Factors to Consider When Creating a Digital Marketing Budget

Team Pepper
Posted on 31/12/219 min read
Factors to Consider When Creating a Digital Marketing Budget

Table of Contents

  • What Is a Digital Marketing Budget?
  • Why Is It Important to Have a Marketing Budget?
  • Things to Keep in Mind When Planning a Digital Marketing Budget
  • Key Takeaways
  • Conclusion
  • FAQs

Digital marketing has become indispensable for modern businesses to thrive and sustain in the competitive landscape of today. The world of digital marketing is deep, with innumerable strategies that can be adopted in order to market your product to the right audiences. But it is extremely important to plan the right mix of digital marketing budget allocation strategies for the different online marketing platforms available at the disposal of marketers.

Failing to have a digital marketing budget in place is like aiming an ax in complete darkness, the outcome of which is bound to be uncertain. In the world of digital marketing, it translates into wastage of money, time, and effort. A complete hit and miss! This blog takes you through a series of steps that outline exactly what factors you need to keep in mind when creating your digital marketing budget plan and how it will benefit you in the long run.  

What Is a Digital Marketing Budget?

Simply put, a budget is a financial plan for a defined period of time. A marketing budget is, therefore, a financial plan for the marketing expenses that you are comfortable spending on your business over a specific period, which could be a month, quarter, or year. The following expenses can be included while preparing your marketing budget. 

  • Paid advertising
  • Registering blog domain
  • Hiring marketing personnel
  • Sponsored web content
  • Marketing automation software
  • Other website maintenance expenses

The above list is not exhaustive and every organization can decide, depending on the nature of their business, whether a particular expense qualifies to be included in their marketing budget.  

Why Is It Important to Have a Marketing Budget?

Before we dive into the things that should be considered when planning a digital marketing budget, it is important to truly grasp why you need a marketing budget at all and what purpose it will serve. Here are some compelling reasons in favor of having a marketing budget.  

To avoid overspending or underspending

A marketing budget acts like a yardstick with which you can easily plan your marketing expenses. It gives you a clear picture of each expense allocated against each marketing strategy, thus helping you stay right on track. Not having a marketing budget in front of you can make you lose focus and lead to overspending or underspending, only to realize when it’s too late.

To allocate funds in the right places

A successful digital marketing budget allocation will tell you exactly how much funds you can allocate to the different channels available to you. Marketing expenses should translate directly into revenues, for which it is important to first allocate those funds to the channels that will give you optimum results.

To set a clear, long-term path

Imagine running a successful ad campaign that generates paying leads but having to bring it to a screeching halt because of a lack of adequate funds. It is frustrating and can cause a big blow to your business. In order to avoid such a situation, it is always best to have a marketing budget that sets the right tone for all your marketing efforts right from the start and lets you have an upper hand. It gives you enough flexibility in the long term while delivering effective and consistent marketing opportunities.

To grow your business sustainably

A successful marketer understands that marketing spending is not really a cost to the business, but more of an investment into its growth. To utilize the funds available and churn out the maximum degree of results, a marketing budget is your best bet.   

Things to Keep in Mind When Planning a Digital Marketing Budget

Your company’s digital marketing budget plan has to adhere to the current market trends, which will not only help you with customer acquisition but also provide the desired return on investment (ROI). It is using different social media channels like Facebook, Instagram, and LinkedIn, as well as employing SEO best practices in order to rank higher on Google.


Here are a few crucial things you need to keep in mind before doing your brand’s digital marketing budget allocation:

Decide on the amount

While each company needs to zero in on the right amount to spend on their marketing budget themselves, a general thumb rule of sound marketing investment is to allocate nearly 5% to 7% of your revenue towards marketing expenses. The percentage is not static and can vary from industry to industry.

Companies that are built on the values of strictly word-of-mouth marketing and organic reach, will hardly ever see a substantial marketing budget and stay conservative. Other companies that factor in expenses such as salaries, software, or ad spending into their marketing budgets will have a marketing budget running into millions. You need to sit down with your team and decide which expenses will form a part of your digital marketing budget plan, in order to arrive at a sound figure that resonates with your marketing goals. 

Figure out the company’s marketing goals

Every company has a set of goals to meet and plans for achieving them accordingly. The marketing department needs to ensure that they know exactly what the goals of the company are, which of these goals will require marketing support, and exactly how much budget needs to be apportioned towards each of these goals.

While the primary responsibility of a marketing department is to ensure a continuous flow of inbound leads and their conversion through a series of strategies, it is equally important to set aside enough budget towards other time-sensitive company goals such as deals or promotions, products launches, product or event sign-ups, etc. To achieve this amicably, set boundaries that specify the contribution of marketing as a team towards the fulfillment of these goals and arrive at a budget that is flexible enough to include everyone.

Choose the right digital channels

There are several internet marketing tools available today for conducting promotional activities. The correct digital marketing budget tip would be to understand which of these channels will benefit your business the most. Some of the factors that need to be considered before determining the appropriate channels can be your industry, budget, resources available, marketing goals, target audience, market competition, etc. Additionally, answering these questions can also land you the right mix of digital channels that need to be tapped into.

  • What is my goal? Is it to make potential customers aware of my business? Is it to build brand recognition? Is it to drive traffic to my website?
  • Do I need to focus on building my social media following?
  • Is my goal to build trust and authority with my consumers present online?
  • What kind of ROI am I expecting?

Depending on the answers to the above, you will be able to decide on the channels that will help you reach your desired goals faster. For example, Google Ads work great for immediate brand visibility and attracting potential customers, whereas a dedicated weekly blog that resonates well with your current customers works great for retaining them and luring them for repeat purchases. 

Analyze past results and data

Just because particular marketing spending has been the set norm for the past few years, it does not mean that the same should be continued for the coming set of years as well, especially when it fails to show any promise to fetch the desired results. However, in order to figure this out, it’s important to pause, look back on past data, and list out areas that need a revamped strategy.

For example, if all the money that you pumped into the Facebook ads last quarter did not result in any measurable output such as clicks, conversion, or revenue, maybe it was not a viable strategy for you.


This is why it is crucial to analyze past results, pause campaigns that are not proving to be fruitful, and instead, pump money into strategies that will fetch exactly what your business needs at the moment. Make a tracker of the below-mentioned pointers that can help make your decision easy:

  • List out the marketing activities that contributed to your bottom line (and those that failed to do so).
  • Decide whether to continue with the same budget or add more to it.
  • Decide whether to scrap unviable strategies altogether or continue them by tweaking them to produce better results.
  • Look at the initiatives that performed well and decide on the future course of action.

Invest in marketing automation software

The marketing automation software market is expected to grow into a $11.46 billion industry by 2027, as managers worldwide recognize the vast impact of onboarding sophisticated software to fulfill their digital marketing budget plans.

To breathe life into your digital initiatives, a solid digital marketing budget tip is to invest in marketing automation software that will make the whole process automatic and functionally easy to perform. Some important software that you should be definitely looking at are:

  • Email marketing tools
  • Outreach tools
  • Social media marketing software
  • Graphic design tools and software
  • Video creation software
  • Content creation tools
  • Personalized marketing software
  • Lead management software

Plan a solid content strategy

The customer is still the king of every business. But content is king to your internal digital marketing budget allocation plans. According to HubSpot, 70% of marketers were actively investing in content marketing in the year 2020. This percentage jumped to a whopping 82% in the year 2021! There can be various forms of content marketing, such as articles, blogs, ebooks, videos, social media content, graphics etc. Figure out the content and digital marketing strategy that sits well with the nature and type of your business.

For example, customers of service-related industries will require detailed information in order to make a purchase decision. The best-suited content strategy to align with their needs would be in-depth articles and blogs. Similarly, product-based businesses will benefit from video. In such a case, while preparing a marketing budget, you need to account for expenses related to recording equipment, editing tools, presenter’s salaries, etc.

Keep it flexible

While your digital marketing budget plan is likely going to be a yearly fund which will be a lump-sum amount, you can easily slice it down to a monthly plan and go forward from there. This will help you stay agile with the budget and pay attention to the current state of your marketing initiatives. Let’s say a particular marketing campaign is giving you great results for a particular month. It’s wise to pump more money into it. There is no reason to not tweak your budget according to favorable results, and invest more in it for the coming months. Adjust and reset your monthly budgets according to the results and arrive at the right mix by staying flexible.  

Key Takeaways

  • A digital marketing budget is the cornerstone of a company’s success, and having one ensures that the marketing initiatives are in line with the overall goals and objectives of the company.
  • It is important to have a digital marketing budget in order to ensure you do not overspend on unyielding strategies, to allocate funds in the right places, to grow your business in a sustainable fashion, and to chart out a clear long-term path for the overall company growth.
  • The amount to be set aside for a digital marketing budget can vary from business to business as well as industry to industry. A marketing investment thumb rule is to allocate 5% to 7% of revenue towards the marketing budget.
  • Understand what the marketing goals and overall company goals are, decide on the appropriate channels for undertaking digital marketing strategies, analyze past data, and work out a digital marketing strategy that works for your business.
  • A crucial digital marketing budget tip is to invest in marketing automation software that will help you plan and make marketing initiatives easy and doable.
  • Keep your digital marketing budget allocation flexible and agile to incorporate important changes as and when required.


A digital marketing budget allocation may seem like a daunting task at the start, but it is an extremely crucial task that sets the tone for a successful year of business. Have a clear picture of all the important marketing expenses, decide whether the marketing collateral and other related activities need to be done in-house or outsourced to another agency, and arrive at a budget that is watertight but also broad enough to stay flexible, should the need arise.


1. What should be included in a digital marketing budget?

A digital marketing budget should include all marketing-related expenses such as paid ads, costs related to hiring marketing personnel, website maintenance charges, cost of different software purchased to conduct marketing activities, etc., as well as other expenses required to achieve the overall company’s goals that the marketing team may have to incur.

2. What are the types of digital marketing?

There are different ways of attracting your customers via digital marketing, such as search engine optimization, content marketing, social media marketing, email marketing, mobile marketing, affiliate marketing, etc.

3. What is a digital marketing budget plan?

All the goals and objectives that a company intends to achieve need to be planned in a manner that the digital marketing budget is able to fulfil and meet. This is why a digital marketing budget plan is required.

4. What are some digital marketing goals that a company should have?

Digital marketing goals differ from company to company. However, through digital marketing, companies generally aim at lead generation, brand building and recognition, social media following and interactions, and building trust and authority with online audiences.