How Much is Typically Spent per Marketing Channel?

Marketing is essential for business growth. Unfortunately, many business owners don’t have a clear understanding of how to set a realistic marketing budget. The marketing budget should include all costs associated with advertising, promotions, public relations and anything else under the “marketing” banner. Business owners often ask us how much they should spend on their marketing. We tell them it depends on how much gross revenue they expect to make. But, we also tell them what is typically spent per marketing channel, so they have a frame of reference.

How Much Do Businesses Spend per Marketing Channel?

The general rule for setting a budget is to spend about 3% to 5% of your gross revenue on marketing, according to the Small Business Administration. However, if you make less than $5 million in gross revenue per year, you should budget around 7% to 8%. For more about setting a marketing budget, we suggest you read our post titled How to Set a Marketing Budget for Your Business.

Now, let’s take a look at the typical budgets that are set aside for different marketing channels.

Social Media Marketing (SMM)

Whether you run a small, medium, or a large business, you shouldn’t ignore the power of social media marketing.

With a quick Google search, you’ll quickly see that most social media marketing plans tend to range from around $4,000 to $7,000 per month. This does include running paid ads. A basic monthly cost, for just one social media platform can be anywhere from $1,000 to $2,500. However, some digital marketing companies can provide social media marketing at lower or custom pricing. If there’s a company you like, feel free to reach out to them and see if they can provide a social media marketing service that fits within your budget.

The amount you spend on social media marketing should make sense for your brand. Businesses who do social media marketing will typically spend about 15% to 25% of their marketing budget on social media. After that, you should figure out how much to spend on each social media platform. Consider social media platforms like Twitter, Facebook, Instagram, YouTube, Snapchat and LinkedIn. For more information on this type of marketing, check out all the blog posts in our “Social Media” category.

Email Marketing

Email marketing connects the business owner with potential customers. With a smart approach, you can turn an email marketing campaign into thousands in returns.

A general rule of thumb is to dedicate about 15% of the annual budget to email marketing. You should also consider the goods or services you sell, your industry and your overall marketing goals. When well-executed, email marketing gives a high return on investment. You should expect a return of around $44 for every dollar spent.

Some of the most important factors to consider in your email marketing campaign include the quality of the email list, a clear call to action, a strategic subject line and when to send the email. Learn more about email marketing by reading our blog post titled How to Craft an Effective Email Marketing Campaign.

SEO

Countless business owners have no idea how much to budget for SEO. Because this is a long-term strategy, you don’t usually see incredible results in the first month or two.

According to a study done by MOZ, most companies spend about $750 to $1,500 per month for SEO services. For national and highly competitive industries, it’s not uncommon to spend around $2,500 to $5,000 per month. The cost will depend on your market and the level of competition for the keywords you are targeting. An SEO professional can help you get an idea of what your specific SEO budget should be. However, in almost every industry and location, spending even a relatively small amount on SEO will help your rankings in the long-term. So, it’s a good idea to start investing in this channel as quickly as possible.

Another way to budget for SEO is by a percentage. Most smaller businesses that invest in SEO tend to spend close to 25% of their marketing budget on this channel. As your website ranks better in Google, your income will increase and your rankings will become more secure. As this happens, it will make sense for you to lower your SEO budget to around 10%.

PPC

Pay-pay-click is a marketing strategy that can give high return on investment. In fact, when using Google AdWords, businesses make an average of $2 in revenue for every $1 they spend.

When budgeting for PPC, you should consider the lead quality, visitor frequency, cost per lead and geographical location. Do you want to generate “Y” number of leads or acquire “X” number of customers? On average, about 20-30 of the searchers will click on paid ads.

To get as many clicks per possible, you should invest around 10% of your overall marketing budget on PPC.

The average cost per click is about $5, so if there are 300 visits to your website you should budget for $1,500 per month. Other dominating forces in the PPC world are Facebook and Instagram Ads. Typical PPC budgets tend to range from around $2,000 to $5,000 per month.

Website Updates

You can make simple changes to your website such as adding images, videos and freshening up the design. These upgrades will help you stay ahead of the competition and improve overall user experience. These modifications can frequently be done at little or no cost from your end. This is assuming you have a website that’s easy to modify and doesn’t require a you to understand website coding.

For website modifications that require a developer, you can expect to spend anywhere from around $250 to $5,000, depending on what you want. However, this isn’t an average monthly cost. Website updates that require a developer are usually annual.

Email Templates

Email templates can help to improve the conversion rates of your emails. Based on where you purchase email templates, you should expect the cost to range from $30 to $150. Templates can have a high ROI if they convert well. Also, like website modifications, they are only purchased as needed. They are not a monthly expense.

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Text Messaging (SMS)

Short Messaging Service (SMS) marketing involves sending promotions, coupons, and brand awareness campaigns via text messages. While most people think text messages are for corporations with big budgets, this is far from the truth.

Unlike other marketing channels, SMS texts are read within five seconds. Most providers charge a flat rate. You should budget for $80-$100 in your text message marketing campaign.

How to Allocate Your Marketing Budget

The main challenge to business owners is how to allocate money to their marketing campaign to get high ROI. Before you jump into the budgeting process, you must determine how much you can afford to spend.

Here are a few tips that can help you decide how to invest your marketing budget.

1. Set your goals

There’s a lot of information out there on how to budget for marketing. Whether you have an established business, or you’re just about to get off the ground, you should identify your goals.

If you’re trying to scale up quickly, you should keep your marketing budget at about 12% of your gross revenue. For established businesses, you should allocate 7-8% of the gross revenue to marketing.

2. Make a list of your best marketing channel options

Now that you know how much is in your marketing budget allocation, its time you come up with the figures. List the platforms in order of priority.

If you’re planning to spend more on Facebook, Instagram and Twitter, you should specify that. Avoid channels that are way beyond your reach. For example, if PPC ($2,000 t0 $5,000) is too pricey at this time, then hold off until your budget becomes larger.

3. Find the right marketing avenues

This is where things get tricky. You don’t have to divide the marketing budget equally. Instead, you should consider the channels that bring you closer to reaching your business goals. For examples, some businesses do extremely well on social media. Others tend to do better with blogging. Where do you need to invest to most effectively increase your exposure to your target audience? After you have decided the answer, then select the marketing channels that make the most sense for you.