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September 8, 2017 No Comments

How Much Should Your Marketing Budget Be in 2018?

Posted by:patonmarketing onSeptember 8, 2017

The digital marketing world is continuously evolving and the best marketers are constantly on the lookout for new strategies, techniques and solutions to improve their results. Simply looking at what worked in the past doesn’t cut it anymore. Old bulletproof strategies that guaranteed success even if poorly implemented don’t bring the same results and could even damage your online presence. What’s more, digital marketing is not an exact science: you can’t make precise predictions based on previous events. What may work today doesn’t necessarily work tomorrow.

So how are digital marketers supposed to manage their campaigns in 2018? Should they just rehash their successful campaigns from 2016 and 2017 and hope for the best? Similarly, what type of budget should small or medium sized local companies assign for their digital marketing endeavors next year? Will it be more expensive?

Firstly, let’s take a look at some statistics and what the future will look like in 4 years from now:

– companies will spend almost $120 billion by 2021 on their digital marketing campaigns; these include paid search, display advertising, video marketing, email marketing, branding and reputation management and social media advertising; this figure represents roughly 46 percent of all advertising funds. (according to a study done by Forrester Research, an American market research company specialized in technology*)

– digital marketing spending is growing at an estimated 11 percent (compound rate) every year, according to the same study*;

– the millennial age group (18 to 35 year olds) are expected to spend $600 billion every year on products and services online by 2021; this is the age group most digital marketers will try to focus on;*

These numbers suggest one important aspect: the digital marketing world is growing faster than ever. However, we don’t have to wait 4 or 5 years to see the change predicted by experts. We see it as we speak and similar investment trends should be visible right away. The summer is almost over and the much dreaded Q4 is just around the corner. This means that digital marketers, business owners and CEOs are starting to develop their marketing budgets for 2018. So what should you expect? How will the new year compare to 2017 when it comes to digital marketing budgets? What should you focus on next year? Let’s take a look:

Go local

Marketers have always known about the importance of location-based marketing, but never really managed to fully implement it in their campaigns. Sure, there are geographically targeted ads on the internet and search results are often location specific, but there is a lot of unharnessed potential sitting around. FourSquare, for instance, was the big hope in location specific marketing, but it didn’t fit into consumers’ day-to-day life.

In 2018 however, most social media platforms and apps, together with numerous review and messenger platforms, already have Geotagging. Snapchat and Instagram, for instance, have various location-based stickers and Geofilters, so going local is not an issue anymore. Smartphone penetration is also a huge plus, as more and more people will geo-tag their location and search locally whenever they need something. Moreover, Augmented Reality is becoming popular and it works great with geo-location software.

Local marketing also enables companies to reach potential customers instantly, with relevant offers depending on their location. Messages will be highly targeted, the call-to-actions will be more efficient and advertising will be much more naturally integrated in day-to-day life.

Go with the big names

Up until recently, there was some kind of reticence on this subject. Marketers felt uneasy about using influencers and employing big stunts in their marketing campaigns. Luckily, 2017 has shown a lot of digital marketing professionals that influencer marketing is truly a success when used properly. After all, we are working in the noisiest era of marketing, and attracting customers can be really tough. A big name in your niche, which already has a large following can boost your online presence instantly. The same goes for big stunts – events that inspire people. Think about the recent Red Bull stratosphere jump performed by Felix Baumgartner. Although not as grand as that, but you get the picture.

Keep in mind that getting a famous person (influencer) in your marketing campaign doesn’t get unnoticed and people will talk, share and want to learn more about your company. This is definitely one of the best ways spend money on marketing in 2018.

Go BIG on video marketing

Let’s be as straightforward as possible: Video is the KING of digital marketing now and will continue to grow in the next years. There’s some fantastic content produced online by thousands of people, and people love it. We love it so much, in fact, that almost 85 percent of internet traffic is consumed on video streaming.**

The marketing budgets spent on video marketing complete the picture: it’s estimated that 30 percent of medium sized companies spend $500,000 per year on video marketing alone and 9.6 out of 10 marketers invested in video content in 2016. What’s more, 63 percent of marketers expect a rise in their video marketing budgets for 2018. Video content is where it’s at for 2018 and your campaign should include it, no matter the target.

So how much should you spend?

The rule of thumb is to spend about 5 percent of your total revenue on marketing, as a whole, if you want to maintain your current position. If you want growth, a more generous percentage should cover your needs: think about something between 7 to 12 percent. If you take into consideration that roughly half of that sum should be spent on digital marketing, that leaves you with about 3 to 6 percent of your total revenue.

Of course, marketing budgets are affected by multiple variables: product launches, new market entries, mergers or acquisitions. You’ll need to take into consideration every variable before adjusting your marketing budget. Also, marketing budgets should be flexible, according to various metrics used during campaigns. Basically, you should measure the success of your campaigns in real time and adapt accordingly. This is why it’s terribly important to allow a 10 percent wiggle room for any additional, unforeseen costs.

 

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