How To Create an Ecommerce Marketing Budget That Drives Results

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When sales plateau, many ecommerce business owners instinctively look to marketing to resolve their growth issues. However, what if there was a way to boost sales without launching new marketing campaigns? Instead of diving into your next project, consider taking a step back to assess your ecommerce marketing budget. Budgeting for marketing helps you efficiently allocate resources, maximize ROI, and drive consistent growth for your business. This article will show you how to create an ecommerce marketing budget and tiktok ecommerce strategy that achieves your unique goals and sets your store up for long-term success.

One of the best ways to understand how to create an effective ecommerce marketing budget for your online store is to analyze your past performance. Shophunter’s Shopify sales tracker can help you uncover valuable insights about your store’s performance to ensure you’re starting off on the right foot.

Why You Need a Marketing Budget

A marketing budget helps you outline how much money you have for marketing and how you plan to spend it. It gives you a clear plan for your marketing dollars so you can allocate funds efficiently across a range of projects.

This structure helps you avoid overspending, prioritize projects to invest in and allocate funds for specific initiatives in advance. A budget also allows you to show how marketing projects are performing so you can justify spending to higher-ups and prove the value of specific initiatives.

Why Create a Marketing Budget?

Today's marketing environment is complex. Budget cuts have become common, and underperforming marketers quickly fall under the axe. Data from our State of Marketing Report supports this: nearly 60% of marketers say how they spend their budget is being scrutinized somewhat more or much more now than in the past.

Creating a comprehensive marketing budget is your silver bullet for avoiding these outcomes and having cash to execute your marketing strategy. Developing a marketing budget also helps you:

Allocate funds for software purchases.

Compare your year-over-year progress.

Allocate funds for projects in advance.

Justify the importance of specific projects.

Calculate the ROI from your marketing projects.

Show the value of proposed marketing projects to your higher-ups.

Show positive ROI, which can help you get a better budget in the future.

Allocate funds for freelancers and full-time hires who'll execute your strategy.

E-Commerce Advertising

Ecommerce Sales Strategy

Ecommerce Monitoring

Ecommerce Search Metrics

Competitive Product Analysis

Ecommerce Marketing Ideas

Is There a Recommended Figure for Ecommerce Marketing Spend?

No matter how good your products or services are, people need to hear about them first - and marketing is the best way to spread the word and increase sales. Yet many online business owners believe that marketing begins and ends with their social media feeds. Word of mouth and community are great ways to build buzz and garner loyal customers - and retailers love social media because, for the most part, it's free. But in reality, building a customer base requires some more upfront investment.

Spending money on marketing is intimidating, especially for a new or small business with razor-thin margins. According to data compiled by the US Small Business Association, they recommend traditional B2C businesses should spend 7-8% of revenue on marketing. Ecommerce companies spend an average of 18% of their income on marketing. In some industries, spending up to 30% to acquire customers is not uncommon.

Factors That Influence Marketing Spend

Deloitte's 2024 MO Survey reported that martech budgets currently comprise an average of 20% of marketers' budgets. Respondents indicate this figure will balloon to nearly 1/3 of marketing budgets by 2029. Within an increasingly complex Martech landscape, marketers will likely face important decisions on where and how to invest these dollars.

Hubspot also has a short blog post that collates data on marketing spend as a percentage of revenue. These figures give a wide range (7 to 30%) that could be more helpful if you need clarification. If you're starting, you might not know how much you'll turn in the first year, making budgeting marketing spending tricky.

Crafting an Ecommerce Marketing Budget

It's recommended starting at 15% (the mid-way point of our range) as it gives you a figure to work with. For example, if you plan to turn over $100,000 in year 1, you can spend up to $15,000 on marketing. While spending too little on marketing is easy, spending too much or spending what little budget you have on the wrong marketing is possible.

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Competitor Ads

Ecommerce Ad Intelligence

PPC Competitor Analysis Tools

Ecommerce Ads

Google Ads for Ecommerce

Analytics Tools for Ecommerce

How to Determine Your Ecommerce Marketing Budget

Goals: The Guiding Star of Your Marketing Budget

Goals determine everything. Without them, you'll be wandering around in the darkness. Take time to define your overall goals. It could be something as simple as a turnover of $100,000 or earning enough to pay yourself $25,000 while only working 4 hours per day.

Why Strategy Matters in E-commerce

Business strategy is the overarching plan. It states the game you want to play and how you intend to win. You can't win at every game you could play, so you need to pick your lane carefully and focus on executing the tactical plan informed by your strategy.

Margin Control: A Critical Piece of the Budgeting Puzzle

The quickest way to end up closing your doors for good is to spend a ton of cash on marketing without understanding your margins. It's an easy mistake to make. Margin control is understanding your figures. These include what you pay for the product, your markup, costs, and an estimate of what profit you’d like to make.

Here's a quick example:

If you buy an apple for $1 and sell it for $3, the difference of $2 has to cover your marketing spend, operational costs, and salaries, leaving me with a profit, however small!

In this example, you can't spend $2 on marketing alone, and you have to remember you have a transactional fee whether you're using Shopify to handle payments, Stripe or PayPal with WooCommerce or Magento store.

Understanding your Customer Acquisition Cost is important for your business's survival. You'll need to test several marketing tactics to calculate this figure. But once you have a number, you can use it in your marketing plan to make better predictions. You can work backward if you have an idea of the retail price, cost price, and profit you’d like to make, as all the figure costs need to be factored into this calculation.

Tactical Plan: Test and Research Before Going All In

Another common mistake you see when working with clients is going all in on a particular marketing tactic. Your competitor might invest heavily into TikTok, and so you follow suit. The results are poor, yet you keep throwing money at it.

Testing a range of tactics with a tiny budget is worth testing if you're just starting. With this research, you'll have a clearer idea of where to spend money to reach your ideal customer. You can invest in channels and tactics to help you reach your goals.

Cash Flow: Your Budget’s Biggest Constraint

Your biggest constraint is how much cash you have or get your hands on. If you only have $100 in your bank, that's your marketing budget! With such a tiny amount, you'll have to be super creative. If you can afford a couple of grand, you can experiment more and test different marketing tactics. Regardless of how large or small your marketing budget is, it's worth focusing on several tactics at once and leaving yourself some cash to experiment with.

The marketing tactics you use will depend on your industry and the resources you have within your business. As an ecommerce brand, you could spend 50% of your marketing budget on PPC and SEO, with that amount split equally between the two. With the remaining 50%, you could use 10% of my budget on email marketing, 20% on social media, and 10% on offline marketing and set aside the final 10% for experimentation.

Let’s say: You aim to turn $100,000 in year 1. You give yourself $20,000 to spend on marketing. Using our rough figures above, you’d spend $5,000 on SEO, $5,000 on PPC, $1,000 on emails, $3,000 on social, $1,000 for offline, and the remaining $1,000 on testing new tactics. You may even want to spend some money updating your branding to cement your position in the market.

Balancing Your Budget: The Importance of Allocating Funds Across Marketing Activities

When we look at the proposed marketing budget breakdown with our clients, one thing is almost always apparent imbalance. Whether because one manager carries more influence than another, experience pushes more of the chips in a certain direction, or some other reason, marketing budgets, and marketing activities tend to go heavy in one area and light in another (like a guerrilla marketing campaign).

To counteract that tendency, we urge management to create three primary budget columns:

Branding

Traffic

Conversion Rate Optimization

Branding

Branding seeks to position your company as the leader in your niche. When someone mentions the products or services you supply, branding helps ensure you’re the first name mentioned.

This column will likely be the hardest to track a return on investment, but no matter how well you do at traffic and CRO, sales will be tough if people don’t know, like, and trust your company.

Traffic

We place paid and organic traffic in the same budgeting group. Both are concerned with generating traffic and require funding. This bucket is key to driving consumers to your website. According to a study, search traffic generated 65% of total e-commerce sessions, with 33% generated through organic search and 32% generated through paid search. It’s a mistake to think of organic traffic as “free.” It is not. Whether you pay (in-house or a marketing agency) for search engine optimization (SEO) work or (more sustainably), prepare content for your website to draw visitors in, organic traffic requires funding.

Most companies should look to their organic (owned) traffic for a steady, ample flow of visitors and then use paid traffic to increase the numbers. Beware of underfunding the organic effort and overspending on advertising and pay-per-click campaigns. You can do an excellent job of branding, but if you don’t have traffic lanes set up to get your offers in front of your prospects, how will you make sales? Branding is critical to marketing, but so is traffic.

Conversion Rate Optimization (CRO)

Your audience knows who you are and believes you can solve one or more of their problems better than anyone else. You have traffic systems to direct those who need the solutions I offer to my website and landing pages. It sounds like the perfect setup, but one huge factor still needs to be added: conversion rate optimization (CRO). If you struggle to convert visitors into buyers, you’ve wasted your branding and traffic budget unwisely.

Conversion Rate Optimization (CRO)

You’re not in business to pay for getting people to your site; you’re in business to help them through the process of buying from you. That is the job of conversion rate optimization. The interesting thing is that CRO is one of the main areas ecommerce brands miss when allocating their time and resources (like their marketing budget).

HubSpot calculates that only 17% of marketers use landing page A/B tests to improve conversion rates. Yet, CRO tools have an average ROI of 223%. It pains us to see this happen because the truth is that CRO can have the greatest ROI compared to many other marketing strategies you may utilize (SEO, traffic generation, social media, etc).

7. E-commerce Marketing Strategies to Fund with Your Budget

Here are some of the more common avenues for ecommerce marketing to help increase sales.

Google Ads

Google is the most popular search engine, so the opportunities it creates to reach your target audience are profound. Your customers will often use Google to search for products like yours.

Running advertisements on Google: This can help you reach individuals actively looking for the items you sell online. The three primary types of ads on Google are search, Shopping, and display.

Through SEO and other organic efforts: you could raise my website to the top in search engine rankings. Paid search ads may be an essential part of your digital marketing campaign.

Search ads: Place your website at the top of the search results, making your business one of the first your target audience sees. A top placement can directly lead to more clicks and sales, which could be a cost-effective e-commerce advertising strategy.

Google Shopping ads: Show a thumbnail, a short product description, the e-commerce store’s name, and a few other tidbits of information. They are placed at the top of a search results page, even above the text-only ads, but they can also be found on the Shopping tab and Google partner sites.

For many e-commerce stores, available funds should be allocated to Google pay-per-click advertisements first. Shopping ads would follow, followed by display ads. You can analyze the results of small campaigns to determine the most cost-effective strategy for your business.

Facebook Ads

If your target customers use Facebook regularly, running ads on Facebook should be considered when developing a marketing campaign and budget. Facebook offers several types of ads, including dynamic product ads and remarketing ads.

One of the many great things about advertising on Facebook is the ability to refine the scope of your efforts while also controlling your budget. When you set up your ads, you can say how much money you want to spend per ad per day or for the total campaign. You also can set parameters so that your ad is only displayed for your store’s target audience.

Instagram Ads

Instagram is an image-based social media platform, so it’s well-suited for marketing your ecommerce products with high-quality photo content. If you determine that your target customers use Instagram regularly, you can use both paid ads and influencer marketing on this platform.

Paid ads are set up directly through Instagram, just as you would set up an ad on Facebook. Because these social media platforms are affiliated, you can schedule your Instagram ad to run when you set up a Facebook ad.

Influencer Marketing

Influencer marketing requires you to identify key influencers relevant to your brand and discuss promotions with them. An e-commerce business often sends the influencer free promotional items as part of the arrangement.

The influencer then endorses the product, generally through a social media post or blog content. When followers see the product’s benefits touted, they may rush to your website to purchase the item, increasing sales.

Email Marketing

Costs for an email marketing campaign will vary considerably based on several factors, but you can generally expect an extraordinary return on investment. You can customize email marketing campaigns by segmenting your distribution list and creating tailored email content. Email marketing is direct, and results can easily be monitored and measured.

Email marketing begins with the development of an opt-in campaign, such as when you collect email addresses during the checkout process or via popup ads on my website. Buying email addresses is associated with spam behavior and may reflect poorly on your ecommerce store.

Effective Email Campaigns for Your Online Store

Each campaign will need a professional email prepared. This may involve an investment in copywriting and design. Your email platform and email management apps may also incur additional costs. Remember that when you create your online store with WiziShop, you’ll enjoy access to many tools designed to optimize your website, including Auto-Mail Booster. This complete emailing tool makes email marketing a breeze. It lets you:

Customize email content

Send newsletters highlighting upcoming product sales

Program automatic follow-up emails, and more

Organic Marketing

Paid marketing strategies using social media platforms, Google, and email deliver prompt results, but those results may be short-lived. You must regularly pour money into these avenues to generate leads and enjoy their other benefits. Organic marketing is free and should be part of any store’s ecommerce marketing checklist. Organic marketing covers:

Blog posts

Free posts on your social media platforms

Other types of content that your business did not directly pay for

The cumulative effects of these various organic marketing strategies can be profound, but it will take time to see the results.

For example, it may take many months to see movement in your website’s placement on search engine results pages through a targeted SEO campaign. If you desire immediate results for your business, paying for advertising could seem like the best path. However, organic marketing has a synergistic effect. SEO and organic ecommerce content marketing results can reinforce or surpass the results from paid marketing efforts. Because of this, paid and organic marketing have a place in an ecommerce business’s marketing plan.

Unlocking E-Commerce Success with ShopHunter's Shopify Sales Tracker

ShopHunter's Shopify sales tracker is essential for e-commerce founders, particularly those within the Shopify ecosystem. At its core, this tool uses a custom algorithm to estimate sales for entire stores and individual products, helping users quickly validate product potential.

Key features include:

Sales estimates for both stores and products, offering insights into market opportunities.

Ad spy tool to track advertising activity across multiple stores, allowing you to spot trending products and winning marketing strategies.

Whether you're a dropshipper, a Shopify store owner, or a newcomer to e-commerce, ShopHunter simplifies product research and minimizes the risk of investing in low-performing items.

Sign up for a free trial (no credit card required) to our Shopify sales tracker tool to find your next eCom opportunity or to level up your current eCommerce store by learning from your competitors.

14 Strategies to Optimize Your Ecommerce Marketing Budget

1. Map Out Your Ecommerce Goals

Your ecommerce marketing budget should align with your unique business goals. Therefore, before allocating funds, you need to define your objectives.

You’ll want to invest in social media marketing and content creation to improve brand awareness. Alternatively, to drive sales, you might consider paying for ads and email marketing to get your business in front of potential customers immediately.

2. Get a Handle on Your Other Operating Expenses

Before setting a marketing budget, ensure you understand your ecommerce business’s other operational costs. Calculating your other expenses helps ensure financial sustainability and strategic resource allocation.

For instance, if you’re spending a large percentage of your revenue on inventory, shipping, and fulfilling orders, it’s crucial to get these costs under control before allocating too much to marketing. Considering these costs, you can allocate a marketing budget supporting growth while maintaining operational efficiency and profitability.

3. Understand Your Customers and Your Market

Do you have a specific marketing channel you can use to promote your brand and connect with consumers? Enthusiasm is always beneficial when it comes to marketing efforts. But before spending all your time and money on said channel, verifying if it aligns with your potential revenue opportunities and customer needs is crucial. Having extensive market data in your back pocket enables you to target your advertising more effectively, tailor your messaging, and choose the right channels to reach your audience, maximizing the impact of each dollar spent!

To gain this understanding, conduct market research to identify your target audience's demographic details, buying habits, preferences, and pain points. Analyze competing brands to understand their market positioning and pricing strategies. Consider collecting consumer insights by using:

Surveys

Focus groups

Data analytics

Engaging with social media and reviewing customer feedback can provide real-time insights into changing trends and preferences.

4. Track Important Metrics

To ensure that your marketing budget is allocated efficiently and effectively for your digital commerce venture, keeping an eye on key performance indicators (KPIs) is essential. Here are five important metrics to monitor:

Return On Investment (ROI)

This is the most crucial metric for assessing the effectiveness of your marketing budget. ROI measures the return generated from your marketing spend relative to its cost. It helps you understand which strategies are profitable and which aren't. Calculate it by first subtracting the cost of your marketing efforts from the total revenue you earn from your marketing efforts. Then divide this amount by the cost.

Cost Per Acquisition (CPA)

This metric calculates the cost of acquiring a new customer, which is critical for evaluating the efficiency of your marketing campaigns. CPA is determined by dividing the total marketing costs by the number of new customers acquired through these marketing efforts.

Customer Lifetime Value (CLV)

CLV estimates the total revenue a business can expect from a single customer account throughout its relationship with the company. Knowing the CLV helps understand how much to invest in acquiring and retaining new customers. A healthy marketing budget aims to maximize CLV while keeping acquisition costs reasonable.

Conversion Rate

This measures the percentage of visitors to your website or campaign landing pages who complete a desired action, such as purchasing or signing up for a newsletter. High conversion rates often indicate effective targeting and engaging content, while low conversion rates suggest that your spending needs to translate into results.

Marketing Originated Customer Percentage

This metric looks at what percentage of your new business is generated directly by marketing efforts. It highlights your marketing team's impact by showing the proportion of customer acquisitions that began as leads generated by marketing campaigns.

These metrics provide a comprehensive view of your marketing budget's performance and effectiveness, guiding you to decide where to allocate resources for maximum impact.

5. Test Your Marketing Channels and Actions Regularly

When it comes to Internet commerce, things are always changing! What works well one day may be less effective months or even weeks later. This is no less true for your marketing strategy.

Regular testing of your marketing channels and actions can help you identify the most effective strategies for reaching and converting your audience. Continuous testing allows you to optimize your spending by allocating more resources to high-performing channels and scaling back or modifying underperforming ones.

To effectively test your marketing channels, employ A/B testing, comparing two campaign versions to see which performs better. Use analytics tools to track engagement, conversion rates, and ROI for different channels and campaigns. Experimenting with varying forms of content, advertising messages, and targeting strategies can reveal customer preferences and behavior insights.

6. Create Quality Content

You can implement several strategies to get the most out of your content marketing budget.

You’ll want to focus on creating fun and engaging content. Think about things that are easily digestible and entertaining as something is mindlessly scrolling on your phone.

You’ll want to dig a little deeper. Consider your audience’s pain points and create content that helps them solve common issues. This will help you establish yourself as an expert in your industry and build more trust and credibility with your audience.

7. Automate Your Workflows

A manual process for certain marketing workflows makes sense for young brands, but as you scale, you’ll need to automate wherever possible to avoid adding unnecessary headcount and free up bandwidth for your existing employees.

Some commonly automated workflows include:

Email marketing: Trigger automated messages and follow-ups to eliminate back-and-forths with clients and prospects.

Social media scheduling: Set it and forget it.

Lead generation: Many brands leverage tools like landing pages and web forms to capture leads and automatically add them to their marketing processes.

Analytics: Many popular tools will help aggregate all the data from your marketing campaigns and programs to help you determine success and optimize your approach accordingly.

8. Stay Up On the Latest Trends

Keeping up with the latest trends will help you stay ahead of the competition and identify opportunities while they are still cost-effective. By being able to predict future industry trends, you can abandon strategies that have run their course before you waste your budget on them.

9. Create a Top-Notch Web Experience

An optimal bounce rate is somewhere between 26-40%. There could be several reasons why your bounce rate is higher, but double-checking your web experience is a good place to start. Ensure your website and mobile app are intuitive, and checkout is easy. Otherwise, you could be leaving dollars on the table.

10. Offer Incentives and Promotions

Incentives and promotions might cost you some money upfront but are a great way to attract new customers, retain existing ones, and increase brand engagement.

Some tried-and-true incentives and promotions include:

Discount codes and coupons to pique consumer interest.

Free samples to help people fall in love with your product before they commit.

Referral programs to reward customers for sharing the love with friends and family.

Contests and giveaways for an exciting chance to win free merch.

Limited-time offers to give consumers a sense of urgency.

11. Collaborate with Influencers

Collaborating with influencers is one of the most cost-effective strategies available to marketers. Leveraging creators who know your brand, use your products, and genuinely believe in both will provide the social proof you need to build serious love with your target audience with resonated content.

Your brand should optimize its influencer program for many reasons, and we’ll discuss some more of them shortly.

12. Offer a Personalized Experience

According to research by Epsilon, 80% of consumers say they are more likely to buy from a company if it offers them a personalized experience. After collecting adequate data on your target audience, you should be able to offer more customized recommendations, product offerings, and web experiences to increase customer satisfaction and loyalty.

13. Optimize Your Campaigns

Ensure you’re keeping a close eye on your campaigns so you can tweak them when necessary to ensure you’re getting the best ROI from your efforts. Leverage A/B testing, automated analytics tools, and whatever else you can find to get a clear picture of your campaign and program performance.

14. Revise the Allocation of Your Budget if Needed

As you learn which marketing strategies and channels are bringing your online commerce venture growth and which are halting its progress, feel free to adapt your spending accordingly.

Although it can be beneficial to examine specific marketing tactics you've employed to see if you can improve upon a specific strategy and achieve better results later on, there's no need to waste your resources if you know they need to be fixed.

With ever-evolving digital marketing trends, it's unsurprising that most businesses will find that their original strategies go differently than they plan. All the more reason to monitor your performance with helpful analytics! With this data, you'll be better equipped to change your spending strategy best to suit your current needs and make the most of your resources.

The Shopify sales tracker from ShopHunter takes a unique approach to estimating sales for online stores and products. At its core, the tool uses a custom algorithm to provide sales estimates for Shopify stores and products. This helps eCommerce entrepreneurs quickly validate product potential and make informed business decisions.

Beyond basic sales tracking, ShopHunter's sales tracker features an ad spy tool that monitors store advertising activity. This combination lets users spot trending products and successful marketing strategies early on. ShopHunter aims to streamline product research and reduce the risk of investing in low-performing items whether you're a:

Dropshipper

Shopify store owner

Someone looking to enter the eCommerce space

How ShopHunter's Sales Tracker Works

To use ShopHunter's sales tracker, eCommerce entrepreneurs first enter a Shopify store or product page into the tool. The dashboard then populates an overview of the estimated sales, including total sales over time and sales by the last month.

For even more detail, users can click through the dashboard to access information on:

Sales over time

Sales by the last month

Additional ads running for the store or product

This allows users to quickly validate product potential and uncover existing marketing strategies to help inform their own.

Benefits of Using ShopHunter's Sales Tracker

ShopHunter's sales tracker helps eCommerce entrepreneurs validate product potential before investing time and money into a new business venture. By providing detailed estimates of store and product sales, the tool helps users make informed decisions about what to sell in their Shopify stores. The additional data on existing advertising strategies can also help jumpstart a new store's marketing efforts.