Digital strategy is all about positioning your business in the best possible place using cutting-edge digital solutions. It’s a vast expertise that ensures your digital presence is solid, future-proof, and aligned with your business goals.
It serves as a detailed guide for your business, considering your target demographics, industry competition, goals, and key performance indicators (KPIs).
A digital strategy is not similar to a digital marketing strategy. They may have similar goals but their complete scopes and responsibilities are different.
Whichever way you look at it, a good digital strategy is crucial to the success of your business. Without it, you may be missing out on many growth opportunities.
That said, the big question is how much businesses need to spend on their digital strategies. Searching the internet won’t give you a concrete answer because it depends on your business needs.
This detailed guide will break down all the components and steps you need to know when creating a practical budget for your digital strategy.
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What Goes Into a Digital Strategy Budget?
Before you sit down and stare at your sheets, it’s important to know what digital strategy is and what components go into its budget. Whether you have an internal team to take care of your digital strategy needs or plan to hire an outsourced partner, you will need to know where your funds go.
Saying that digital strategy is broad is an understatement. Here are all the major elements and expertise it encompasses:
- Digital marketing plays a massive role in helping businesses unlock new opportunities and reach new customers. Digital strategy experts collaborate closely with marketing professionals to create a bespoke digital marketing plan that can produce higher conversion rates.
- Digital advertising is different from digital marketing, but it is equally as important as it. Digital strategy ties both together, making sure they work cohesively to help the brand generate more interest and boost sales.
- Web development demand has significantly increased in recent years as more businesses strive to establish a credible online presence. Digital strategists work closely with dedicated web developers to make sure that the website they’re building provides the best leverage for the business.
- Web design covers one of the most important facets of digital strategy — visual communication. Digital strategists oversee the designs and ensure they provide optimal user experience.
Depending on your needs, great digital strategists know how to combine the four major components mentioned and make them work together harmoniously. When planning your digital strategy budget, consider every element carefully.
How to Create a Budget for Digital Strategy
- Know Your Needs
- Evaluate Your Revenue
- Assess Your Marketing
- Research Necessary Tools & Technologies
- Consult A Professional
1. Know Your Needs
Before you go on and research costs, the first and most crucial step is to understand your business needs. As mentioned above, four major components make up an impactful digital strategy, and since every business is different, they one more than the others
For instance, there may be brands that already have existing websites with compelling designs, but they don’t have a great reach to their customers. In that case, the digital strategy will focus more on digital marketing and advertising, and the budget should reflect that.
Understanding your needs is the most fundamental step of any partnership or project when it comes to business. Knowing will also help you communicate your needs to potential service providers and research costs more effectively.
2. Evaluate Your Revenue
The next step when planning your budget is to evaluate your revenue and finances. During this step, you can call on your leadership team to discuss your business’s financial performance from the recent quarter or year and break down how much you’re willing to spend on digital strategy.
If your business hasn’t been performing well or isn’t as financially stable as it should’ve been, don’t pour everything on your digital strategy budget.
Remember, you can still get great results without breaking the bank. You just need to create a practical budget and work with the resources you have.
3. Assess Your Marketing
Marketing is arguably the biggest component of digital strategy. Most, if not all businesses already have existing marketing strategies and efforts in place.
After you take a deep dive into your finances, you can go on and assess your current and previous marketing activities.
Ask yourself the following:
- How much does it cost to acquire a lead?
- What are your current marketing channels? e.g. email marketing, influencer marketing, and content marketing
- What key metrics matter the most for you?
- What results have you generated with your previous marketing efforts?
- What are your marketing goals and pain points?
Answering questions like these will help you better understand what to improve and how much to allocate for it. Lastly, always keep in mind that marketing may be a major piece in the puzzle but it should not dominate your budget allocation.
4. Research Necessary Tools & Technologies
The fourth step when preparing a budget can be overwhelming, especially considering the broad digital strategy and the wide variety of related tools available. For this step, it’s best to work closely with your leadership team and digital strategists.
Based on your identified needs, what are the necessary tools, apps, and technologies you need for your digital strategy? Each business needs different solutions.
To stay organized while researching, create an Excel sheet and organize the tools based on what components they fit. After you’ve looked up everything, compute the total for each component to see where your budget is going and prepare for projected costs.
5. Consult A Professional
You can search the internet tirelessly for tirelessly search the internet on how much to spend for your digital strategy, but there won’t be any concrete answers. The best way to know how much to allocate for your budget is to consult with a professional directly — they may be from your internal team or a third-party service provider.
The knowledge you’ve gathered from the initial stages of your planning will help you communicate your needs with them more clearly.
If you’re planning to hire a digital strategy service provider or freelancers, consider their fees for your budget. When you sit down to discuss with them, inquire about their pricing structure and how much their services cost.
Do they charge an hourly rate or a project rate? Will they provide the tools you need? What is the scope of their expertise? Don’t leave anything out, and ask everything you need to know to prepare a practical budget for your project.
Read here: “Digital Agency Pricing Guide 2023”
Digital Strategy Budget Template
Factors Affecting Digital Strategy Costs
Many factors determine digital strategy costs, and being aware of each will help you know what to consider when budgeting. Here are factors that you should consider carefully:
- Business size
- Business goals
Every business has its own needs and goals. Some of these factors might not affect them as much, but it’s important to stay flexible and informed when budgeting.
Grow Your Business and Budget Your Digital Strategy Wisely
No one should go into business without a plan. Even for small businesses and startups, there’s no excuse not to maximize digital strategies and solutions.
A compelling digital strategy will serve as your tactical roadmap to help you reach your goals, avoid overspending, and get the most return on investment.
When crafting a digital strategy budget, always keep an open mind and hear any input or tips from your team members. Don’t rush it, and do your best to research the crucial components tackled in this piece.
Now that you know everything that should go into your budget, make the most of it by working with a proven partner. Connect with the best digital strategy agencies on Clutch.