How Much Should You Spend on Digital Marketing in 2019?

Digital Marketing Budget

With the majority of the world population using the internet to fulfill their needs, it would be a mistake not to reach out to them with your product or service.

For this to happen, you need to have an online presence coupled with an effective digital marketing strategy.

One of the most critical parts of a digital marketing strategy is deciding on a budget.


Marketing is a bottomless pit. The more you spend, the more results you will get, when done right. However, since resources and funds are limited, you need to plan how to use them to maximize ROI efficiently.

If you’re already spending funds on digital marketing but are not getting the expected ROI, it could be one of two things; either you are not spending enough, or you’re not spending right.

This makes it even more critical to plan out your digital marketing budget carefully.

1. Things to Consider When Planning a Digital Marketing Budget

When planning your digital marketing budget for 2019, there are a few key factors that you need to consider.

A digital marketing budget depends on three things: the company’s goal, size, and product life cycle phase.

a. Goals and Objectives

The goal of the company is perhaps the most important factor of all. You cannot plan a digital marketing budget without setting out the goals first.

Most companies either have the goal to get more leads or grow revenue.

According to a survey conducted by Ascend2, 18% of respondents sought lead generation, while another 18% of respondents wanted to grow revenue.

Lead Generation and Sales Revenue Survey

If the goal is to get more leads, then you have to focus your digital marketing budget on acquisition mostly.

If the goal is to increase sales revenue, then the budget must be distributed between acquisition and retention.

b. Company Size

Large companies tend to have high recurring revenue, which is why their digital marketing spending is high as well.

On the other hand, small businesses don’t usually have that much revenue to spare for digital marketing. They have to be a bit conservative.

Large companies can spend their digital marketing budget on all channels, whereas SMBs have to focus on a few channels that matter the most for their business.

c. Product Life Cycle Stages

At the first stage, there is no need to spend anything on digital marketing as the focus is on launching the product.

Starting from the second stage, which is growth, companies usually spend a higher percentage of their revenue on digital marketing to establish their product or service in the market.

In the third stage, the maturity phase, companies spend a small percentage of their revenue on digital marketing because the product is already established and has a significant market share.

The fourth stage is the decline, during which there is no need to spend anything on marketing.

Once you have considered all these factors, you are ready to plan out the budget.

2. How Much Do I Need To Spend on Digital Marketing?

There is no one-size-fits-all answer to this question. It depends on the three factors discussed above.

However, US Small Business Administration suggests marketing expenditure be 7% to 8% of the revenue. Companies can also take a look at other companies in their industry as a reference.

According to CMOSurvey, companies on average spend 6.5% to 8.5% of their revenue on marketing. This varies according to industry.

Consumer Services and Education sectors spend the most on marketing, as shown in the figure below.

Marketing Spending Industry wise

After considering all the factors and the industry average, it shouldn’t be that difficult to decide how much to spend on digital marketing.

If you are still not sure, CANZ Marketing is here for you. We are just a call away. Contact us now, and we will help you from strategy to budgeting.

3. How to Allocate Digital Marketing Budget in 2019?

Before you start allocating budget to various digital marketing channels, it is wise to analyze which channel works best for your company.

This way you can spend more on things that work to maximize the ROI, spend some of the budget on new and unexplored channels, and avoid wasting budget on things that don’t work or don’t contribute in achieving your goals and objectives.

4. How Much To be Allocated to Various Channels?

a. Organic Marketing

Organic marketing or Search Engine Optimization takes time to shine, but it pays off in the long run. If you are not in a hurry of getting sales and leads, then you should spend more on organic marketing.

If you have the right strategy, you can reap the benefits of higher ranking for a long time, maybe forever.

b. Paid Advertisements

If you want to get leads or sales quickly, then go with paid ads or PPC.

Spend more on PPC, and it will pay off in a short period of time when done right.

However, PPC is expensive, and it will exhaust your budget quickly.

An effective strategy is to spend appropriate amounts on both PPC and organic marketing.

c. Social Media Marketing

Social media is not an ideal channel if you are looking for direct conversions.

According to a report released by Shopify in 2018, social media has a 2% conversion rate, which is the lowest of all channels.

Social media should be used when you want to build the audience, reach your target market with offers, create engagements in the community, or drive traffic to your content. If you have such goals, spend some percentage of your digital marketing budget on it.

d. Email Marketing

As you might have noticed in the image above, email marketing has the highest conversion rate. This happens when you have maintained a subscriber list. It is best to spend on this channel anyway.

Not all of the traffic coming to your website converts immediately.

Some require nurturing, while others don’t need your product or service at that time.

If you can get them to subscribe for emails, you can send them the latest offerings.

5. Is That All I Need To Know?

Of course not! Planning an effective digital marketing budget requires continuous improvement.

Once you have started digital marketing, you will start getting data.

Make sure to track all the traffic, conversion, and other marketing intelligence data.

This data will help you sharpen your digital marketing budget planning in the future.

How much has your company set aside for digital marketing budget in 2019?

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