Like any company, you have a budget. So how do you know if you are putting your internet marketing dollars to good use? Unfortunately there is no secret formulate to follow that tells you what percentage of your budget you should be spending on each marketing approach. However there are ways to effectively maximize your budget.

When it comes to spending money on the internet there are dozens of ways you can go about it. Search Engine Marketing, Search Engine Optimization, E-mail Marketing, Banner Ads, Video Marketing, Affiliate Marketing, Pay Per Click Advertising, Display Ads, Classified Ads, the list goes on…. So where do you start?

Looking at a study done by eMarketer, you can see the trend of marketing dollars going towards Search.

More and more companies are beginning to realize that you can have the nicest website in the world, but if nobody can find it, what’s the point? Here is how I would break up the internet marketing budget. I separated it into 4 distinct parts.

Part I: Search Engine Marketing

Part 2: Search Engine Optimization

Part 3: Website Usablility/Testing

Part 4: E-Mail Marketing

Part I: Search Engine Marketing

You need to begin by doing your keyword research to see what people are searching for to find your products and services, that’s where search engine marketing comes into play.

More specifically pay-per-click advertising, is a great way to start driving traffic to your site quickly. You can set up a campaign in 30 minutes and immediately start driving traffic to your site. However the caveat is that you are paying for that traffic. Treat PPC advertising as a way to see what people are searching for. Go and bid on a few hundred relevant keywords that people would use to find you and see which keywords bring the most traffic. Also pay attention to which keywords are giving you the best conversions. I would spend about 40%-50% of your budget to PPC marketing for the first few months. Once you have enough data to see trends in the analytics, start to pinpoint which keywords are bringing you the best traffic.

Part 2: Search Engine Optimization

After you have identified that keyword, that’s when you want to start to optimize your website for organic traffic. Reduce your PPC budget to about 20% and put about 60% towards search engine optimization (SEO). Depending on what resources you have to work with, either have your in-house SEO or an agency work at building your organic traffic. Even though SEO is more of a long term strategy, it will pay off x10 or more, if you can get on the 1st page of google for competitive keywords.

Part 3: Website Usablility/Testing

Now that you have a good amount of traffic coming to the site, you need to optimize it for conversions. Depending on what you define as your conversion (lead, sale, download, etc) you want to create a seamless user experience from the time they enter, to conversion. To do this, you need to test, test, and test some more. Try using Google’s Website Optimizer to run A/B or Multivariate tests to see which brings you better conversions. I would spend about 15% of your budget towards website testing.

Just to put things in perceptive, simplified:

Say you currently convert 3% of your web traffic. Each conversion is on average $500. So for every 100 visitors you are making $1500.

Now let’s say you ran a test to try and get more people to convert.

Now you are converting 6% of your web traffic. Again each conversion is on average $500. So now you are making $3,000 for every 100 visitors.

Just by doing a few tests and converting a few more people, you have doubled your conversions/revenue.

Part 4: E-Mail Marketing

Having a good in-house email list can be extremely useful. It can be great for sell-ups, promotions, news updates, special offers, incentive programs, etc… Harness your current client base and keep them in the loop as to what is going on with your business. Invest in e-mail marketing software or have a company manage it and start sending updates to your clients. Keep them up to date on new products or services you offer, current client promotions, timely offers, etc… Spend the money to have a designer create a custom made HTML newsletter template that will flow nicely with your website.

Internet Marketing Budget Breakdown:

Search Engine Optimization (60%)

Search Engine Marketing – PPC (20%)

Website Usability/Testing (15%)

E-Mail Marketing (5%)

Keep in mind that every company is different and different approaches work better or worse depending on the industry. This is just a good format to follow for companies looking to spend a good amount of their marketing dollars towards internet marketing.

I would love to hear how your company allocates your marketing budget and what has worked and hasn’t worked in the past.