During our recent webinar, How to Structure Paid Ad Campaigns and Accounts to Maximize Customer Lifetime Value, a question came up that we get asked all the time:
How should new brands think about their digital marketing budget?
Let’s dig into that for today’s edition of What Clients Ask Us. (Also, if you’ve missed the past few posts in this series, you can read the entire archive here!)
First, some context to help you locate your brand within the digital marketing realm.
For many of the new brands we work with, specifically those who are launching for the very first time, they should expect to spend at minimum, $15,000 a month on digital marketing. In essence, we are their marketing team. We handle everything for them, as is customary this type of agency relationships.
Over three months, then, that’s $45,000. Which might be an intimidating number for a new brand. And the hard part is, you’re not going to know what will work, campaign wise. There’s not enough historical data to benchmark.
Meaning, brands must reframe their initial spend as more than just a pure marketing budget, but an invaluable investment in research and development.
Understanding what doesn't work is hugely important when you're launching a brand, because it tells you which campaigns to shut off quickly, so you can shift the budget to the next iteration of the insight you want to learn, i.e., value propositions, price testing, model testing, and any number of other valuable data points.
This iterative process takes time. Facebook, for example, requires a certain amount of conversions to go through an ad set for the algorithm to start to work and ultimately find other people to purchase your product. There’s no hard number for this rule, but 50 conversions a week is a smart place to start.
For example, if you need 50 conversions a week per ad set, and your product costs $100, you need to spend $5000 in a week to get that ad set to work how it should. From there, you can back out your budget and estimate out how much you need overall.
Please note, you don't have to spend that much money when you launch a new brand. But if you don't spend some money, you're going to take a long time to learn, and it's not going to be as easy to implement a structure.
What other questions do you have about digital marketing? Drop us a line and let us know how we can use our curiosity to help your company drive revenue.