Any business owner operating an eCommerce store knows that budget allocation is tricky. Identifying which area to pump money into is more than just a game of numbers. You may be keen on resource crunching but must also think beyond short-term gains and immediate returns. The help of an expert on eCommerce marketing costs is mandatory in this case.

You can let your target audience know more about your brand through marketing. It engages your market and elevates your brand to keep up with the competition. Simply put, marketing is the path to closing sales. But how much money should you allocate to bag the maximum ROI?

eCommerce Marketing Costs

How Much Should Your Marketing Spend Be?

If you’re a new brand, you might wonder how much-established eCommerce companies spend on marketing for eCommerce.

The industry type is one of the most critical factors affecting marketing spend. According to a 2022 CMO Survey, B2B product companies usually spend about 9.4% of their revenue on marketing. On the other hand, service companies spend 10% of that on marketing. As for B2C product companies, 14.2% of their revenues are for advertising, while services allocate 8.7%.

Strategies to Develop an eCommerce Marketing Budget

Different companies employ varying strategies to develop a marketing budget. Here are a few of the best marketing strategies.

  • Revenue-based

One practical approach is to allocate a certain percentage of your revenue for marketing. Many businesses set aside between 6.5% and 8.5% of their annual revenue for marketing activities.

However, for newer businesses, consider a higher percentage. If your company is under five years old, allocating 10% to 12% of your revenue to marketing is a prudent strategy.

  • Competition-matched

By gauging the expenditure of your rivals, you can make informed decisions about your marketing budget, ensuring that you remain competitive in the market. The eCommerce digital marketing agency you’ll be working with can guide you in making this budget plan.

  • Top-down

In a top-down budget plan, the management establishes a budget for the year or quarter without pre-set parameters. The marketing department should stick to it throughout the designated period.

  • Goal-driven

The management collaborates with the marketing team to establish specific objectives and then allocates a budget to attain those goals. Each goal in your eCommerce marketing plan is assigned a monetary value.

For instance, a value of 50 cents per new social media follower would mean that gaining 100 followers equals a value of $50. This approach allows for a more focused, measurable strategy to achieve desired outcomes.

Marketing Budget Planning Mistakes You Should Avoid

There are many moving parts and variables when setting up a marketing budget, which explains why there is also more room for mistakes. Note that a single misstep can lessen the effectiveness of your eCommerce marketing strategy, not to mention the potential challenges it will pose for your business.

Here are a few common budget-planning mistakes you should avoid when creating your marketing budget, whatever eCommerce platform you use.

  • Allocating Fewer Funds to Effective Strategies

It’s common for companies to direct their funding towards familiar processes, even if a newer marketing method has proven to be more effective. The notion that a successful marketing method will always be effective is understandable but completely flawed.

The consumer market is dynamic — what worked yesterday may not work tomorrow. A more prudent approach is to invest in emerging eCommerce marketing strategies continually. This way, businesses can adapt to shifting market conditions by leveraging higher-quality personalization, automation, and other upgrades.

  • Overlooking Data Accuracy

A marketing approach without a clear understanding of your target audience can pose financial risks. It’s best to analyze your consumer data thoroughly to tailor effective marketing campaigns. However, relying on inaccurate or flawed data can significantly hamper your marketing efforts.

Therefore, it’s crucial to carefully review your analytics and eliminate any outliers before they negatively impact your budget. By ensuring data accuracy, you can make well-informed decisions and enhance the effectiveness of your eCommerce marketing plan.

  • Undermining Existing Customers

While making a marketing campaign for your eCommerce business, you might be tempted to target a broader audience to increase sales funnel throughput. However, widening your market segment often incurs higher costs than retaining current ones.

While only a few will reach the end of your sales funnel, they are driven by diverse reasons. Prioritizing customer retention over time is best to achieve more significant and consistent profit growth.

  • Not Updating Your Budget

Market dynamics and customer priorities are constantly changing. Hence, an eCommerce digital marketing budget that proved successful last year may yield different results this year or later. Therefore, it’s best to integrate a fresh analysis of the current market into your budget-creation process.

Ways of Tracking Your Marketing Budget

Lead generation and campaign tracking are integral to gauging your marketing efforts’ success. If you choose the former method, you can create one line item for every lead with corresponding details like revenue generated, status, notes, assigned rep, campaign, lead source, and date.

If part of your eCommerce marketing plan is going the campaign tracking route, you should create a line item for every campaign with a note highlighting the campaign name and the amount you invested in it. You must include details like employee salaries and the total time you spent running the entire campaign.

When you tweak your strategy or adjust your budget, focus on one variable at a time.A simple alteration can make a significant difference. For example, you are increasing the budget by a few dollars or changing a Facebook photo.

Clicta Digital Offers eCommerce Marketing Services That Won’t Break Your Bank

Budgeting shouldn’t be a pain if you know you have enough funds to run your campaigns. Let Clicta Digital be your partner as you get your brand known, improve your market reach, and close more customer sales. We’ve been in this business for years, so rest assured, we know what we’re doing, and we do it well!

If you need help with eCommerce marketing, call us! We’ve worked with large corporations, mid-size businesses, and startups, so you can trust us to turn your results around. Get in touch, and let’s talk about growth!