When deciding if digital marketing is right for your business, the first question you will probably think of is “How much does digital marketing cost?”. In this article, we’ll tackle hard numbers to help you understand what kind of budget you might be looking at.
Cost of Digital Marketing
You came for an answer so let’s start with some hard numbers and then work backward to explain how we get to them.
A standard business in an average industry should dedicate at least 20 hours a month for digital marketing. If the company is operating in a competitive industry like lawyers and dentists, they most likely need to expand their investment for marketing. If they are operating in a very competitive geographical market like Raleigh or Charlotte in North Carolina, they probably need to spend more time on marketing than companies in smaller towns. If you try to rank for multiples locations, states, nationwide, or even internationally, you need to add significantly more time to succeed.
If your current website is in bad condition or you are a start-up, you probably need to spend more money on marketing than someone who is already ranking on the second page but wants to be on the top of the first page.
Most agencies charge between $80 and $200 per hour for digital marketing. If we are looking at a 20 hours per month marketing project at $100 per hour, you will pay about $2,000 per month for an average service.
We typically see companies dedicate between $500 and $50,000 per month for digital marketing. You might find some marketing agencies offering services below $500 a month, but what can someone accomplish in 5 hours a month; probably not enough to move your website to the first page unless you are not in a competitive industry and operating in a very small town.
Most small to mid-sized businesses pay between $2,000 and $6,000 per month. While more ambitious businesses pay between $10,000 and $20,000 per month for their marketing efforts.
Larger organizations often dedicate well over $100,000 budget for online marketing each month.
Variables that Determine Digital Marketing Prices
The wide range in pricing for digital marketing comes down to the following factors.
- The niche/market you are in.
- Your location.
- How competitive it is.
- Your timeline for getting results.
- Where you currently stand in search engine ranking.
- How well your website currently converts.
How the niche/market you are in effects price:
The niche/market you are in effects the price an ad network will charge you and conversion rates.
For example, a typical bail bonds company will pay an average of $58.48 on Google Ads per click. While a pest control company would pay an average of $38.84 per click on Google Ads. To get 1000 clicks per month from your ad spend a bail bond company would have to spend over 50% more.
Different markets also have different conversion rates. For example, the typical landing page for higher education converts at 2.6% while a landing page for vocational studies converts at 6.1%.
In order to achieve the same amount of conversions per month, a higher education company would have to drive over 134% more traffic to their website.
How your location effects price:
Your location could effect price for both organic SEO and PPC. Typically an injury law firm in New York City will face greater competition than a law firm from Cheyenne, Wyoming. The greater competition can drive up the price that ad companies charge to generate a click, and the increase in law firms trying to rank #1 in search engines can make achieving the goal a more labor intensive effort.
How competitive your market is can effect price:
The competitiveness of your market can also effect price. In our experience some markets don’t generally put in the same level of digital marketing efforts as others.
If you have a knitting website that you want to appear as number 1 for your city, odds are you won’t find many other knitting companies putting in significant marketing efforts.
Alternatively, digital marketing efforts around Mesothelioma are one of the most competitive.
How timeline can effect price:
If you need to drive results quickly then paid ads might be the fastest way to achieve results. You would literally be paying for website visitors. Driving website visitors through ads can happen faster than improving organic search engine results.
Additionally, devoting more time to an effort will lead to faster results and the corresponding increase in price.
How your current search engine results can effect price:
Do you currently rank for the search terms you want to appear for? Are you on page 1 or page 10? Your current standing in search engines will serve as a starting point and effect the level of effort needed to get to #1. If you aren’t even ranking for the search term, then creating content and/or improving the existing website might be needed.
How well your website currently converts visitors will effect price:
Does your website convert visitors into paying customers? Driving additional visitors to a website that does not convert them into a customer can be a waste of ad spend and SEO budget. Effort might need to be spent improving your existing website, for example the content, so that it converts visitors to customers before effort is spent on improving traffic to your website.
How Much Should a Company Spend on Digital Marketing?
The following questions are questions that we ask all of our clients, to help assess what their internet marketing budget needs to be, in order to be successful.
Internet Marketing Questions for Your Business
What are your goals?
Your goals should clearly elaborate what you need and this will help a marketer form ideas of what services will be needed. Internet marketing comes in a wide spectrum of services from SEO, to PPC management, social media and email campaigns.
What makes your business stand out?
To better optimize your business online, a marketer needs to know your business inside and out, so do you. Knowing what makes your business stand out, or your unique selling position(U.S.P.), will better help you to be successful offline as well as online.
What are you doing offline?
Small business owners know that you have to balance your online marketing with offline and traditional marketing and tactics. If nothing is going on with your traditional marketing efforts, it can double the workload and cost of your internet marketing efforts to gain the same effect.
Who is your competition and what are they doing?
Every internet marketing strategy should come with a thorough look at the competitors. By analyzing the competitors a seasoned Raleigh internet marketing team can give you an idea of just what will be needed to be truly competitive in your field. A law firm in Raleigh, for example, will have much more competition and marketing efforts needed in order to stay competitive with the other lawyers in town than say an attorney in the middle of Wendell.
What platforms are your customers on?
Different platforms used for marketing incur a wide variety of costs. If your customers are just in search, that’s great, but PPC ads might also be needed, or if you are looking for animated videos for content generation the cost of those could be different as well. It’s important to know what platforms are available to you and which ones your target audience is using.
How are you going to measure success?
Marketing success is usually measured by sales earned. You need to let your marketing team know what your sales goals are and keep them updated with this data every step of the way. Interpreting data is a huge part of a marketer’s job and can take hours or days from which to create a plan. The more time and effort put into analyzing the data, the higher the costs incurred, but these are also relative to your higher sales income!
As a general guideline the U.S. Small Business Administration suggested 7% to 8% of your gross revenue should be spent on marketing if you’re doing less than $5 million a year in sales.