Did you know that marketing and advertising take one of the most significant slices of a business’s expense pie? Every business pumps in a lot of money in their marketing efforts.
That said, marketing your business and its products and services is a necessary expense – it is at the core of making money. And in this modern world, effective digital marketing can help drive business growth and success.
This article discusses how much an average business spends on digital marketing and several financing options if your business is short in cash to give your campaigns a go-signal.
The Cost Of Digital Marketing Campaign
Statistics show that the average cost of digital marketing ranges from US$50 to US$500 per hour, US$2,500 to US$12,000 per month, and US$1,000 to US$7,500 per project for small- to mid-sized businesses.
To give you a better look at the cost of digital marketing, we enumerated some of the most popular services or components of digital marketing and their respective average prices.
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Search Engine Optimization (SEO)
This is a collection of strategies to optimize your website to rank higher on search engine result pages (SERPs).
You don’t need to pay the search engine anything. In general, you don’t have to pay for SEO if you have the skills, but it is a painstakingly long and complex process. You might as well pay for the services and expertise of an SEO agency or expert.
The average cost of an SEO marketing agency is between US$750 to US$1,500 per month. For consultants or freelancers, the hourly rate is between US$80 and US$130 an hour. You can also expect to shell out US$1,000 to US$7,500 for a single SEO project or campaign.
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Social Media Marketing
This digital marketing service focuses on increasing your social presence, brand loyalty, and brand awareness.
There’s no set minimum, and the costs can range from US$100 to US$10,000 per month. This depends on the platform, the frequency of posts or ads, the target audience, and its size.
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Pay-Per-Click Advertising
PPC is a marketing strategy where you pay for every ad click or impression. It involves bidding on search terms to secure the best visibility and positions for your websites, links, and adverts.
The average cost of a Google Ad is about US$1 to US$2 per click. That said, small- to medium-sized businesses can spend about US$9,000 to US$10,000 on PPC every month.
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Email Marketing
Email marketing is a time-tested digital marketing strategy, helping businesses build brand loyalty and awareness, which boost lead conversions and sales.
If you’re interested in email marketing, you should expect to spend about US$300 to US$2,500 per month.
Funding Options For Your Digital Marketing Campaigns
The increasing cost may drain your business funding and leave you scratching your head. Fortunately, there are several financing options to fund your digital marketing efforts.
1. Merchant Cash Advance
A merchant cash advance offers alternative funding to a traditional small-business loan. Whether you experience a funding shortage in the middle of an advertising campaign or need access to capital to launch a PPC advertising campaign, a merchant cash advance can help you.
Business owner receives a lump sum upfront from a provider in exchange for a slice of future sales. This is an excellent option for businesses with high credit card sales volume or those who may not qualify for traditional loans.
A merchant cash advance is available in various forms, usually having shorter durations and smaller regular remittance amounts than traditional business loans. It’s easier to find merchant cash advance lenders online, and the amount you can borrow will depend on several factors, including your business’s average turnover and how much you can afford to repay.
2. Crowdfunding
Crowdfunding is another excellent option to raise money to fund your digital marketing efforts via donations, exchanging money for rewards or shares in your business or loans.
This funding option uses the vast networks of people via crowdfunding websites and social media to bring investors and entrepreneurs together. Most crowdfunding sites generate revenue from a percentage of the funding you raised.
To start, you need to specify your business goals, why you need funding for your business, and how much money you need. People on a crowdfunding platform can make online pledges for your business. This is either by offering donations or prebuying products. You can give back something to those who helped raise the money, either in the form of freebies or early access to new products.
In general, restrictions may apply on who can fund your business operations and how much they can contribute. This helps protect investors from putting too much of their money at risk.
Remember that there are several good crowdfunding websites, each having its pros and cons. So, make sure to research the details carefully.
3. Retained Earnings
Businesses earn a profit by providing services or selling products for more than it costs to produce. This is considered the most fundamental source of funds for any business.
Your business’s net income left after excluding the costs, expenses, and other financial obligations are known as your retained earnings (RE).
Your RE balance is often allocated to reward shareholders via dividend payments or share buybacks. However, you can also use it to fund your digital marketing efforts. If you have healthy RE funds, you can strike the perfect combination of keeping your shareholders happy while financing your marketing initiatives to bring in more revenues for your business.
4. Venture Capitalists
Venture capitalists are one of the most sought-after assets in the business world. VCs are people who can give you the needed funds for your business operations like marketing in exchange for a percentage of the equity share of your business.
Other than financing your business, VCs also offer their expertise and guidance. They can help you at every stage by constantly evaluating your business and its progress. They have an extensive business network and can help connect you with the right people. This provides your business with lucrative opportunities to accelerate your business growth.
Take note that VCs prefer making quick profits. Thus, they are a viable option for businesses beyond the starting phase.
5. Bootstrapping
Bootstrapping is financing your digital marketing efforts with your own money. In the initial stages of a business, your business’s financials may still struggle.
Thus, self-funding can help you gradually gain traction in the market. You can either use your personal savings or borrow money from your family or friends, also known as love money.
Bootstrapping means you don’t have to pay interest on borrowed money or pay low interest when borrowing from your friends or family. Take note, however, that if you’re taking love money, your friends or family may also ask for an equity or profit share of your business.
6. Bank Loans
Bank loans are the most common source of funding for businesses. Although most people think that bank loans are only used for starting a business, it is also a viable option for funding your business’s digital marketing efforts.
Also, this type of loan is more readily available. But it does come with several challenges. For one, you’ll have to face extra costs such as fees and interest. If you’re a startup or a newbie in business, it can be challenging to get approval.
That said, if your business has been established for about three years and has good financial credit but suddenly find yourself in a money pinch or doesn’t have enough fund for a large-scale marketing campaign, then you might be able to get a good deal from your local banks.
7. Working Capital Loans
A working capital loan is a short-term small business loan that can fund your everyday business operations, including digital marketing and advertising.
Like merchant cash advances, working capital loans can provide you with a lump sum of cash to quickly cover your immediate expenses. You then need to repay it, usually in monthly installments.
Another advantage of working capital loans is that it’s easy and quick to apply with fast approval.
8. Business Line Of Credit
A business line of credit is another flexible business loan option. Also called revolving credit, a business line of credit helps cover your short-term digital marketing funding requirements.
With this loan type, you borrow an arranged amount of standing credit which you can draw upon at any time. Once you’ve paid off the portion you used, the total amount will be available to use again without having to reapply for loans.
Line of credit operates similarly to credit cards. However, the interest rates of a line of credit are more affordable than credit cards. You also have to pay interest on the amount you use instead of the total amount approved.
9. Partner With Other Businesses
Starting a new business on your own can be a difficult road to take – physically, mentally, and financially.
But no one said you’re not allowed to look for a partner to help ease the burden. Partnering with another business can allow you to enjoy double the benefits. You can combine your technical and creative forces, doubling your resources, and of course, your funds.
Finding strategic and trusted partnerships has propelled numerous startups to success.
Conclusion
And there you have it! These are just some of your options when you need funding for your digital marketing campaigns. You can either opt for one of these options or a combination of them. Just make sure that whatever you choose, you get an excellent funding deal to accommodate your business’s marketing efforts.