Digital advertising is pretty much a must for Small-to-Medium Enterprises or SMEs. With so many customers moving to the Web for product search, online visibility is necessary for a business to survive.
Here’s a common question when entering this realm, though: How much should I be spending on digital ads and what returns should I get?
Luckily for SME owners, it’s possible to take a strategic approach here. One might even say that given the limitations of the digital marketing budget for SMEs, strategy is required!
Today, we’ll explore realistic expectations for digital advertising spends and potential returns. In the process, you should learn how much to spend on digital advertising yourself.
Setting expectations: reality vs. the dream
Let’s start here. There’s a common expectation for businesses new to marketing that they can get big bucks for every dollar spent on it.
That might have been more attainable in the early days of digital marketing. Channels weren’t too saturated back then so you were fighting fewer competitors for attention. People weren’t trained to skip or ignore ads either.
Today, we have a highly competitive landscape and people accustomed to ignoring ads. Those present challenges to anyone trying to advertise a brand. As such, keep it in mind and set attainable ROI goals based on your industry, market, and competition.
Strategic ad budgeting explained for SME marketers
1. Understand your business’s needs
Different objectives need different budgets. A campaign for brand awareness won’t cost the same as one for lead generation. Even your target audience affects your budget.
If your target demographic is made up of younger audiences, for example. That means you may be more likely to turn to social media than other channels.
Say the usual digital marketing budget in Singapore ranges from $500 to $10,000 per month for a small business. Let’s go for the middle and say it’s about $5,000 on average.
66% of businesses use 5% to 25% of that budget for social media. Within this range, a business targeting younger audiences may allocate $1,250/month (25% of the total budget of $5,000) to social media.
On the other hand, a business targeting audiences less likely to be on social media would probably allocate only $250 (5% of the total budget of $5,000). As you see, demographics can quickly affect SME advertising costs in Singapore.
2. Evaluate your digital presence
You have to assess your business’s current presence before you can determine your ad budget.
For example, do you need to build from scratch? Or do you already have a strong online presence? The latter may need more of an outlay because you’re starting from zero.
Solutions like Rival IQ and Meltwater may help you assess your brand’s current digital presence vs. competitors. With the perspective those offer, you can figure out what sort of work and budget you should be looking at.
3. Identify the best channels for SMEs
The most popular paid channels available for SMEs include Google, Meta, and TikTok. That being said, you should take time to figure out which of these is best for your audience, industry, and brand.
Doing so can help you identify where to allocate more or less of your marketing budget, allowing you to set aside more for the channel that offers the best ROI for businesses like yours.
Be sure to weigh organic vs. paid strategy on these channels too. You want to balance organic efforts with paid ads for a comprehensive strategy.
For example, HubSpot uses useful guides and blog posts to boost reach organically. But then they supplement that through paid ads that promote their top-performing posts too!
4. Be smart when calculating your budget
There are several ways to calculate your budget, such as these:
As a percentage of sales, e.g. 7% of your annual sales figures.
As a figurate based on your CAC or customer acquisition cost
Whatever formula you end up using, keep your ROAS expectations for the budget reasonable. ROAS is the return on ad spend, i.e. the amount of revenue you get per dollar you spend on ads or a campaign.
It’s all too easy to come up with a high figure for that when estimating, but reality doesn’t always follow those projections. You have to consistently monitor and update this target based on what you can actually achieve with your campaigns.
5. Be realistic—and don’t snooze
Give yourself time to test and learn before you expect to see results from your work. Marketing isn’t magic! It takes time and consistent effort.
Some channels will provide quicker wins than others. Some will use entirely different KPIs for assessment. It’s vital to know which ones to track for which campaign and channel.
Aside from that, you’ll have to be ready to adapt and reallocate dollars as necessary. The data over time will guide you in optimising adjustments. So, don’t just take a set-it-and-leave-it approach.
6. Look out for the hidden costs
Some things are overlooked by SMEs when calculating marketing budgets. These include platform fees, creative production costs, and sometimes even channel management costs.
A good rule of thumb is to sit down and talk about what a marketing campaign might need, from planning to execution and maintenance. That can help you identify costs that you might not think of otherwise.
7. Don’t be afraid to work on a small budgets
You don’t have to pump hundreds of dollars per day into your ads. You can actually take it slow, try testing a little bit first, and then learn what works.
We ourselves are constantly doing small-scale testing for our SME clients when it comes to ad optimisation. We switch out creatives that don’t work after 1-2 weeks on Meta, for example, and try something new to see if we get a better result.
If you want to learn more about this, you can also check out our article on running Google search ads on a small budget. It could be an eye-opener!
Let us help you find your ideal budget and optimal ROI for digital advertising
Ultimately, budgeting for digital advertising requires you to align realistic goals, ad spend, and strategy. If you find it overwhelming to try and do that yourself, don’t worry. We can help.
At ROMI, we handle ad campaigns for many SMEs. We can arrange a consultation call (no strings attached!) with you if you want to know how we can do the same for you.
We’ll help you figure out what a realistic budget and ROAS looks like in your specific case. Contact us today and see why we’re considered specialists in SME marketing!
If you're dealing with complex financial issues, consulting with a Business Bankruptcy attorney for Orange County, NY can make all the difference. The support from experienced professionals can ease the process significantly.