4 Post-Pandemic Marketing Budget Trends

The pandemic, which some would argue is not yet completely behind us, has changed the way businesses think about their finances. Not only did shutdowns reinforce the importance of having cash reserves, but it also gave accountants and executives an opportunity to revisit budgets and consider how adjustments could impact the company’s bottom line.

Obviously the exact numbers vary from business to business, but on average over the past several decades, it’s expected that roughly 10% of a company’s overall budget will be allocated for marketing services. In the post-pandemic world, this number has shrunk about 2% with no sign of returning to pre-2020 levels. The good news for branding and marketing agencies? There’s no reason to be concerned.


1. There’s a Clear Shift to Digital

Marketing budgets have been evolving since the days when newspapers reigned supreme in the media landscape. Large companies may still have some of their ad budget in traditional mediums like radio, TV, and print (yes – there are still some publications out there), but even those with seemingly-bottomless dollars are switching to digital. By the latest estimates, the average mid-size business is putting more than half of their advertising budget toward digital products.

It should be noted that part of this trend has to do with the fact that the “digital” umbrella encompasses so many different products. For example: video marketing on YouTube, Instagram ads, Google ads, and email marketing all fall under the digital category. With the amount of time people are spending on their devices continually growing, it’s no wonder why this transition is taking place. In terms of the future, it seems the sky is the limit when it comes to digital investment.

2. ROI Expectations Are Changing

If someone asked you what a reasonable expectation for ROAS (return on ad spend) would be in today’s marketing environment, what would your answer be? A 2:1 return seems positive, and a $3 return on every $1 spent on marketing feels like a huge win. While these numbers certainly aren’t indicative of a failed campaign, digital marketing institute has compiled a report that suggests even a 3:1 return could be considered underperforming.

According to the article (linked above), marketers should set their sites on a $5 return on every $1 spent toward a marketing campaign. By their estimation, even expectations of a 10:1 return shouldn’t be considered unreasonable. They go as far as to mention that achieving an even better return is possible, though 10:1 is considered an extreme success.

Marketers might be concerned that meeting these expectations is going to be a huge challenge, which is completely understandable as these returns are loftier than ever before. Still, with all the tools available, not to mention the sea of valuable and relevant data, it’s important to recognize that higher returns are going to be expected.

3. Experimentation is In

It’s hard to be dynamic in your marketing approach when the creative production process takes weeks or months. When you’re able to pause a campaign, revise your creative, adjust targeting parameters, and get things back up and running within the same day, you need to be experimenting with different formulas until you find one that works.

The idea of an A/B or split-test is nothing new. The primary difference between using this tactic in 2002 and implementing it in 2022 is that the results become apparent much more quickly than they ever did in the past. Make no mistake about it, you still need to allow enough time for ad platform algorithms to find the right audience for your ads before drawing a conclusion, but once the “learning” phase (which is seen on almost all platforms) has been over for a few days, it’s safe to say the results are in.

From there, you can take the winner of your test and compare it to other platforms. For example, perhaps your results would be better if you allocated all your budget to just Instagram instead of the entire Facebook audience network. The possibilities are (almost) literally endless in terms of the combinations you can test out with digital marketing.

Once you find a plan that delivers the results you’re looking for, you can increase your investment. and feel confident that you’re using your money in the most cost-effective way.

4. Measurable Results Are Necessary

Remember those high ROI expectations? The first step to proving that your marketing efforts are worth your client’s expense is developing specific KPI (key performance indicators) upon which your campaign’s success, or lack thereof, will be judged. If you don’t have a goal to shoot for, you run the risk of focusing on the wrong objectives and ultimately failing to produce the results your company, or your client, was hoping to achieve. Here’s a list of common digital marketing KPIs you can draw from for inspiration.

It might seem like the only relevant metric to keep track of is sales or conversions, but that’s not always the case. For example, if you’re running ads promoting a new business it might be more beneficial to run an initial brand awareness campaign to prime your audience for more sales-focused ads down the road. Just be sure you define this as a metric you’ll use to determine your success before running the campaign.

Today’s digital marketers must be proficient in utilizing the various tracking systems, whether that’s the Facebook Pixel, Google Analytics, or any number of reporting dashboards that will give you quick access to view the data. In order to prove that your campaigns have real, tangible value, you need to be able to prove it.


Wrapping Up

It’s hard to predict whether or not marketing budgets will increase, but one thing is certain: businesses are expecting better ROI on their ad dollars. Digital marketing experts are able to maximize ad spend in ways never seen before in the advertising world, so it’s reasonable to anticipate more investment in the coming years.

If your brand could benefit from a partner with experience in developing a digital marketing plan that gets the most out of your ad budget, get in touch today for a free consultation.