Opinion 6/27/2022,
5 mins

What should I spend my digital marketing budget on?


Where should my digital marketing budget go? 


In an ideal world, to make a business successful it would simply take the invention of a product or service that solves many different problems, and then the customers would instinctively come flocking to it like seagulls on a tray of seaside chips. Unfortunately, that’s a dream world very few of us will get the opportunity to live in.

All successful products and services require some level of financial outlay to bring the general public’s attention to them in the first place, and then additional spend is needed to maintain that awareness and interest. Marketing is a necessary evil, and in my opinion, digital marketing is the smartest way to harness it.

seagulls in flight with stolen food

So how much digital marketing budget is needed, and where should it be spent? 

The question of how much you should budget for when creating a plan for promoting your goods and services will depend on a few things, such as how long you have been in business, which industry you’re in, who your ideal customer is, and where they might be actively online. It should, if you’re smart, also depend on your projected revenue, which will enable you to change your strategies to react to any successes or dips in your revenue streams. We call this the Elastic Budget Strategy. 


What is an Elastic Budget Strategy? 

Also referred to as a Flexible Budget Strategy, this type of marketing plan enables you to work with both a proactive and a reactive approach to your digital marketing. It is the method of managing the marketing budget on a month-by-month basis, aiming to spend no greater than a certain percentage of incoming revenue. The targeted percentage would depend on your stage in your business journey, but a good figure would be around 5%. 

How do I forecast my marketing budget? 

With a Flexible Budget Strategy, you really need to have a good hold on the data you have at your disposal to run it effectively. Some of the aspects you should be keeping tabs on are: 

  • Revenue achieved on the same month across previous years 

  • Any more recent revenue trends you can see 

  • Total marketing spend on the same month across previous years 

  • Spend across individual platforms, ie Google Ads, Social Media Ads 

  • Total orders / sales placed through your various channels 

  • Web traffic trends to your website through individual avenues 


It’s not absolutely vital that you have a grip on all of the above, but they are very good methods of tracking what you’ve achieved to be able to get a ballpark figure of what you might achieve in the coming months, therefore you are able to increase or decrease your marketing budget accordingly. This is where the term Elastic comes in. By setting a ballpark percentage spend vs forecasted revenue, you can control and maintain your budgets on a monthly basis, to manage your business cashflow and ensure the security of your brand in the long term.  

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Did you know? 

The average marketing budget for Business-to-Business (B2B) companies is 13% of company revenue 

Source: Business 2 Community 

Once upon a time, a business owner might have a specific, static figure in mind for what they could afford to throw at their marketing for a certain financial year. They would have expos and events, Print or Out-of-Home (billboards and signs), or broadcast advertising. These would be set in stone and the marketing department would do their work to plan for the year.  

In 2022 and beyond, it is not as simple as that, as there are so many things that can change on a daily, weekly, or monthly basis. For example, for market leading gazebo and party tent retailer Gala Tent, their entire customer base ground to a halt when the Covid-19 pandemic resulted in nationwide lockdowns. Had they worked with a strict budget, planned their year, and spent their money in January, then they would have seen massive financial losses when incoming revenue slowed to a snail’s pace. However, by using an Elastic Budget Strategy, the business was able to switch off or turn down many of their expensive advertising streams in order to maintain a spend of only 3% of revenue.  

Quite often, third party digital agencies are incentivised as Premier Partners of big tech firms to spend more of your company money on paid ads, so are not looking to actively reduce your spend. It’s in their best interests to ensure you use up as much of your budget as you can, so by bringing it in-house or by working with an unbiased agency who is actively looking to reduce your marketing spend by finding ways of promoting your brand for as little outlay as possible (such as Gala Education & Marketing). 

How much should I spend on marketing if I am a business start-up? 

So, you’ve got no previous sales or data to go by, and you’ve got some optimistic projections that you’d like to achieve to ensure you can scale up effectively. It is still possible to run with an elastic budget, and I would argue that an elastic budget is more vital than ever in the early stages of your new business. You’ll need to allow for additional expenditure at the start, such as the equipment needed to do your job and obligations such as insurance etc. So building and maintaining a solid elastic budget strategy will help you to be both proactive    


Articles online suggest that a new business (defined as between 1 - 5 years old) should be spending between 12% and 20% of their annual revenue on marketing, to speed up the growth of the business. This might appear perfectly reasonable, but that seems like a lot of your revenue to us. There’s no need to spend that much of your revenue on advertising, if you spend smart and are prepared to put the time and effort into building your strategies well. You can find our great guide to which forms of digital marketing are best suited for start-ups in a previous blog here, and I recommend you give it a look and see if it helps you to mould your ideas for launching a marketing campaign. My first recommendation when speaking with any clients at all is to get your SEO up-to-scratch. It’s my passion, and something I feel we’ve got down really well here at GEM. SEO is going to save you a fortune in the long term.  

Is SEO cheaper than PPC? 

I’ve had a few different debates online recently regarding what you might perceive as expense. For example, I can say that the cheapest form of digital marketing is SEO, but takes more time and effort to get it right. I understand that in the real world, labour and time equal money, and therefore aren’t free, but very little is truly free in this world, it is simply that I feel SEO in the long term will work out much cheaper than Google Pay-Per-Click advertising.  

Here’s an example that helped to launch GEM from marketing department of a successful retailer to standalone brand in its own right. We spent three months writing and designing hundreds of articles, changing our advice centre, adding dozens of new pages and blog posts along the way. In this time, we spent less on the wages of the people doing the work than we usually would in a single month of PPC advertising.  

Now, it's a fact that if you stop paying for PPC ads, then your ads immediately stop showing and your brand is no longer front stage, centre on the likes of Google. There’s no long-term benefit to PPC at all. It’s an immediate benefit that stops the minute you stop paying. Spending a few months building up your SEO is a much greater use of budget and resources, as once you have it to a place that you’re happy with, you can largely let it run whilst you build something else up, stopping in regularly to check on your rankings and adding more valuable content to your site to maintain your position. 

Is it more difficult for a new business start-up to rank on search engines? 

 The answer is yes. A new business start-up will always have it tougher than an existing competitor website, for a few reasons.  

  • Domain age – a new website will always have it tougher than a domain which is a few years old. Search engines place more trust and perceived authority into a website that is established.  

  • The amount of content – it takes a while to fill a website with enough trustworthy, valuable content for a search engine to sit up a take notice enough to rank your site higher 

  • Backlinks – The World Wide Web is exactly that, a web of sites. By having your site linked to another piece of the web, this site is essentially giving you a vote of confidence in the content you’re writing, and therefore presents you as a good source of information 


So, right now, GEM is in exactly the same situation as you and your business start-up. Our site doesn’t rank for the keywords we want it to. Our site is almost brand new, our website is currently low on content, and we only have a handful of backlinks. A big part of our plan is to implement SEO, and our blog is going to reflect the step that we’re on in our journey. 

I’ll make a point of writing my next blog more about the tricks that I’ve found to work more effectively than others when it comes to SEO, but if you’re keen to understand how to get started with low-cost, highly-effective digital marketing methods, I recommend that you get in touch on 01709 911663 and have a chat with myself or my team about where you are in your journey, and how we can assist you for very reasonable rates.  

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