increase the engagement rate.

Stats published on kissmetrics.com says that customer retention is a big problem, 90% of the people will interact with your website once are gone within 60 days. So you always need to ask this question, what will be the (LVC) Lifetime Value of Customers. Your customers will stop visiting you if they can find an ongoing value with your service.

Considering that your objective is to get new customers rather than branding. In that case, you need to invest more on advertising. Here I will introduce you to a term called Cost Per Install (CPI). The problem with calculating CPI is that the effectiveness differs significantly across platforms.

In incentivised traffic, you can offer in-app currency in exchange of app installation. The biggest problem with these marketing programs is that the user is not interested in your product, he is after the in-app money (incentive) you offer. Often they will delete the app once the in-app money is used.

Suppose on an average you need 10,000 people to install your app on their mobile, and the CPI is $0.25. Then you need to set a daily budget of $2500. The most amazing thing about this activity is that, once you give it an initial boost, down the line you will be able to get a lot of organic installations.

[Image Credit: Death To Stock]

About Nishant Maliakel Oommen

A dreamer with a penchant for outdoor running, content creation is one of Nishant‘s forte. He thrives in challenging environments and is adroit in inbound marketing. His technical education and experience have enabled him to turn creative thoughts into written reality. In this article, you will learn the importance of, marketing budget and how to create an online marketing budget for your business.

View all posts by Nishant Maliakel Oommen

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