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17 Digital Marketing Budget Allocation Tips for Small Businesses

9 Mins read

Navigating the complexities of digital marketing can be daunting for small businesses, especially when it comes to budget allocation. To offer guidance, we’ve gathered insights from Content Marketing Managers to CEOs, distilling their wisdom into seventeen actionable tips. From understanding your audience and channels to investing wisely in high-ROI channels, these experts provide a roadmap for making every dollar count.

Know Your Audience and Channels

Know your audience. Putting your marketing budget toward a billboard would probably be very unwise for a tech company, but effective for a restaurant off a busy highway. It is easy to get sucked into articles that authoritatively extoll “marketing best practices,” but always refer back to YOUR customers. Where are they? What do they care about? What are their priorities? If you’re unsure about your customer, start with surveys, polling salespeople, and customer outreach.

Liz Kelley, Content Marketing Manager, Focus Lab

Calculate Profitable Customer Acquisition

Think about the budget and how many customers it would take to make it profitable. A $5,000 monthly marketing budget may sound like a lot of money, but if you get a $250 lifetime value per customer, that means you only need 20 new customers a month to be profitable. 

It’s a long-term investment, especially if you’re taking brand-building initiatives like SEO. If you want to go further ahead, be willing to invest more in your marketing.

David Begazo, Owner, PRismatic SEO

Test and Measure Marketing Channels

First, analyze the digital marketing options that you have: SEO, paid ads, email marketing, partnerships, sponsorships, etc. Weigh the pros and cons, understand the budget needed, and set clear goals of what you’re looking to achieve.

Second, prioritize the top channel you want to test and get running. Invest your budget into this channel for 3-6 months and measure the results meticulously. Why? Most marketing channels take a few months to get rolling and to really see what their potential ROI is.

Third, make decisions based on data. If the channel is driving traffic, leads, and customers after your initial period, decide to invest more or settle on a budget that you’re most comfortable with. If the data is showing that it’s not working and not profitable, pull out and test another channel. Repeat until you find the best, most profitable channels for your business.

Connor Gillivan, Entrepreneur, Owner, and CMO, TrioSEO

Self-Taught Digital Marketing Strategies

Don’t skimp on digital marketing; however, this doesn’t mean you need a huge budget. Many digital marketing efforts can be self-taught and user-generated, so research marketing strategies and give them a shot first before increasing the budget and outsourcing work.

Corey Schwitz, CEO and Founder, Skydog Ops

Focus on High-Quality Video Content

When it comes to digital video marketing, my top piece of advice for small businesses on budget allocation is to focus on quality over quantity. Instead of spreading your budget thin over numerous videos, invest in a smaller number of high-quality videos that tell a compelling story and truly resonate with your audience. 

These videos are more likely to engage viewers, encourage shares, and generate a stronger return on investment. Remember, a single impactful video can outperform multiple mediocre ones, both in terms of viewer engagement and brand perception.

Mike Vannelli, Creative Director, Envy Creative

Utilize Email Marketing for ROI

Without doubt, the best bang for the buck in small-business budgets is investing in email marketing. Email provides a 36:1 (or better) return on investment, meaning that with a solid program, you will reap significant rewards now and well into the future. But it’s more than just short-term ROI that email provides. 

Email marketing creates a 1-to-1 relationship with your subscribers because it lands in their personal inbox and can be highly customized to subscriber interests, behaviors, and needs. In the long run, this creates a sense of familiarity and recognition of your brand at a level that you cannot buy with ad dollars. Email is one of the best methods of creating brand advocacy with your audience and helps convert in the short and the long term. Your budget stretches further. 

Finally, unlike other methods of marketing where the audience is owned by the platform, your email audience is owned by your business. This has value not just in communications and brand building but also as an asset for your business.

MaryAnn Pfeiffer, Principal and Founder, 108 Degrees Digital Marketing

Monitor Marketing Efforts for Earnings

Always keep an eye on what you’re getting back from what you spend (yes, I’m talking about ROI). It’s really about seeing if the money you’re putting into your marketing efforts is paying off.

In my experience, whether it’s for my company or when I’m helping clients, it’s key to remember that while things like organic visitors, video views, or how much people interact with your content are good to know, the main goal should be making sure these efforts are leading to more earnings. If a marketing method isn’t bringing you a good return on your investment, it might be time to try something else that could work better.

Marco Genaro Palma, Freelance CMO and SEO Consultant,

Prioritize Results-Driven Marketing Agencies

From experience, I understand how small businesses wrestle with budget decisions in digital marketing. My advice is to prioritize results-driven strategies. When partnering with or hiring SEO agencies, focus on finding those offering transparent pricing structures and clear ROI metrics. 

Look for agencies that align with your business goals and can demonstrate a track record of delivering tangible results within your budget constraints. Remember, it’s about investing your hard-earned money wisely to maximize your returns and propel your business forward in the digital landscape.

Cody Jensen, CEO and Founder, Searchbloom

Ensure Online Presence with Clear Messaging

The one piece of advice to small businesses is that in this day and age, brand perception is everything. And the first place anyone looks is online. So it’s really important that your brand has an online presence that is credible, trustworthy, and clear.

But that doesn’t mean it has to be expensive. It’s totally OK to start small.

For any small business on a budget these days, as long as you expect some of your target audience to find you online, I would always allocate some budget to having a website, and making sure you at least show up in search.

Pay attention to things like spelling and grammar, and make sure your website is discoverable on Google. Make your service or product offering so clear that a child could understand it. Clear is better than clever, every single time.

So your first three budget items might be 1) website builder, 2) copywriter, and 3) SEO expertise.

If you’re a good writer, write the content yourself. Nobody knows your business better than you do. But make sure it’s CLEAR.

Claire Ransom, Founder, SEO and Content Strategy Agency, Aloha Life Digital

Target Platforms Where Audience Congregates

In steering small businesses through the vast sea of digital marketing, the mantra is: focus your budget where it truly counts. It’s tempting to chase every new trend, but the gold lies in identifying and investing in platforms where your specific audience congregates. 

This precision not only maximizes your return but also ensures your message resonates deeply, fostering connections that convert. Dive deep, not wide, and your budget will be an investment, not just an expense.

Cyrus Partow, CEO, ShipTheDeal

Use Social Media for Higher Conversion

Having experienced what it’s like to attract customers online, I wholeheartedly believe that businesses need to prioritize allocating more resources toward platforms that offer them a higher Return on Investment (ROI). When I started my business, I used social media because it’s inexpensive and also has a higher conversion rate.

If you concentrate your efforts on finding digital platforms where you can allocate fewer financial resources with the promise of a higher conversion rate, you will allow your small business to grow. Trust me, it won’t take long before you plow back the profits that you earn to expand the business. My quick realization that social media was a great fit for my business allowed me to save the capital I had from non-productive areas. 

With social media, I was able to find people who wanted professional and curated reviews on tech content. When I opted for social media marketing, my budget was $22,000 in the first year. Within the same period, my business registered revenue in the region of $418,000, which is 5.3% of the revenue. It’s pleasing to note that, although social media marketing was the only marketing strategy I employed, its percentage was slightly below the average percentage of what businesses ought to spend on marketing in a year.

Bobby Lawson, Technology Editor and Publisher, Earth Web

Focus Efforts on Active Audience Channels

Allocate your budget to the marketing channels that will give you the highest return on investment. Many small-business owners often feel pressured to use every marketing channel available, which leads to them spreading themselves, and their budgets, too thin.

I advise small businesses to identify the marketing channels where their target audience is most active and focus their efforts there. By zeroing in on these channels, they can make a greater impact on their target audience and make the best use of their budget.

Lauren Galvez, SEO Consultant,

Outsource for Expertise and Impact

My key piece of advice for small businesses on budget allocation is to strategically discern activities that will genuinely impact your growth. The best way to budget your marketing is to spend it where you can build your unique strengths and either outsource or eliminate the rest.

By concentrating on areas where you lack expertise and investing in specialists for critical areas, you leverage their expertise to maximize your return on investment. This will help in driving significant improvements in visibility, engagement, and ultimately, revenue. 

The strategic allocation of resources enables you to balance cost-effectiveness with impactful marketing initiatives, laying a solid foundation for scalable growth.

Blake Smith, Marketing Manager, ClockOn Rostering, Attendance & Payroll

Leverage User-Generated Content

When it comes to navigating the digital marketing landscape on a tight budget, my top advice is to avoid straining your financial resources. Instead, focus on leveraging cost-effective strategies that yield significant returns. One highly effective approach is to capitalize on user-generated content (UGC) across social media platforms. Encourage your satisfied customers to share their experiences and testimonials organically. 

This will help you build trust and authenticity, and amplify your brand’s reach without hefty expenses at the same time. By strategically allocating resources to free or low-cost tactics like UGC, small businesses can maximize their marketing impact while staying within budget constraints.

Johannes Larsson, Founder and CEO,

Test Platforms and Adjust Based on Data

When it comes to budget allocation, we recommend testing several different platforms and strategies that match your target audience for which you have strong marketing assets.

While running these initial tests, take a data-driven approach to the results. Are they resulting in leads or sales? Are our users engaged? Are they following social media accounts, signing up for newsletters, or engaging in other micro-conversions?

Based on this kind of data, you should then adjust budget allocations across networks and strategies to maximize the impact of your budget. But remember, this is only effective if your measurements of success are accurate. Make sure your data gives you a clear picture of the value being driven by each tactic.

Mike LaLonde, Co-Founder, PPC Assist

Experiment and Make Data-Driven Decisions

In the realm of digital marketing, one crucial piece of advice I’d give to small businesses on budget allocation is to prioritize experimentation and data-driven decision-making. While it can be tempting to allocate a significant portion of the budget to well-established marketing channels or strategies, such as paid advertising or social media campaigns, it’s essential to leave room for experimentation and testing new tactics. 

By allocating a portion of the budget to experimental initiatives, such as content marketing, email campaigns, or influencer partnerships, businesses can uncover hidden opportunities, identify what resonates with their audience, and optimize their marketing efforts for maximum impact.

Moreover, leveraging data analytics and performance metrics to track the effectiveness of various marketing initiatives is key to making informed budget allocation decisions. By analyzing key performance indicators (KPIs) such as conversion rates, return on investment (ROI), and customer acquisition costs, businesses can identify which strategies are delivering the best results and allocate budget accordingly. 

This iterative approach allows small businesses to adapt and refine their digital marketing strategies over time, optimizing budget allocation for long-term success and growth. Ultimately, by embracing experimentation and data-driven decision-making, small businesses can maximize the impact of their digital marketing efforts within budget constraints.

William Hogsett, CEO, Seota Digital Marketing

Invest Wisely in High-ROI Channels

As someone who has built a small business from scratch, I’ve learned a thing or two about navigating the dynamic world of digital marketing. One personal tip I can offer is to prioritize channels that give you the best bang for your buck. ROI is key. Take the time to dig deep and find out which digital platforms your target audience loves the most. That way, you can allocate your hard-earned resources wisely. 

Oh, and here’s a little bonus tip: consider investing in marketing automation tools. Trust me, they’ll save you precious time and supercharge your efficiency. It’s important to remember that it’s not just about spending money—it’s about investing it smartly to achieve sustainable growth and reach your business objectives.

Julian Hooper, Managing Director, Fluidic

Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.

Digital marketing stock image by Michail Petrov/Shutterstock

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