Fundamentally, you should assess your internet marketing strategy as a Cost of Sale and not an Overhead. This is important for business owners to understand. This is because profitable sales generation is the key to online success. A profitable and carefully strategised business will have a deep knowledge and understanding of their gross profit. More importantly, the amount available to pay out of that gross profit to generate new sales and still end up on top. As long as the remaining gross profit covers the business expenses and overheads, the business will make money and be profitable.

It is important for all businesses to consider their digital marketing outgoings. Marketing is the primary lead generation strategy. It’s essential for business owners to understand the significance of marketing expenses and how to manage them.

The accounts

Marketing expenses are calculated in the business profit equation. So, to work out the business profit, you need to subtract the marketing expense from business profit. The profit of a business is always a sum of the amount of units the business sells, times the margin made on each unit, minus the marketing expense involved, minus the direct overhead. Digital marketing expenses include things such PPC, social media advertising and promotional campaigns.

The importance

An internet marketing strategy is considered an expense when it comes to your profit and loss statement. However, ultimately, it is a supporting investment in your brand. That’s why it’s essential to measure your marketing expenses against its return on investment (ROI). Although marketing can be called an expense for the purpose of your accounts, successful marketing campaigns are vital and practical investment and a key driver of lead generation and conversion.

Related: How Can We Grow Your Business?

To conclude

As a business, it’s important for you to continually assess your marketing budget and spend versus its return on investment. You should always evaluate marketing expenses and measure them against common expense to sales ratios. This will determine how the effectiveness of the campaign. For example, you can calculate ratios such as digital advertising to sales ratio, promotion to sales ratio and social media marketing to sales ratio.

By monitoring the ratios and changes over time and comparing them with industry benchmarks, it’s easier to determine how effective your overall internet marketing strategy is and whether you need to amend your marketing budget. If you have questions about your digital marketing strategy or marketing budget then get in touch today on 0870 062 8760. Or, email us at info@aiminternet.co.uk. Our team has a wealth of experience and is always happy to help.

You may also be interested in What Can Digital Marketing Do For My Business?

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