Digital marketing can help your business flourish, but how do you persuade the big bosses to give you the budget? Here’s our quick how to guide to help you out.
Whether you’re asking your board or your potential investors, pitching for a digital marketing budget will require you to put forward a solid business case. How do you achieve this?
Typically, boards and investors want you to ‘show them the money’ – they don’t like handing over budget for unquantifiable activities. It is not easy to demonstrate clear ROI potential in such a complex area as digital marketing, but it is still possible to present a cost-benefit analysis that will demonstrate why you should receive your budget.
Use your existing data
Your cost-benefit analysis should ideally be based on your existing data.
An established business that uses analytics software on its website, should be able to provide:
- Session data: the number of times your website has been visited over a specific time period (for example, the last six months)
- Conversion data: The number of people that have ‘converted’ or taken useful action on your site during the same period. This could be sales leads, job enquiries, document downloads or any other action that indicates a user is interested in your brand.
What you need to do is track your online sales journey. This starts with how people discover your site (e.g. through running a search on Google or clicking one of your paid ads), and ends either on the website itself, if that’s where the sale takes place, or continues offline if the website’s purpose is to collect leads for future sales.
A Google AdWords example
Let’s take a look at an online sales journey that uses Google AdWords as its starting point:
|Number of times Google Ad seen||Conversion rate||Number of visits from Google||Website conversion rate||Number of sales enquiries||Sales conversion rate||Number of sales||Gross profit|
In this example:
- A company’s Google Ad is seen by 50,000 people in a month
- 1,000 of them visited the website, so the conversion rate from Google Adwords to the website is 2%
- Of those 1,000 website visitors, 20 of them went on to complete the enquiry form. So the conversion rate of the website is also 2%
- The sales team converted 25% of the enquiries, delivering 5 new customers to the business
- Over the lifetime of a customer, the average gross profit is 4k. So 5 new customers are worth £20k to the business
These figures give us many options for setting Key Performance Indicators (KPIs) that can be costed and presented as part of your business case for digital marketing. For example, if we know that every customer is worth £4k, then we can calculate that a 1% increase in our conversion rate (3 extra customers) would deliver an additional £12k in profit. Similar calculations can be made to predict the impact of increasing traffic.
Run this exercise, or a variation of it, track each of your online sales channels, and then present your findings in such a way that there is a clear incentive for your board or investor to sign off on your budget (as long as it is in proportion to the projected gain).
Presenting evidence to support your arguments is the most important aspect of pitching for a digital marketing budget, so do your analysis beforehand and present realistic, achievable and costed KPIs. Good luck!