Marketing executives typically spend between 7% and 10% of their companies' marketing income. From this, at least 72% of their overall marketing budget goes to digital marketing channels.

Digital marketing spend is also on the rise, increasing by 11.1% from the first quarter to the third quarter of 2024. Misallocating these budgets can be costly, time consuming and demotivating.

The good news is that even in today's troubled economic waters, there are ways to spend a digital marketing budget that is optimized for performance while keeping your customers comfortable. Read on for the three specific steps I take with each marketing budget.

1. Identify the right marketing tactics

At my company, one of the tests we give marketing candidates when we interview them is to ask them about a certain scenario. For example:

You have a son with a toy store in New York City. He opened his first e-commerce store and wants to sell toys online. He gives you three months to show you can sell toys. And if you could sell toys, then he would increase his budget and commit to a year.

Now, what marketing tactics would you use it to ensure that the client sees results in these three months? It is critical to note here that some marketing tactics would not work for him because:

• One: This is his first e-commerce store, so he doesn't have a newsletter list, so newsletters wouldn't work right away.
• Two: It's a brand new website, so SEO would take a long time. This guy wants to see results right away.

We are always looking for marketing candidates who understand this. SEO would not work immediately as it takes more than six months for a new site. Newsletters are also not applicable. Organic social also takes a lot of money and doesn't drive sales right away.

Related: 5 non-SEO tactics to drive website traffic

Given all these requirements, there are at least three practical channels here.

• The first is pay-per-click or PPC.
• The second is paid social, which is geo-targeted.
• The third is influencer marketing or affiliate marketing.

These are the three channels that are best for this particular situation because the guy has a new e-commerce site. He wants to see the results immediately before he decides increase its marketing expenses.

PPC campaigns will allow the client to target those who are actually looking for toys online. This can immediately drive traffic to their store, as PPC usually results in a 200% ROIaccording to Google.

Similarly, paid social allows targeted advertising for different sites. Lastly, influencer marketing, especially those trusted by families and parents, can increase brand credibility, which is important for a new e-commerce store.

2. Start small and optimize your channels

When you're marketing for a client, if they have a marketing budget of $120,000 for the year, you don't simply divide that into $10,000 per month. We also don't start by blowing their budget right away.

We start with a lower budget. In this situation, what you can do is start with a lower amount, like $5,000 per month. Then, we can start with PPC and paid social. You test channels and optimize them.

Even if the client says they have a budget of $10,000 a month, we don't tell them it's $10,000 a month. This is stupid, naive and inexperienced. Instead, we say to the client, “Let's start with $5,000 a month. Let's start on one or two channels and see what works and what doesn't based on the results.”

Depending on the performance of your channels, even though you start with $5,000 per month, you could end up with $15,000 per month at the end of the year.

Related: 7 crucial metrics to measure the effectiveness of your marketing campaigns

3. Monitoring the results and increasing the budget

Show your customer the results for your chosen channels. Only when they see results will they be more comfortable and then the budget and amount of the channel will increase.

This is also the time when we can consider adding more channels. For example, you can add SEO, which takes months to see results. Once you add that, let's get the results back to the client and then increase their marketing spend as they see results.

The bottom line is that you need to have a minimum amount to spend as a first step. But make sure you start small for the first few months, choose one or two channels, optimize those channels, show results for those channels, and then increase the budget and, later, add another channel.

If you're a bigger brand with more money, you can claim more channels at once, but the best practice still applies.