If you ask a digital marketing professional how much to spend per marketing channel, you’ll likely get a wide variety of answers. And in reality, there are two questions you should really ask. First, “how much should your marketing budget be?” If you don’t first answer this question, you may end up hindering the growth of your business. We already answered the first question in our blog post titled “How to Set a Marketing Budget for Your Business.”

The second question to ask is “how do you invest that budget to get the best possible results?” That’s what this blog post aims to answer.

Consider the Cost Per Lead (CPL)

Cost Per Lead (CPL)Every marketing channel has the potential to generate leads for your business. But which channels are most likely to generate leads at the lowest possible cost? This will depend on your market, industry and target audience.

Let’s say, for the sake of conversation, you have a monthly marketing budget of $1,000. What would that do for you? Does one lead cost $1,000, or can you get 100+ leads for $1,000? The more leads you can get, the better! But even if you get a tons of leads, they will only benefit you if you have a good closing rate.

Know Your Closing Rate

Most businesses have a closing rate of around 20%. Based on that average, if you have five leads, one of them will become a paying customer or client. Naturally, you’ll want to push your closing rate up as much as possible. If you can close 40% of your leads, you’ll end up making twice as many sales as the typical business.

Now that we’ve talked about the cost per lead concept, and the closing rate, let’s look at what you can expect from each marketing channel. And again, these are average numbers and your industry might be different.

Traditional Marketing

There are many types of marketing that are classified as traditional marketing. Examples include print ads, billboards, mailers, flyers, radio, etc. Before the age of the internet, everyone did traditional marketing. But things have changed and this is no longer the only option.

Cost Per Lead for Traditional Marketing:

Results

Cost Per Lead*

Closing Rate

Marketing Budget

Leads

Sales

Average $619 20% $1,000 1.6 0.3
High $1,200 20% $1,000 0.8 0.2
Low $38 20% $1,000 26.3 5.3

 

*All cost per lead data in this blog post is derived from an article by Integrated Marketing Association. For a more comprehensive list of marketing channels and the CPL for each, please read that article. 

What to Expect from Investing $1,000 in This Marketing Channel

Based on the numbers listed above, if you spend your $1,000 in traditional marketing, it’ll take three months to see one sale. After an entire year of marketing you’ll have a total of four sales, assuming all the averages mentioned in this blog post are applicable to you.

Do you believe traditional marketing is the best way to reach your target market? If so, and you think you can see abnormally good results with this type of marketing, then it’s worth testing.

Before you spend money on a newspaper ad, billboard, or something else classified as traditional marketing, do some additional research on marketing for your industry. Make sure your audience is likely to see those advertisements and turn into actual leads.

Video Marketing

There are many types of videos that can be used in video marketing. Some examples include explainer videos, educational videos, promotional videos and vlogs. Now, let’s take a look at what you can expect in terms of results from video marketing.

Cost Per Lead for Video Marketing:

Results

Cost Per Lead

Closing Rate

Marketing Budget

Leads

Sales

Average $174 20% $1,000 5.7 1.1
High $288 20% $1,000 3.5 0.7
Low $59 20% $1,000 16.9 3.4

 

What to Expect from Investing $1,000 in This Marketing Channel

Statistically, video marketing has stronger chances of generating leads than traditional marketing, for the average business. With a $1,000 budget, a closing rate of 20% and $174 per lead, you would likely see one sale.

There is another point to consider though. We’re sometimes asked something like “We got a video, but how do we get it out there now, so people can see it?” Having a video won’t do much unless your target audience can find it. And depending on your situation, you may need to invest some additional money into social media, email market or other marketing channels to accomplish this.

Before you do video marketing, think about what exactly you’ll do with the video and how you’ll get the most value out of it.

Social Media Marketing

Social media marketing is one of the most popular channels out there! One of the reasons for this is that it’s usually free. Also, it’s not typically too challenging to get started. Some social media example platforms include Facebook, Instagram, TikTok, LinkedIn and Twitter.

Cost Per Lead for Social Media Marketing

Results

Cost Per Lead

Closing Rate

Marketing Budget

Leads

Sales

Average $58 20% $1,000 17.2 3.4
High $73 20% $1,000 13.7 2.7
Low $21 20% $1,000 47.6 9.5

 

What to Expect from Investing $1,000 in This Marketing Channel

Based on the averages we’ve been using, you would likely see three sales if you were to do social media marketing with your investment of $1,000. But there’s a catch. According to an article by Metric Marketing, it will take about 6-12 months before you start seeing any meaningful results. It definitely takes time to build up your credibility and network through social media. And it also takes time to refine your messaging to learn what gets the best engagement.

If your business is very visual, such as an art gallery, restaurant, dance studio or something else of that nature, social media is more likely to be good for you. Also, if you care less about leads and more about networking and developing virtual relationships, you should consider social media marketing. But, if you’re like most businesses, you should probably not invest your $1,000 in social media marketing. Other marketing channels can generate good results in quicker than 6-12 months.

 

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Email Marketing

Many people assume email marketing isn’t effective anymore, because there’s so much spam being sent these days. However, that assumption isn’t correct. People still open emails they care about. In fact, depending on the reports your read, email marketing has an average ROI of around 3,800-4,200%! Let’s take a look at the cost per lead below:

Cost Per Lead for Email Marketing

Results

Cost Per Lead

Closing Rate

Marketing Budget

Leads

Sales

Average $53 20% $1,000 18.9 3.8
High $72 20% $1,000 13.9 2.8
Low $33 20% $1,000 30.3 6.1

 

What to Expect from Investing $1,000 in This Marketing Channel

Email marketing can be very effective. If your businesses follows the averages, you would likely see three sales as a result of email marketing. But unlike social media, you don’t need to wait 6-12 months before you start seeing meaningful results. All you need is a quality list of contacts. If you’ve been in businesses for years and keep good records, you likely already have a great list of contacts. Industries like this include medical, auto repair, accountants or CPAs and maybe even florists. Businesses that collect an email address from their patients, clients or customers can easily implement email marketing.

If you can’t easily export your contacts, due to industry or because your business is new, you’ll need to work on a way to build your email list. A don’t make the mistake of purchasing lists of emails. This is not a best practice.

PPC Marketing

PPC is an acronym for “Pay Per Click.” You can easily get started with PPC marketing through Google Ads, Bing or Facebook. And if you do a Google search on this topic, you’ll find plenty of other options as well. With this type of advertising, you only pay when someone clicks your ad. It might be seen thousands of times. But even though your ad is being seen, you don’t actually pay anything unless someone clicks it. The cost per click could be less than a dollar. Then again, it could be well over $50. The cost will depend to a large extent on your market and industry.

Cost Per Lead for PPC Marketing

Results

Cost Per Lead

Closing Rate

Marketing Budget

Leads

Sales

Average $49 20% $1,000 20.4 4.1
High $133 20% $1,000 7.5 1.5
Low $34 20% $1,000 29.8 6

 

What to Expect from Investing $1,000 in This Marketing Channel

If you follow the averages, your $1,000 marketing investment will result in four sales. This is certainly the best cost per lead so far. There are a couple extra considerations though.

  1. Like email marketing, the results can be extremely quick. As soon as you get started with the ads, you can start generating leads.
  2. According to an article by JDR Group, it can take 3-9 months to fully optimize your PPC marketing. So, while you can start seeing results right away, you likely won’t see an average of four sales right away. It could take a little time before you get to that point.

If you’re looking to quickly drive people to your website, so you can start getting business, this is an excellent marketing channel for consideration.

SEO Marketing

SEO stands for “Search Engine Optimization.” This essentially means making your website rank well in Google. If you want to rank at the top of search engines, like Google, Bing and Yahoo, then SEO is what you need. Let’s look below to see what kind of results you can expect to see from SEO:

Cost Per Lead for SEO Marketing

Results

Cost Per Lead

Closing Rate

Marketing Budget

Leads

Sales

Average $31 20% $1,000 32.3 6.5
High $47 20% $1,000 21.3 4.3
Low $14 20% $1,000 71.4 14.3

What to Expect from Investing $1,000 in This Marketing Channel

If you invest $1,000 into SEO you will likely see six sales, assuming all the averages apply to you. But like social media, this type of marketing can take a little time before it really starts to yield results. The general rule of thumb is that SEO takes 3-6 months before you start seeing good results. And like the cost per click for PPC, this will largely depend on your market and industry.

If you need to start generating leads immediately, we wouldn’t suggest doing SEO. PPC and email marketing would be better. But, if you can wait a little while, and you care more about getting the most bang for your buck (highest possible ROI), then investing your $1,000 in SEO is a very smart move.

Should You Split Your Marketing Budget?

You can definitely put some of your marketing budget into different channels. In fact, we would encourage you to use multiple marketing channels at the same time. However, some marketing channels require a certain budget to be effective. For example, you’re not going to want to spend less than $800 on PPC advertising. You would have $500 going to the ad spend (directly to Google) and $300 for the ad management. That’s likely the lowest you should go if you want to do PPC. That only leaves you with $200 remaining, out of your original $1,000 budget. You could then put the remaining $200 into setting up your email marketing, or getting a consultation on how to effectively do social media marketing.

If you have a specific budget in mind for your marketing, speak with a digital marketing professional and ask them how best to invest that budget for your own business. This will help you get the best possible results.

Closing Thoughts

We hope you’ve found this blog post to be insightful and helpful as you decide how best to spend your marketing budget.

Many business owners assume they should put their money into billboards, print ads or other types of traditional marketing. Then, they don’t get positive results and decide marketing doesn’t work. They will feel as though it’s just a waste of money and say something like “word of mouth is the best marketing.” And yes, we agree. Word of mouth is the best marketing. But that doesn’t mean you shouldn’t do any other marketing. Go ahead and invest in your business. Put about 5-12% of your estimated gross revenue into marketing and see how much more business you can get.

And of course, if you need help with your digital marketing, let us know! You can connect with us via the contact page or the contact form below. We look forward to the opportunity to help your business grow.

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About

Joshua Lyons Marketing, LLC was established in 2015. Since that time we have provided digital marketing services to business and professionals. We help our clients increase their online exposure as a means to increase sales and revenue. Our core services include search engine optimization (SEO), website development and content creation. We also provide other online marketing services, such as email marketing, marketing consultations and various types of advertising. Our team is based in the Milton, Pace and Pensacola, Florida area. However, we work with clients throughout the United States. Read More

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