How to Allocate Your Digital Marketing Budget
Kyle Kyle
Digital Marketing
May 30,2017

How to Allocate Your Digital Marketing Budget

Allocating your digital marketing budget can feel a lot like playing one of the Laughing Clowns games at a local show. You know the one: you put all the balls into the clown’s mouth and cross your fingers that they land in the high-scoring columns.

With digital marketing, though, you’re dealing with multiple clowns – and I’m not just referring to your colleagues.

Each clown represents a different channel. They all have potentially positive outcomes. But they can all go wrong, too. And it’s your job to decide how many balls you’ll feed to each clown.

Sidenote: We’re assuming you’ve already chosen which clowns to tango with. But if you need some help with SEO services, or any other digital channels contact us today.

Here’s a little reminder of the channels you’re most likely choosing from:

Digital Marketing Channels

Here we’ll look at:

  • Discovering which channels get the best results for your business
  • Avoiding ‘funnel vision’
  • Follow results to get more results
  • Applying the 70/20/10 rule to your digital marketing budget
  • Calculating your channel splits within your Assisted Conversions Report
  • Some bonus tips.


Work Out Which Channels Are Driving Results

First things first, you need to understand what kind of results you actually want. What types of outcomes do you consider significant when deciding if a channel has a high ROI?

  • Traffic and impressions?
  • Conversions?
  • Profit margins?
  • Data and insights?
  • Positive vibes?

All of these are valid and can certainly be valuable for your business… except maybe that last one.

Once you have the stats that are most relevant to you (or ideally all of them), you need to translate that data into something meaningful. Or get your agency to do this.

Word to the wise: Many people rely too much on the ‘funnel’ for this. But this can be a bit misleading

Because many customers don’t follow the funnel. They might interact with your brand 10, 20, 50, 100 times before they make a purchase or enquiry.

And that’s certainly not a funnel.

That’s an impossible labyrinth that’s always shifting and folding back on itself. What, is your customer a damn maze runner?

Maze Runner

Yes. Yes they are. And you gotta deal with it.

How? With an Assisted Conversions Report.

Example: Terry’s Toolshed is a power tool manufacturer and retailer. The digital marketing manager, who is conveniently also named Terry, wants to know how valuable each channel is for the business. He mostly cares about conversions.

In his Assisted Conversions Report, Terry can see that 15% of conversions connected with the brand through Facebook at one stage, and 50% clicked on an AdWords ad at least once before they made a purchase. So both of these activities would appear to be performing very well indeed.

Terry can now predict that more investment in his current channels will most likely pay off handsomely – but not as handsomely as he’ll look when he struts into the CEO’s office with his new report and demands more budget in the next financial year. You got this, Terry.


Follow the Results

Once you know where the results are coming from, you’ll be able to follow the golden rule of allocating digital marketing budget: put the budget (mostly) where you’re getting results.

You might “love Facebook”. Your competitors might get great results from AdWords. Your Great Aunt Bertha might swear by her SEO-only marketing mix.

But none of this means jack if those channels don’t get results for your business.

Enter: The 70/20/10 rule.

  • Dedicate a comfortable majority of your money (the 70%) to an area that’s safe (i.e. the digital marketing channels that have historically performed well for your business).
  • While that 70% is sailing smoothly, take a gamble with 20% of your budget. Choose a new channel that could be a bit riskier but could also produce amazing results if it pays off.
  • Your last 10% is purely for experimentation. Try something a bit out of the ordinary just to see if it has potential to work well for your business. Even if it leads to nothing, your comfortably successful 70% should more than cover this experimental budget. And you never know what you might discover!


Calculate Your Channel Split

Bust out your Assisted Conversions Report. It’s time to get jinky with it.

  1. Align your channels to your objectives.
  2. Align your channels to the different funnel stages. (Then you can also start looking for opportunities and ways to improve efficiency.)
  3. Measure and optimise. But don’t measure everything with the same yardstick.

Not everything is worth the same. Sessions, email addresses, remarketing pixels, social follows… all these things will have different values depending on your funnel, your typical customer journey, and your objectives.

Example: Got Buns, Hun is an e-commerce store that sells food and accessories for pet snakes (specialising in anacondas). Nicki, the marketing manager, has set up an Assisted Conversions Report and is ready to assign some values to her objectives.

She knows that when a user signs up to receive the monthly newsletter, there’s a 50% chance that they’ll make an order of $200 or more within the next 12 months. She also knows that, in general, only 2% of sessions on the Got Buns, Hun website lead to a conversion.

With this knowledge, Nicki assigns a high value of $100 to each ’email address’ objective, but a low value of $4 to each ‘new session’ objective. This means her report will always give her an accurate snapshot of how well her campaigns are performing with everything weighted appropriately.


Bonus Tips

Complementary Channels

Always look for ways to make channels help each other. For example, you can use your blog content to create useful data pools, which can then be used to shape your audiences on Facebook and AdWords.

Bowing Out Gracefully

If a channel is causing you nothing but trouble, don’t feel obligated to ride it out to the end. Keep your digital marketing budget flexible so you can jump ship if things don’t go the way you thought they would.

Watching Out for Ceilings

With almost any digital marketing channel, it’s possible to reach a ceiling. Once you do, you enter the realm of diminishing returns (which isn’t usually a great place to be).

While it’s great to be outperforming your competitors, you don’t necessarily want to get to a stage where increasing your spend doesn’t produce enough results to be worthwhile. Aiming for 100% impression share for paid media might not be as good as it sounds. And doubling your SEO budget doesn’t mean you’ll see twice as much organic traffic to your site. It’s all relative, so keep your ‘ceilings’ in mind when deciding whether to drive more budget to a well-performing channel vs. diversifying into other channels that aren’t excelling yet.

So, there you have it. Hopefully you have a clearer idea of how you’re going to ration those balls between your Laughing Clowns now. And, if not, you might just need to consult a digital strategist.


Digital Marketing
May 30,2017

Author: Kyle

Kyle loves writing and editing content, which is fortunate since he's our Head of Content. He particularly likes creating infographics and interactive quizzes, but he’ll take whatever he’s given to be honest. After working across a range of industries for an eclectic collection of clients, Kyle is an expert in sounding like an expert. He also likes to play tennis and sing, but he'll never get paid to do either of these things.

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