What Is Marketing Spend and Why Does It Matter?
Marketing spend is basically your business’s investment in getting noticed—whether that’s through ads, social media, SEO, content, or other strategies. But it’s not just about how much you spend; it’s about making sure every dollar works for you.
Picture this: In 2023, businesses on average spent 10% of their revenue on marketing, with most of it going toward digital strategies. Why? Because that’s where the customers are. A strong marketing budget helps drive traffic, generate leads, and boost brand awareness, especially in today’s ultra-competitive world.
When you’re working with an agency, your marketing spend isn’t just about funding campaigns. It’s also paying for their expertise, tools, and creativity to amplify your results. But here’s the catch: unclear goals or misallocated funds can leave you with wasted resources and disappointing outcomes.
A strategic approach to marketing spend turns it into more than just an expense—it becomes an investment that delivers measurable ROI. Whether you’re working with a boutique agency or a big firm, understanding where your money’s going and what to expect is key to making it all count.
How Much Should You Spend on an Agency?
Figuring out how much to spend on an agency can feel like a guessing game, but it doesn’t have to be. Here’s a breakdown of typical budgets:
- Small Businesses: $1,000–$5,000/month. This is great for essentials like SEO or social media management if you’re working with a limited budget.
- Mid-Sized Companies: $5,000–$20,000/month. At this level, you can incorporate PPC campaigns, advanced analytics, and content creation for more comprehensive growth strategies.
- Large Enterprises: $50,000+/month. These budgets support global campaigns, influencer partnerships, and creative production at scale.
It’s also important to know how agencies price their services. Flat fees offer predictability, but you need to make sure the services justify the cost. Percentage-based fees (like for PPC campaigns) should align with industry norms, and performance-based pricing can work well if there are clear success metrics.
The bottom line? Tie your budget to your goals. If you want quick wins, focus on high-impact strategies like PPC. For long-term growth, invest in content and SEO. Make sure you understand the pricing model and expected outcomes before signing the contract.
How to Choose Agencies That Maximize Your Budget
Not all agencies are created equal. To make your budget count, pick one that aligns with your goals and values transparency. Here’s what to look for:
- Specialization: Does the agency have experience in your industry or the specific service you need? For example, if you’re in eCommerce, you’ll want someone with a proven track record in online retail.
- Proven Results: Look for case studies, testimonials, and real-world examples. Ask them to show you the numbers—like how much revenue they helped generate or how they improved a client’s search rankings.
- Clear Deliverables: Avoid vague contracts. The agency should outline what they’ll do, when they’ll do it, and how they’ll measure success.
- Adaptability: A good agency should evolve with your needs. Whether that means pivoting to a new platform or adjusting to industry trends, flexibility is a must.
Also, check out the tools they use. Are they leveraging cutting-edge analytics or sticking to outdated methods? An innovative agency is more likely to keep your campaigns ahead of the curve.
Across Channels
When you’re working with an agency, don’t hand over your entire budget. Instead, spread it across channels to maximize results. Here’s a rough guide:
- Paid Ads: 40–60% of your budget should go here if you’re looking for immediate results. PPC on platforms like Google or Facebook often delivers fast ROI, but keep an eye on metrics like cost-per-click and conversion rates.
- Content Creation: 20–30% for blogs, videos, and other content that drives long-term traffic and engagement. High-quality content builds trust and positions your brand as an industry leader.
- SEO: 10–20% for organic growth. Focus on technical fixes, keyword optimization, and local SEO if applicable.
- Testing and Analytics: Reserve 5–10% for A/B testing and performance analysis. This ensures your campaigns are data-driven and constantly improving.
Work with your agency to allocate these percentages wisely. If they recommend something like 70% for paid ads, ask for data to back it up. A well-balanced budget supports both short-term wins and long-term growth.
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Combine Your Efforts with Agency Expertise
Teaming up with an agency works best when you’re actively involved. Here’s how to make the most of the partnership:
- Set Clear Goals: Be upfront about what you want to achieve. Whether it’s generating leads, increasing web traffic, or boosting brand awareness, clear goals keep everyone aligned.
- Track Performance: Regular reports are your friend. Look at conversions and ROI, not just vanity metrics like clicks.
- Play to Your Strengths: If your in-house team is great at social media, let the agency handle PPC or SEO. Focus your spend on areas where they bring the most value.
- Stay in Touch: Regular check-ins help keep strategies on track. Use these meetings to discuss wins, challenges, and pivots.
At Build Digital Future, we help businesses like yours make smart marketing decisions. We connect you with vetted agencies that align with your goals, ensuring your budget works harder and delivers results.
Why risk trial-and-error? Let us guide you toward a strategy that maximizes your ROI and sets you up for success. Reach out today, and let’s get started!