One of the most common mistakes that many marketers fall into is making digital marketing budget decisions based purely on their team’s opinion rather than analyzing past performance data to make better decisions moving forward. Suppose you aren’t measuring the impact of today’s marketing efforts to inform tomorrow’s marketing efforts. In that case, you are likely missing out on ROI opportunities, and wasting spend on channels, strategies, and audiences that aren’t performing well. Why leave your digital marketing campaigns to chance?
Digital marketing analytics can help you maximize marketing efficiency and improve return on investment (ROI). It allows you to objectively measurable performance to make better-informed decisions when it comes to where you invest marketing and advertising dollars. From paid advertising, email marketing, SEO, and beyond, digital marketing analytics can consider all aspects of your marketing.
Why Marketing Analytics Make Digital Marketing Budget Planning Even Better
According to a recent study by Deloitte, marketing budgets comprise ~11% of total company budgets on average. Allocations within digital marketing budgets vary widely from brand to brand and depend on a number of quantifiable and non-quantifiable factors. Quantifiable factors like conversion rates and cost per acquisition by digital marketing program or channel can be calculated and understood with the help of marketing analytics.
Understanding quantifiable factors can help marketers get more value from digital marketing efforts and help marketers lower their marketing costs. Digital marketing analytics enables marketers to view performance data objectively and spot trends that can inform digital marketing budget decisions. Performance trends can help marketing teams shift funds towards the most effective digital marketing channels, identify new target audiences, and help accelerate the path to purchase.
Getting Started With Marketing Analytics
Despite the growth of digital marketing and the widespread adoption of marketing analytics, many marketers still struggle to best leverage it to maximize ROI. With the growing menu of measurement and attribution solutions paired with the shrinking bandwidth of marketing teams, it’s no surprise that some marketing teams are at a standstill when it comes to taking the first step forward. But it doesn’t have to be that way.
When it comes to building a digital marketing budget, there isn’t a perfect answer for every organization. However, I can share a series of questions that you can ask yourself to help you decide the optimal mix of programs, campaigns, and channels.
What is my customer acquisition cost (CAC)?
The first step in building your digital marketing budget is understanding how much you are spending to acquire new customers. This includes looking at all marketing programs, both paid and unpaid, that contribute to acquiring new customers. Knowing your CAC is critical to calculating ROI and for driving growth.
What is the lifetime value (LTV) of my average customer?
Lifetime value is a prediction of the total sales revenue attributed to future relationships with a customer. LTV answers how much revenue you will see from a single customer over time.
How much budget am I spending on digital marketing? On each channel?
To make the most of your digital marketing budget, you want to spend less than your target ROI. Your CAC and LTV are two metrics that can indicate how you are tracking against your target ROI. Whether you handle digital marketing in-house or use an outside agency or solutions provider can impact how difficult or easy it is for you to calculate overall digital marketing spend. You may need to aggregate spend across various platforms and channels into a single view to get a full picture of spend. It may be a big lift, but it’s a non-negotiable if you want to drive marketing ROI.
What does my average customer journey look like?
Once you understand how much you are spending on each channel and how they are directly moving the needle on sales, you can take a closer look at the complete customer journey. Be careful not to mistake the high conversion rate of a single channel as the only channel to continue investing in. For example, if you convert most leads via paid search, it may be tempting to the majority of paid advertising dollars to search. However, if customer search queries are influenced by Facebook ads, sponsored podcast content, or earned news stories, it can be difficult to pinpoint your most effective channels. The bottom line, map out the customer journey, stage by stage, channel by channel. With a detailed customer journey, you can start to understand which individual touchpoints have the most significant impact on whether or not a customer makes a purchase and allocate future budget accordingly.
Answering the questions listed above is easier said than done. For some marketers, the answers to these questions may mean that a renewed look at their digital marketing channel mix is in order. For instance, digital marketers that have previously relied on last-touch attribution data to determine their digital marketing budget may need to rethink the role that top and mid-funnel channels can play in driving ROI.
In other cases, digital marketers may need to create more meaningful content that moves customers along the customer journey more quickly. The good news: omnichannel marketing partners like Digilant can help you answer these questions and assess your digital marketing data to act on it efficiently.
If you and your team want to level up your digital marketing budget know-how to ensure the best possible ROI in 2021, contact us today.