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How Much Do Small Businesses Spend on Digital Advertising?

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How Much Do Small Businesses Spend on Digital Advertising?

Small businesses have always been tough nuts to crack when it comes to jumping on board the digital advertising bandwagon, but things are changing and biz owners are ready to get dealt a hand in the game of big profits. 

Creating a budget for starting a digital advertising campaign is a smart move for those that want to mitigate risk and retain control of their ad spend. Not sure where to start?  We’re here to walk you through and hopefully give you a solid foundation for your new launch pad. 

Who should use digital advertising?

Marketing your business is a necessary function to engage your customer audience on a long-term basis. Digital marketing enables you to conduct that marketing in a more meaningful and measurable way. Some industries seem to benefit more than others: 

  • Home services industry (HVAC, plumbing, electrician, construction.) 
  • Medical and wellness/fitness practices, clinics and studios. 
  • Restaurants and other food establishments.
  • Home-based businesses. 
  • Legal firms and accounting firms.  
  • Auto dealers. 
  • Entertainment companies. 
  • Moving companies. 
  • Real estate agents. 

The list is not exhaustive, however, the trend we are seeing is that a growing number of small businesses are seeing big profit turning benefits by upping their digital game. 

Why allocate dollars for digital?

If your business is running off of the steam of referrals and you still have a positive cash flow…do you even need digital marketing? 

Well, we’re not here to tell you what you do and don’t need. We can just express our fear of relying only on word-of-mouth to run a business.  It’s a double edged sword with referrals being the easiest sell ever and completely unpredictable. 

It’s that unpredictability that drives us to look towards paid marketing strategies that offer more control. 

One benefit of digital marketing is the control you have over your ad spend dollars.  This offers people the ability to track the pulse of your marketing from week to week, so you can make changes to campaigns by either cutting ineffective ads or accelerating the winners. 

Another great ability offered by the digital world is the “omnipresence” that your company can achieve for a relatively small budget. 

Average percent spent on digital advertising...

We’ve uncovered that businesses that dedicate at least half of their marketing budget towards digital advertising, digital content, email marketing and online reviews see their business grow much faster than those that don’t.

Print advertising is not dead, it can be used in conjunction with digital marketing, but for those that still put all their money into billboards, magazines, shopping carts, and newspapers, they are getting less engagement and exposure every year.

Those methods are nowhere near as effective as Google and Facebook that currently dominate local buyer intent. 

Of course, these figures vary greatly based on your company, however as the world of digital continues to grow year after year and with big companies like Walmart and Target shifting their business models online, it is a sign to come that if you don’t have some type of digital marketing plan will fall behind.

Invest in your business and its future.  

a graph of what small businesses will spend for digital marketing

For a deeper breakdown of costs

What services should I spend my money on?

If you’ve been a business owner for more than one minute, you have probably heard people pitch you about 25 different things you should be doing online to grow your business , by the end of it you just want to do none of it.

So, let’s breakdown what we believe is the most important services to focus on and give you an idea of how much it costs to be competitive.

*Disclaimer* This information will be based off of businesses that serve a local area of clientele as opposed to national brands and eCommerce brands.

Search engine optimization (SEO)

SEO is one of those types of digital marketing that tends to see incredible return on investments because nobody is willing to play the game for as long as it takes to get results.

When it comes to this type of digital service, the most crucial factor of your success is the research that is performed prior to spending money. It can take 3-12 months to see the big pay days so you want to make sure your plan is on point the first time around. 

The most common SEO services we provide are to rank a company for [service] + city.  

For example, acupuncture Albany Oregon, was the goal of one of our clients, Valley Health Clinic, who wanted to be found online in the best position possible when people are looking for his exact services. 

However, depending on your competition in the area, this can be an expensive task but worthwhile for long term customer in generation.

Not all keywords need to be as precise, many of your customers have questions about the services you provide and will ask those questions on Google.

A great example of this is, “what are the best neighborhoods to live in in Corvallis”? – Annette Seivert of  Corvallis used us to capitalize on this. (mycorvallisrealestate.com)

How much is SEO going to cost you? Best guess is $299 per month in low/mid competition areas with lower-end sales. ($under $250 purchase) $1,500 per month for high competition areas with high ticket customers. (+$1000 purchases)

pie chart seo vs ppc

Pay Per Click Advertising (PPC)

Pay per click is a very popular form of digital advertising because it allows your business to be at the top of Google search results without doing all the heavy lifting required to get there. (but it will cost)

Pay per click advertising works by putting down words that you want to have your advertisement triggered for in search engines like Google and then paying for people to click on that advertisement.

Many companies are transitioning to this type of advertising because it is more intention based, engaging and traceable.

The real gold of PPC advertising can be found when you are working with a professional that goes outside of the common advertising mindset. 

Running an ad for a construction company in [xyz city] is competitive and expensive, however if you run ads for specific types of construction, such as deck construction, you get much more specific interests an less competition .

A good pay-per-click manager will be knowledgeable in creating ads that target the right people, in the right location, with the right information they are looking for. 

If you’re interested in growing your business with PPC, you can look to be spending between $500 and up.  

a google ad analytics graph

Content Creation

Content for a small business needs to be focused and have a goal to it.

Most small businesses get told that they need to be producing content every single day to make an impact, but it’s about creating effective content on a regular basis, even if that means once a month.

The easiest form of content is writing a short article.  We’ve never met an owner with ample time on their hands to sit and write engaging articles multiple times per week, so doing so routinely is your best bet. 

Video is arguably the most engaging form of content you can produce, but requires a little practice and calm nerves. 

You can make it all easier on yourself by integrating activities, such as taking pictures or shooting short video, into your day to day business. 

One strategy for small businesses centers around creating content about your service’s benefits, not features. 

For example, a yoga studio would publish content regarding the benefits of yoga, such as anxiety reduction and improved focus and community.  These types of content get shared and inspire people to interact with your brand.

Don’t sell in your content…it’s implied.  (your customers aren’t dumb.) 

In summary,  the price of content for a small business should not be a huge expense.  However, outsourcing your content curation is a good idea so that it looks professional and clean. 

Here are some average prices based on our research and our own pricing :

  • Average price for content editing in curation: $25-$75
  • Average price for video production: $250-$1000 (based on quality)
  • average price for graphic design: $50-$250

Content is a very effective form of digital advertising, however if the goal is to get more customers, each piece of content needs guide the viewer to take a “next step” action towards becoming a customer.

how-inbound-marketing-works

Email Marketing

We can confidently say that email marketing is one of the “no-brainers” on this list. It is the cheapest form of digital marketing listed and the software is relatively cheap.

It might seem archaic to you, but most working adults still check their email at least once a day.

How can you build your email list? Well, if you’ve got customers coming in, you’ve got an email list.

There are many ways to grow your email list , including online an offline methods. 

Email allows a business to put out promotions, events and incentives to people that have already done business with you. 

Another great use for email is sending potential customers valuable information to allow them time to warm up to you before they make a buying decision.

At a whopping $9 – $50 per month, you can have an email list of thousands of people at your fingertips.

Growing an email list is one of the most underrated skills in our opinion.

To make it more of an enticing digital effort, you can write 12 emails in January that go out to your list all throughout the year on autopilot. 

You can expect to pay from $9 to $50 per month depending on what email service you go with.

You could also choose to get professionally written emails that drive sales and engagement from $35 and up per email. 

email roi

Bonus: Reputation Management

With so many companies competing for attention on the Internet, the world has turned to on-line peer reviews of your business in order to determine who is worthy of being placed on that golden front page of searches.

Online reviews have become one of the most precious commodities on the internet. BrightLocal.com recently did a survey and revealed some surprising statistics.

  • 86% of people read online reviews for local businesses.
  • 40% of people will only take into account reviews within the last two weeks.
  • 91% of people trust online reviews as much as personal recommendations.
  • 57% will only do business with a 4+ star rated business.

Taken into account the psychological and technical benefits of online reviews, it makes a lot of sense for a small business to take advantage of happy local customers.

Programs for reputation management vary greatly but you can expect to have some sort of monthly fee associated with them.

At Clark Five Design we create reputation management automation for our clients for the price of $49 per month.

Most of the software available online seem to run in the range of $99 – $199 for small businesses depending on how many features you want to add.

directories for reviews

Conclusion

How much should your small business spend on digital marketing?

This is definitely a question that you’ll want to answer going into 2020 and beyond. 

“The future is not digital, its digital right now.” 

How much of the budget should be traditional marketing versus dollars in digital depends on a few key factors: 

  1. What are your profit margins from the average new customer? 
  2. What is your average customer life time value? 
  3. Do you have a calculated digital marketing plan?
  4. How competitive your local area is. 
  5. The industry that you are in. 

Based on some of some of your answers, you’ll be able to expect to allocate 50% of your marketing budget on digital. 

If you would like to fully explore your digital marketing capabilities, please contact us.