3 Steps to Optimize Your 2025 Marketing Budget and Get Results

Marketing executives normally devote between 7% and 10% of their companies' revenues to marketing. Out of that, at least 72% of their overall marketing budget goes to digital marketing channels.

Digital marketing spending is also on the rise, increasing by 11.1% from the first to the third quarter of 2024. Misallocating these budgets can be costly, time-consuming and demotivating.

The good news is that even in today's choppy economic waters, there are ways to spend a digital marketing budget that is optimized for performance while still keeping your clients comfortable. Read on for the three specific steps I take with any marketing budget.

1. Identify the right marketing tactics

In my company, one of the tests we give marketing candidates when we interview them is to ask them about a particular scenario. For example:

You have a guy with a toy store in New York City. He opened up his first e-commerce store, and he wants to sell toys online. He's giving you three months to show that you could sell toys. And if you could sell toys, then he would increase his budget and commit to a year.

Now, what marketing tactics would you use to ensure the client sees results in these three months? It's critical to note here the fact that some marketing tactics would not work for him because:

• One: This is his first e-commerce store, so he doesn't have a newsletter list, so newsletters wouldn't work right away.
• Two: It's a brand-new website, so SEO would take way too long. This guy wants to see results right away.

We always look for marketing candidates who understand this. SEO wouldn't work right away as it takes more than six months for a new site. Newsletters are also not viable. Organic social also takes too much money and doesn't drive sales right away.

Given all these requirements, there are at least three viable channels here.

• The first one is pay-per-click or PPC.
• The second one is paid social, which is geo-targeted.
• The third one is influencer marketing or affiliate marketing.

These are the three channels that are best for this particular situation because the guy has a brand-new e-commerce site. He wants to see results right away before he decides to increase his marketing spend.

PPC campaigns will allow the client to target those actually searching for toys online. This can immediately drive traffic to their store, as PPC normally results in a 200% ROI, according to Google.

In the same way, paid social allows targeted ads for different sites. Lastly, influencer marketing, specifically those trusted by families and parents, can boost brand credibility, which is important for a budding e-commerce store.

2. Start with less and optimize your channels

When doing marketing for a client, if they have a $120,000 marketing budget for the year, you don't simply split this up into $10,000 a month. We also don't start by blowing their budget all at once.

We start with a lower budget. In this situation, what you can do is start with a lower amount, like $5,000 a month. Then, we can start with PPC and paid social. You test out the channels, and you optimize them.

Even if the client says they have a budget of $10,000 a month, we don't tell them it's $10,000 a month. That's stupid, naive and inexperienced. Instead, we tell the client, "Let's start with $5,000 a month. Let's start on one or two channels and see what's working and what's not working based on the results."

Depending on your channels' performance, even though you start at $5,000 a month, you can end at $15,000 a month at the end of the year.

3. Monitor results and increase the budget

Show your client the results for your chosen channels. Only when they see results will they be more comfortable, and then the budget and channel amount will be increased.

This is also the time we can consider adding more channels. For example, you can add SEO, which takes months to see results. Once you add this, let's get the client the results again and then increase their marketing spending as they see results.

The bottom line is you have to have a minimum amount to spend as the first step. But make sure that you start less for the first few months, pick one or two channels, optimize those channels, show results for those channels and then increase the budget and, later on, add another channel.

If you're a larger brand with more money, you can go after more channels at once, but the best practice still holds.




Source: https://www.entrepreneur.com
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