Setting your budget
For the past 12 years I have been advising businesses on advertising and marketing. I recommend a budget of around 7-14% of gross turnover. (Depending on what stage the business is in) which is then split up over the 12 months dependent on the goals you want to achieve. I would recommend a fair percentage of online advertising be around at least 4% of your budget. So rather than pluck a figure out of the air, or launch into guerrilla marketing, set your budget. Let’s say you have allowed $5000 over 3 months, which equals to around $1670 per month.
Now you have comfortably made that decision, the next step is to decide on what you should expect. The obvious expectations are phone calls, increase in sales and hits on your website. But how many? A good benchmark is to at least cover your costs, so each month, if your advertising $$ are covered in sales, you have done well.
As well as covering your expenses, your brand has been seen by 1000’s of other potential customers, which will set the benchmark for future advertising and brand recognition. A fair call would be to sell at least double of what you have spent and all above that is cream on the cake. If your advertising is sales focused (i.e., to drive sales as your primary objective and brand awareness as your secondary objective), you would expect no less. If by the end of the campaign you have not reached this objective, it is fair to say that your choice didn’t give you the best ROI (Return on investment).
And don’t count online advertising out as ‘not worthy’ if this is the case first time round, you have to learn from your experience and by doing this you will be in a better position to make your next online adverting decision.
The costs?
Different online advertising suppliers will request different methods of payment. Some may expect a one off payment, some may offer a 3-month contract, some may offer pay per click where you are offered a ‘click price’. For example, you can set yourself a budget of $1,500 for 1 month, the click through price may be $2 per click and you receive 250 clicks. However those 250 clicks may be used up in 4 days. You may swap and change till you find what provides the best result so you may increase your budget.