Your No-Nonsense 2024 Guide on How to Reallocate Marketing Budget

You’re sitting at your computer. You have the spreadsheet open. Your boss informed you that the marketing budget is the same as last year, but they want to see improvements in results. 

Now you’re sweating — you have to figure out how to reallocate your marketing budget to maximize return on investment (ROI).

Before you start pulling your hair out by trying to figure out how to shift around your marketing spend, read this page to help make your budget reallocation a smooth process for you and your team.

This guide to reallocating marketing spend covers the following:

• What is marketing budget reallocation?
• Why it’s important to revisit and reallocate your budget every year
• What you need to consider before doing marketing budget reallocation
• How to reallocate from traditional to digital marketing
• How to reallocate between digital marketing strategies
• FAQ on marketing budget reallocation

What is marketing budget reallocation?

Marketing budget reallocation is the process of analyzing marketing performance and determining where to shift your marketing spend.

Why it’s important to revisit and reallocate your budget every year

A common question people ask is: Do I really need to reallocate my budget every year?

The answer is yes.

But why?

The fact of the matter is that digital marketing is continually evolving and changing. Fifteen years ago, social media wasn’t really a thought for marketing businesses. Now, for a lot of companies, it’s an integral part of their marketing strategy.

Not only that, but your audience is continually evolving, too. For example, 73% of consumers ages 18-49 prefer the convenience of live chat in communicating with businesses. Ten years ago, it was just nice to have a chat window on a website and people still relied on calling companies.

Because the digital landscape and your audience continually shift and change, your marketing needs to shift and change with it. Some strategies that did well for your business two years ago may not be doing as well as other strategies now — and that’s okay! That’s why you always reassess and reallocate marketing spend to adjust to your current needs.

What you need to consider before doing marketing budget reallocation

Before we dive into how to reallocate your marketing budget, it’s important to go over a few factors that impact how you reallocate your marketing spend. Here are some things to consider:

1. Past performance

Past performance is a big indicator of how you’ll split your marketing budget. You’ll want to look at how each strategy performed for you last year, so you can determine what strategies should have more funds.

2. Industry and market trends

When determining how to split your marketing budget, consider the current industry and market trends. Some tactics may be on the rise in your industry and worth shifting your budget towards. For example, when Google Local Services ads started to gain traction, more local service businesses shifted their ad budgets to this strategy.

Take some time to look at what’s trending in your industry and market to help inform your budget reallocation.

3. Audience

As mentioned earlier, your audience’s preferences are continually changing. Not only do you need to have a solid grasp on whom you’re targeting, but you also need to understand how they interact with your business, so you can better serve them.

4. Competitors

Before you reallocate marketing spend, do a competitor analysis and see what approach your competition takes. It can help inform what strategies you may need to put more spend into to outperform your competitors or new opportunities you can capitalize on that your competitors aren’t.

5. Software investment

Before you reallocate your marketing budget, you need to consider if you’re using any software for your marketing campaigns. You may need to reallocate some of your marketing budget towards that software investment.

Some software you might invest in includes:

• Keyword research tools
• SEO monitoring tools
• Marketing automation tools
• Email management tools

How to reallocate from traditional marketing spend to digital marketing spend

If you mainly use traditional marketing, you may be thinking about reallocating marketing spend to digital strategies. Here’s how you can do that:

1. Consider the cost-to-benefit ratio of traditional strategies

The first thing you need to do before marketing budget reallocation is look at the cost-to-benefit ratio of traditional strategies. One of the most challenging aspects of traditional marketing is tracking what strategies drove people to your business.

So, instead, you’ll need to consider the cost-to-benefit ratio of your strategies.

If you’re running a billboard ad, for example, is the cost of it justified for the potential benefits? For an HVAC company trying to reach homeowners, the cost-to-benefit ratio may seem worth it, since they have a wide audience to tap into that’s seeing the billboard. For a company with a more niche audience, the billboard might not be worth the cost.

This is something you’ll have to consider with all your traditional strategies. Ask questions like:

• Am I reaching mostly my target audience, or an audience mostly filled with people who aren’t interested in my products/services?
• What strategies feel like they aren’t worth the time and money?
• Where do my customers spend most of their time?
• How do my customers consume information?

Asking these questions can help you determine which traditional marketing methods to stop using, so you can allocate that budget towards digital spend.

2. Determine the goals you want to achieve with your marketing

Before you can decide on which digital strategies you want to invest in, you need to set goals. What are you hoping to achieve with your digital strategy? You might aim to:

• Increase leads
• Increase sales
• Increase revenue
• Increase customer retention
• Increase average order value

Setting your goals will help determine what digital strategies you should prioritize.

3. Focus on the strategies that help achieve your goals

You know what goals you want to achieve. You’ve determined which traditional strategies you’re moving on from, so you know your budget.  Now, it’s time to decide on what digital strategies to use.

But where do you start?

Here’s a breakdown of how much each strategy costs (on average) and what it helps your business do:

Not sure which strategies will work best for you and your budget? Consider partnering with a digital marketing agency! You’ll get a skilled team of marketing experts that can help you build a custom plan based on your industry, goals, and market.

How to reallocate budget between digital marketing strategies

If you’re already investing in digital marketing, you may be looking into shifting where you spend your marketing dollars. To reallocate your marketing budget, follow these steps:

1. Look at past performance of digital strategies and ROI

Before you decide how to reallocate marketing spend, you need to analyze the past performance of your digital marketing strategies. You want to look at the results and ROI for these strategies to determine which ones are high-value, and which ones maybe aren’t worth the investment for your business.

You’ll want to consider the amount you’re investing as well as the time. If you’re spending a lot of time and money doing PPC ads, for example, and getting little return on them, you might want to reallocate your budget elsewhere.

Before you eliminate a strategy based on a low ROI, make sure you consider something else — assisted conversions.

2. Look at assisted conversions

Assisted conversions are the channels that contribute to conversions, but they aren’t the last interaction a user has before converting. For example, someone might read a blog post and then the next day click on a Google ad and convert. While the blog post wasn’t directly responsible for the conversion, it played a part.

So when you’re reallocating your budget, you’ll want to take strategies into account that may not drive direct conversions but have an impact. So, for example, if you see that your content marketing strategy has a lot of assisted conversions, you may want to keep investing in it because of the impact it has on conversions.

3. Eliminate strategies that don’t work

You know what strategies have a low ROI and don’t help you convert visitors. So, it’s time to eliminate them from your marketing plan!

Not every strategy brings success to every business. Email marketing, for example, may see greater success for an ecommerce company than a manufacturing company. And that’s okay! The key to digital marketing is leveraging the strategies that best help you reach your target audience.

4. Determine how to spread the extra budget

Now that you’ve eliminated the strategies that aren’t helping business growth, how do you split your leftover marketing budget? A good rule of thumb is to invest more in what’s already working. If SEO is driving fantastic results for your business, investing more in the strategy will only drive even better growth and ROI.

How you divide up your marketing budget is up to you! You can opt to put your extra spend into your best-performing strategy, or spread it out amongst your top strategies. You can always meet with a marketing consultant to help guide you through what’s best for reallocating your marketing spend.

Pro Tip: Reallocate some of your marketing spend to try new strategies. It’s always good to leave a small portion of your budget for new strategies, so you can continually find new ways to grow your business’s revenue. At one point, your now tried-and-true strategies were experiments — so it’s always good to leave room to try new things!

FAQ on marketing budget reallocation

Need help reallocating your marketing budget?

Figuring out where to spend your marketing dollars can be challenging. But with the help of a marketing consultant, you can get it right.

At WebFX, we offer marketing consulting services to help you get your marketing plan on the right track. We have experienced marketing consultants who will work with you and your team to review your website, goals, and the steps you need to take to reach them.

When you leave your consultation, you’ll receive a concrete plan of action that you can start implementing right away.

Ready to start? Contact us online or call us today at 888-601-5359 to speak with a strategist today!