How can you determine the budget for a digital campaign?

Budgets are defined by KPIs. If you want a 5x ROAS then spend as much as possible at that return. If you want to own 70% click share on a query, spend until you're there. Easy.

When I'm setting a budget for a digital campaign, the top method I use is to first look at the campaign's goals and then work backwards. For example, say I'm running a campaign for a new line of sports shoes. I'd start by setting a clear goal, like "I want to sell 1,000 pairs in a month." Then, I check the historical data – how much does it typically cost to get a sale through digital ads? If it's $5 per sale, then I'd need about $5,000 for those 1,000 pairs. I also consider other costs like creative development and tools. This way, I'm not just throwing money around; I'm making sure every dollar is aimed at hitting those targets. It's all about aligning the budget with the specific goals and past performance data.

Business 101 says minimum 3% of gross revenue should be invested in marketing to grow the business. If you’re looking to increase by more than 10% growth let’s say, you need to invest more. Look at the revenue you want to make and then it’s another percentage. I have an advertising calculator I use with clients that takes into account location, rent, profits and margins. It’s important to map it all out and then create a long term plan that will drive brand affinity, top of mind awareness and ultimately sales.

Any good marketing budget needs to establish clear goals for revenue growth and new customer acquisition for next year. To determine these objectives, you should first consult with your board of directors, investors, and marketing team to figure out what is reasonable. Once you have your topline goals in place, you can think about how to achieve them and then plan your budget accordingly. You need to know how much it costs to acquire a new customer, which is determined by looking at two separate data points: cost per lead and conversion rate.

Establishing clear objectives for your digital campaign is like charting a course for success. The SMART criteria provide a robust framework, ensuring your goals are specific, measurable, achievable, relevant, and time-bound. It's not just about what you want to achieve, but how you'll measure success. Defining key performance indicators (KPIs) aligns your campaign with tangible outcomes, be it clicks, conversions, revenue, or loyalty. In the dynamic landscape of digital marketing, a well-defined roadmap from objectives to KPIs is the compass guiding your campaign toward meaningful results.

Selecting the right channels for a marketing campaign requires you to have a deep understanding of your audience, where to reach them, and defining your goals in advance. If your success metrics for the campaign are based on awareness, your platform approach may differ than focusing on clients who are ready to buy. You want to consider budget and ensure you have proper allocation for each of the channels so you aren't spreading yourself to thinly which will decrease effectiveness of each platform.

If I'm picking digital channels for a campaign, I think about where our audience hangs out and what we're trying to achieve. Say I'm promoting a new podcast series, I'll lean more into social media and maybe some email marketing. Social media is great for quick, engaging posts, and email lets me dive deeper into what the podcast offers. Mix it up with owned, earned, and paid media, based on the budget and what the campaign needs. For instance, I might use our brand's social media pages (owned), get some influencers to talk about us (earned), and run a few targeted ads (paid). It's all about matching the channel with what my audience likes and where they're most likely to see and engage with our content. Every channel has its pros and cons.

The budget for a digital campaign is directly correlated with the platform used due to differences in CPMs, ad formats, and the competitive landscape. Understanding these dynamics and aligning them with your campaign objectives ensures efficient and effective budget allocation. It’s important to understand what assets you will have in order to spread budget effectively among the platforms you are using.

Estimating the costs associated with each channel is a pivotal third step in crafting a strategic campaign. This financial forecast considers variables like activity type, duration, frequency, market rates, and demand. Various calculation methods, such as cost per thousand impressions (CPM), cost per click (CPC), cost per action (CPA), or cost per lead (CPL), help quantify your investment. Beyond advertising, it's crucial to include expenses related to content creation, management, and optimization – encompassing design, copywriting, analytics, and necessary tools. This foresight ensures realistic budget allocation and a comprehensive understanding of the resources required to drive your campaign effectively.

In my digital campaigns, I use a cost vs. reach matrix to set priorities. It's like a strategy map. I plot each channel based on its cost and the audience it can reach. Social media, often low cost but high reach, usually ranks high. Email campaigns might be costlier but can also have a high reach, especially with a good database. This matrix visually shows me where to invest for the best return, balancing out the spend with potential impact. It's all about smart spending, focusing on channels that bring the most value for my goals. This method streamlines my budget allocation, ensuring I'm hitting the right spots without wasting resources.

Track your key performance indicators (KPIs) meticulously, comparing them against your predefined objectives and benchmarks. Delve into data and insights, discerning what's working effectively and pinpointing areas that demand enhancement. Armed with these findings, fine-tune your budget allocation and optimize your overall campaign strategy.

While all of the above points are helpful, one thing I'd also recommend is having a retrospective on the performance and making sure there is clear communication with leadership of the results. The reason this step is important is to ensure they know "here is what we expected, here's what we got." Digital campaigns do not need to stop once a budget is completed or goal are (or aren't met) - it simply means it's an opportunity to re-evaluate and consider modifying or keeping on the current path. The ultimate goal for any business leader is to drive success for the business, and proving out digital campaigns will help leaders see you want to drive success and you can help directly contribute to that.

In my digital campaigns, I've learned that continuous monitoring and tweaking are essential. Tracking KPIs is just the start; I dive into the data to unearth deeper insights, seeing what truly resonates with my audience. It's about being agile, ready to adjust strategies based on real-time feedback and evolving trends. This dynamic approach, combined with experimenting with different variables, has been key to refining my campaigns for maximum impact.

Understanding the objective or goal is key in determining budget and what to consider success or ROI. Determining the budget for awareness versus sales conversion campaigns requires understanding their different goals and success metrics. Awareness campaigns typically focus on reach and engagement, while sales conversion campaigns target immediate financial returns. By setting clear objectives and continuously monitoring performance, you can optimize your budget allocation to achieve the best results for your business.