How Much Budget Should be Spent on Storytelling.
It's fairly common knowledge that for existing D2C brands your annual marketing budget should equal around 10-12% of your revenue. For brands trying to scale up, that percentage might be slightly higher.
But then comes the question of how that budget is split between brand marketing, softwares, performance marketing, marketing channels, content creation and all the other puzzle pieces which make up your ecommerce strategy.
A recent study by Hubspot noted that there has been a shift in which channels take priority when it comes to budget. Marketers planned on spending a larger proportion of their budget on social media and newer media channels in 2023 reducing "Traditional advertising" spend by 0.7%.
91% of marketers planned to increase investment into Youtube and 56% planned on increasing Tiktok spend. What do these channels have in common? They are all gateways into Storytelling. They are visual channels where success is hinged on the quality of the creative. And when we say quality, we don't mean a Steven Speilberg level of production. We mean making sure the creative is adapted to the nuances of the platform, bringing value to the audience and telling your brand's story through emotions.
How much should you be spending on storytelling?
Of course, the exact numbers are all going to depend on the size of your brand, your annual turnover and your internal resource but we've given a general example below to give you an idea of how you can organise your budget to ensure you have spend tucked away for brand building and storytelling.
We would always recommend spending 85% of your allocated digital marketing spend on Storytelling - for those of you who work in funnels, thats 85% on your top and middle of funnel activity; leaving 15% for your bottom of funnel/sales activation ads.
This might come as a bit of a shock if you have been splitting your budget equally across all stages of your customer journey, but ultimately consumers are spending more and more time in consideration stages so naturally more budget will need to be spent here in order to always be present.
Let's take a look at a practical example.
Our brand has $480k to spend on digital advertising spend across the course of the year.
That's $40k each month and for the purpose of this example, our brand has internal resource to produce video creative and stills for social assets.
The split would therefore look like this.
"Storytell" includes all your brand led campaigns including introductory ads to brand new audiences and any nurturing ads including further creative led brand ads, UGC, social proof etc. "Sell" are your sales messaging ads like catalogue ads, Google Shopping ads and search ads.
However, it's unlikely that the brand will want to split budget so evenly across all months; especially when you account for on/off seasons and retail holidays.
This particular brand does especially well over the UK Summer period and at Christmas. So a more realistic view may look like this.
Disclaimer! Do not take this example as gospel - it is purely an example of how we would recommend assigning a larger proportion of budget to Storytelling over investing all your budget in bottom of funnel "Sell" ads. Your breakdown will depend on your own trade calendar, peak months and whether you take part in other retail events such as Black Friday etc.
Once you've decided how your budget will be split between Storytelling campaigns and Sell ads, the next task will be deciding how to want to split those budgets between your channels.
Now this is something we cannot assume or make an example of as it is highly determined on your audience and where they are spending their time online. But we can illustrate which channels can cater for each segment. Again, there is no right or wrong to this list so take a look at your audience and discuss with your team or agency what will work best for you.
Instagram (Posts, carousels, stories and reels)
Display (through performance max or Google Display Network)
Facebook (catalogue ads, advantage+ shopping campaigns)
Google Shopping (through performance max or standard shopping campaigns)
And if you want to learn more about why story telling is so important, we have that covered here.
Hopefully this has given you some insight in how you should be looking at your budgets. But please get in touch if you'd like support planning your 2024 ecommerce strategy.