How Can My Digital Data Help Me Set Next Year's Marketing Budget?

Our world runs on data. It tells you what your customers’ interests are, what they purchase, and where they spend their time. Digital marketing gives you access to incredibly powerful data for targeting, giving you minute-level specificity to reach the market you seek.

Analysis of your business data provides greater insight into your operations year over year. Data analytics help you understand how you're performing to your benchmarks and KPIs so that you can make critical changes. It also gives you the ability to set your yearly budget more accurately and allocate funds where they make the most impact. Let's look at how you can use digital marketing data to guide your budgeting decisions for the next year. 

Adjusting Your Marketing Budget Each Year

Your marketing budget isn't supposed to be a "set it and forget it" fixed number over several years. Instead, it should be dynamic, changing year after year and adjusting to your business’s changing needs. You can use data analysis to evaluate whether your priorities should change to align with your organizational goals. It is important to focus only on the top two to three priorities for the best results.  

The sheer volume of data you can accumulate can become overwhelming if you don't know how to ask the right questions. Asking relevant questions reveals the criteria your data will measure. First, you'll want to know how much you are investing in your marketing efforts. Then you'll need to decide how to allocate them.  

Once you've established your base marketing budget, start evaluating the data for each of your campaigns. Measuring the efficacy of your campaign requires establishing the right goals and tracking the right metrics. It’s important to use multiple sources to collect and track analytics for your campaigns because not all platforms are the same. For example, Google Analytics is considered one of the most common analytics platforms, and while it is useful, Google Analytics cannot track traffic from apps because they don’t use cookies. Make sure to pair Google Analytics alongside the reporting from your digital marketing partner to get the most complete picture. Your data may include some or all the following, depending upon which are most relevant for your campaign:

• Average session duration
• Bounce rate  
• Click-through rate 
• Conversion rate  
• CPC 
• Email open rate
• Impressions
• Most visited pages 
• New visitors vs. returning visitors 
• Overall website traffic 
• Pageviews
• ROI  
• Sessions 
• Social reach  
• Social engagement 
• Traffic by source 

Optimizing Your Budget Using Digital Data 

Digital data will give you a clearer picture of your ROAS (Return on ad spend) by presenting raw numbers to measure your effectiveness. Drilling down on those numbers can eliminate ineffective spend, allowing you to reallocate those dollars to areas that will more productively guide customers through the consumer journey. One way to do this is by comparing display and video ads or SEM data. The cost of CPC in SEM data tells you how competitive the market is.  Also, the total impressions in SEM tell you how many consumers are searching at that current time which you can compare to the reach you are achieving in your display or video campaign. 

PPC is powered by keywords. Each SEM campaign depends on choosing and grouping the most searched keywords. The prices for this paid ad service reflect how popular the keywords you've set for your campaign are, as the highest bids or amount you want to pay for each click will earn you a higher spot in the search results. That means the more popular the keywords, the more you are likely to pay. 

As more businesses invest in digital marketing, your budget will need to increase to maintain competitiveness with all the other marketers. You may need to increase your impressions with display or video to reach the correct frequency as more people spend time online. Data analytics also provide insight for competitor analysis to understand what digital marketing techniques your competition relies on, allowing you to adjust your spend to either be more competitive or to dip into other areas.   

Breaking Down Data to Test for Continuing Effectiveness

With the data you have collected on your digital or video campaigns, along with the SEM data, you can begin to break it down for further insight. You'll first want to look at the average reach and frequency of your campaigns. Then you'll need to determine if you've achieved enough impressions to maintain a 4-8 frequency. Finally, you'll want to review general metrics like clicks and website views. 

Now it's time to break down your SEM data. SEM data provides more insight into market competitiveness. As CPC increases, it tells us more people are competing for clicks. To determine how much of the market you own, you'll need to look at search volume for each year, your impression share, and the number of competitors. 

Use Your Data to Guide Your Budgeting Decisions

Everything we do today creates data. Knowing how to track and analyze the right data can make a huge difference. That is why strategic and data-driven companies have an advantage over those who don't recognize the value of their data. By optimizing your budget based on your campaign performance, you can achieve a greater ROI on your marketing spend. Work with a digital marketing agency to leverage their expertise to interpret your data more effectively.