It’s always exciting when you’ve got your funded startup off the ground, and it’s beginning to thrive, but with high growth in the early stages of your business comes the challenge of keeping things that way. Luckily, the right digital marketing strategy can work wonders for keeping sales sustainable. However, the right strategy also requires the right budget.
This article outlines five simple steps to create a digital marketing budget for your startup, including how to ensure your high growth financial plan makes all the right assumptions about when to start digital marketing, what return you can expect from it, and what funding you will need to fund the required activity.
Step 1: Develop a marketing strategy with the right support
When you’re running a high growth or funded tech startup, you’ll need to stay flexible and adapt quickly, which inevitably leads to the need to figure some elements of your business out along the way.
One of the things that you absolutely shouldn’t leave to chance is your marketing strategy. The success of your startup hinges on how well you’re able to communicate your offering to your target market, and that all starts with a fundamental understanding of what activities will help and the associated costs of them.
So, before diving into creating a marketing plan, try reaching out to a consultant or agency who are already involved in the day to day implementation of digital marketing. They’ll know what will work for you and what won’t, as the best tools and techniques are constantly evolving.
You can find out what to look out for when hiring a marketing agency here.
Step 2: Build a budget spreadsheet
The second step is to build a spreadsheet that takes into account the elements influencing your digital marketing budget.
These elements include:
- The target sales needed to achieve your desired income.
- Calculate what that translates into in terms of the required average order value and number of customers.
- From your marketing strategy, review the acquisition strategy and identify the key marketing resources needed to support customer acquisition.
- Using known conversion metrics, work out how much effort is needed to generate the required number of new customers.
Finally, build the spreadsheet so that each element’s conversion ratios and implementation costs can be changed and switched on and off, allowing different scenarios to be tested.
Through this activity, you’ll be able to determine exactly how much you need to be spending and how much ROI you need to be generating to justify the activities.
Step 3: Review the potential impact of your activities
The third step is about figuring out what impact you expect from various activities you’re thinking about incorporating into your strategy.
Some of the elements to complete an impact analysis on include:
- Website Conversion Design
- Search Engine Optimisation
- Pay Per Click Advertising
- Organic Social Media (Brand awareness)
- Paid social media for driving traffic and getting to new audiences
- Email marketing
- Video marketing
This will help you figure out if an activity is worth the effort, what level of work you’ll need to put into it, and what elements you should prioritise.
Alongside that, you’ll begin to build a clear picture of how each element of your strategy feeds into their counterparts to make your digital marketing work cooperate as a complete ecosystem.
Step 4: Stress-test your financial model
The next step to creating a digital marketing budget for your startup is to stress-test your financial model by trying a variety of scenarios.
To do this, you will need three financial models:
- a conservative one (achievable under most circumstances)
- a positive one where everything goes right
- one that sits in between, which is hopefully the most realistic
You will also need to work out how much time and effort each activity takes for each scenario. You can then start using these elements as potential outcomes of your calculations.
Through this activity, your assumptions can be tested and validated through real-world data. Once you understand what is achievable based on your available resources, you can opt for the most viable financial model while still maintaining an element of flexibility and preparedness for different outcomes.
Step 5: Add your forecasts to your overall business model
Once you’ve generated and stress-tested your forecasts, you’ll need to apply them to your overall business model to check that your forecast sales and marketing costs are in alignment with the model.
If they are, you’ll be able to include these costs in your planning and budgeting. If not, it means that your model is flawed somehow, and you’ll need to revisit and adjust it before finalising the budget for your digital marketing.
Once this is done, you can begin projecting updates regularly throughout the year while also comparing these. This will allow you to stay flexible and adaptable in your market while making it simpler to scale up as you continue to grow.
By now, you should have a good idea of how to determine what level of income you can expect from the launch of your new project or business and how much of it you need to invest into your digital marketing budget.
Of course, there are other considerations, such as ensuring you’re able to quickly allocate the right people to the right seats in your startup, which are also relevant to how your budget as a whole will take shape. You can find out more about that here.
I hope you found this article helpful as a starting point for creating a digital marketing budget for your startup. If you’d like to find out more or get support to build the right marketing budget for your startup, get in touch.