Your Digital Marketing Budget and the (New) Growth Share Matrix

Ogno Your Digital Marketing Budget & the (New) Growth Share Matrix

When it comes to allocating a digital marketing budget there’s no one-size-fits-all blueprint. Each industry acts differently. This makes figuring out which channel is paying off and which ones you should avoid investing more money a challenge. But fear not – this new take on the Growth Share Matrix model can help clear the air!

What Is a Growth Share Matrix?

Well, glad you asked!

The Growth Share Matrix is a competitive analysis framework that divides company’s products into four categories, based on their success. It was created by Bruce D. Henderson in 1970, with the intention of helping companies decide what products to invest in or cut, based on market attractiveness and competition. It has since evolved and adapted to the often unpredictable and rapid pace of today’s business landscape, maintaining its relevance in the modern era.

The Growth Share Matrix follows a relatively simple premise. Essentially, you’ll want to divide each of your company’s products into one of the four matrix quadrants: star, question mark, cash cow and pet, as follows:

Growth Share Matrix

What Is a Cash Cow?

A Cash Cow in this context is a low-growth, but high-market-share, product. These are the products that bring in cash and can fund investment in your ‘Stars’.

So, What Is a Star?

When we say star we’re referring to products that are likely to achieve high-growth and high market share. In other words, the products your company should be investing heavily in today.

Question Mark for the Question Mark?

Question marks in the growth share matrix represent high-growth but low-market-share products, often new products with high potential. These should be invested in or let go, depending on how likely they are to become Stars.

What about Pet?

The Pet category includes low-share, low-growth products which are considered failures. Your business should consider repositioning or stop investing in them.

Creating a Digital Marketing Budget with the Growth Share Matrix

Now, instead of having growth and market share on the axes of your Growth Share Matrix, try putting individual strategy growth and ROI instead. This will help you assess success across your different digital marketing channels and strategies (and ultimately tell you what is working and what isn’t).

Here’s an example:

Growth Share Matrix example

So let’s say that our hypothetical Google Ads campaign has low growth potential but high ROI – that’s our cash cow. Our SEO strategy looks promising both in terms of growth and ROI, so it will be positioned as a star.

For the sake of this example, let’s say that our cash cow (Google Ads campaign), also leaves a lot of room for experimentation. Due to this flexibility, we get to try out different Facebook and Instagram strategies without taking such a big financial risk – and therefore these can be classified as question marks for now. Meanwhile, our hypothetical LinkedIn efforts are proving to be costly and with not much growth – so we’d classify them as pets.

Now, let’s say that the metrics for our hypothetical paid marketing campaign appears to have an ROI of 150% while maintaining a low CPC. Not bad right? Right… but if you compare this to an organic campaign with the same budget that drove an ROI of 300% and an ever lower CPC, you’d quickly understand that the paid marketing campaign all on its own may not be the star you initially thought it was. This may be just the push you need to start combining your SEO and PPC efforts.

Your Digital Marketing Budget, Made Better

Digital marketers tend to look at the success of an individual campaign as opposed to looking at the bigger picture. This can get in the way of sustainable growth.

By employing this framework into your digital marketing planning, you’ll get that bigger picture. Putting all your efforts in context by putting your strategies against each other while keeping sight of your short and long term goals.

Equipped with the information from your Growth Share Matrix, you’ll be able to make better decisions. All with a better understanding of which strategies generate the most profit and growth for your business, and which generate the least.

That’s the beauty of this adaptation of the Growth Share Matrix model – it will get you looking at your digital marketing budget in a whole new way.

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