Answering ‘how much does a digital marketing agency cost’ is easy. However, if you’re thinking about marketing from the perspective of an expense on your budget line item, you’ve got the wrong perception about marketing.
Marketing is an investment in the growth of your business, and the companies that are doing it right get a return on their investment. We’ve seen returns on our client’s investments from $9 for every dollar spent to even $30 dollars for every dollar spent.
There is no guarantee on what your investment will return, but one thing is for sure, marketing works when it is done consistently and based on a few fundamental principles.
It’s not a cost or expense, it’s an Investment, and you should expect a return.
Think about it. How many ads have you seen today just driving around in your car? Or how many ads have you skipped jumping to the next video you want to watch on YouTube? The fact is, companies (likely your competitors) are spending money on marketing. Why? Well, they are probably getting a return and growing their business.
Often a prospective client will come to us and say something like this, “We’re annoyed that we keep hearing our marketing is going well, but we don’t seem to see an end in sight for a return on investment. Unfortunately, our agency doesn’t seem to be able to answer that question.”
If your agency can’t answer that question, you’re not working with the right agency. Instead, you need to find a digital marketing agency that will work alongside you to help you understand what kind of investment you should make and what you might expect in return.
According to the 2021 CMO Survey, marketing investments ranged from 5% to 12% of companies’ revenues. In addition, the survey asked the respondents when they are making a case, how often do the following behaviors occur? 40% of respondents answered that all the time, [the] marketing [team] builds a business case based on how marketing spending is aligned with business priorities.
Several years ago, the Harvard Business Review published an article titled The Ultimate Marketing Machine that stated, “The leaders of high-performing companies connect marketing to the business strategy and to the rest of the organization; inspire their organizations by engaging all levels with the brand purpose; focus their people on a few key priorities; organize agile, cross-functional teams; and build the internal capabilities needed for success.”
Perhaps by now, we’ve helped you see that marketing is not a cost but an investment in your company’s growth.
How much does a marketing plan cost?
Typically an integrated marketing communications plan will cost $35,000 to $50,000. It will start by aligning your marketing objectives with your company’s business goals. It will also establish a baseline for your customers’ perceptions and include primary customer research to identify current versus baseline perceptions.
The number of customers you interview, the type of research you conduct, and the number of competitors you review all factor into the cost range.
Once you complete planning, you will have a strategy that aligns with your business goals, messaging that distinguishes your brand from competitors, and clarity on the best few initiatives likely to yield the highest return on your investment.
Remember, marketing is part art and part science. Most decisions that customers make are emotional, so it’s important not to completely emphasize science over art.
How much does a digital marketing agency cost?
If your marketing agency is doing an excellent job for you, they will pay for themselves. However, there is no one-size-fits-all for how much you can expect to invest with your digital marketing agency. It’s going to depend on the type of campaigns you’re running, such as video-based campaigns versus pay-per-click campaigns versus search engine optimization.
Small to midsize firms will charge between $150 to $250 per hour based on the type of work they are performing, their proven experience and expertise, and the outcomes they will provide.
The best thing you can do is ask your agency to provide you with a marketing campaign cost breakdown. They should show you how much each component of the campaign will cost and the expected outcome.
Remember, no one has a magic 8-ball that can predict the future. However, you can create some models to serve as a baseline for measuring campaign performance. Then, as you gain insights and metrics through time, you can calibrate your campaign to improve performance.
How do you create a digital marketing budget plan?
Here are a few critical elements of your marketing plan budget.
- First, identify whether you should invest closer to 5% or 12% of your revenues. Next, model out what your investment will look like and the return you need to make it worthwhile. Then share that information with your agency and ask them to develop a plan that is most likely to achieve your goals. A great agency will tell you if you don’t have enough to invest to achieve your goal.
- Don’t expect a guaranteed return. The only guaranteed returns are in CDs, and people rarely invest in them.
- Expect to do some customer research. Companies don’t talk to their customers enough. Your customers are referring you to their friends. Find out what they are saying and use it to grow your company. In-depth interviews are a great way to get insights into your customers and what motivates them.
- Don’t skip your messaging strategy. Typically clients who work with us are worried that something is off with their messaging. The biggest letdown is spending too much money on paid advertising that doesn’t convert. Messaging is a crucial part of your marketing plan budget.
Do you want to discuss how much you should invest in marketing? Reach out to us at MediaFuel by filling out our contact form.