How Much Should You Spend on Online Marketing vs. Traditional Marketing?

June 16, 2014 Karen Axelton

online marketing budget

As a small business owner with a tight budget, the question of how much to spend on online marketing vs. traditional marketing may have you scratching your head. Here are some stats that could help you make the decision.

Nearly one-third of marketers have reduced their traditional advertising budget to fund more digital marketing. According to Gartner, digital marketing budgets saw a double-digit increase last year and are expected to rise another 10 percent in 2014.

While overall marketing spending varies from company to company and among industries, on average, in 2013 companies spent 10.7 percent of their annual revenue on all marketing activities. Online marketing spending averaged 3.1 percent of revenue, or 28.5 percent of the total marketing budget.

Online advertising accounted for the biggest share of the digital marketing budget, at an average of 12.2 percent of the digital marketing budget. Next is website design, development and maintenance. Ecommerce, social media marketing and mobile marketing are tied for the third-largest share of digital marketing budgets.

Digging deeper, a StrongView survey shows where marketers are planning to increase and decrease spending in 2014:

  • Email: 52% will increase spending
  • Social media: 46% will increase spending
  • Search (SEO/PPC): 41% will increase spending
  • Display ads: 36% will increase spending
  • Mobile marketing: 32% will increase spending

Clearly, all types of companies are investing more in online marketing. However, companies are also investing more in several traditional forms of marketing, including:

  • Trade shows/events: 21% will increase spending
  • Public relations: 13% will increase spending

The big losers in terms of marketing spending are print advertising (32% plan to decrease spending) and TV/radio (17% plan to decrease spending). Direct mail was fairly evenly balanced, with 16% planning to spend more on it and 21% planning to spend less.

There’s no hard-and-fast answer to the question of how much should be spent on digital vs. traditional marketing. Each business must do its own assessment of its customer base, budget and marketing goals to come up with the ideal mix.

For example, if your customer base is generally young people aged 18 to 24, clearly you’d want to focus on digital marketing, because these customers spend most of their time online. If your goal is to drive more traffic to your website, online marketing is the best way to do so (although traditional marketing can help, too). And if your budget is small, online marketing allows you to stretch it further than traditional marketing would.

But it’s important not to throw out the baby with the bathwater. If your customer base responds well to traditional print advertising or direct mail, there’s no reason to abandon it altogether. Try different types of marketing, measure the results and adjust your budget balance accordingly.

Author information

Karen Axelton

Karen Axelton

Karen Axelton is Chief Content Officer of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her company’s blog at SmallBizDaily.com.

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