Advertising and marketing have been around for as long as capitalism has been alive. We have come a long way from when people stood shouting in market squares, to a world where advertising and marketing are primarily done online. With the majority of people having reliable internet connections and internet-ready devices, it is only natural that businesses began to follow them online. This led to the birth of online and digital marketing, with marketing teams all over the world having dedicated marketing and advertising budgets. But, how big should the budget be? We are going to look at some considerations you should make to ensure you allocate your website the right advertising budget while ensuring it is appropriate for what you want to achieve.
Understand Your Sales Funnel
Before setting an advertising budget to bring in new customers, you have to understand how you attract customers and the process they follow from when they hear about your website and business, to the time when they become paying customers. Doing this will help you track your results and find out areas where you need to increase your budget, as well as areas where everything is working so well that you can cut down on spending there.
Your analysis of your sales funnel should tell you how many website visitors you have per month, how many leads you are getting and how many of them are converting, the cost of generating a sale, and the typical revenue and value attributed to each successful lead generated.
Determine Your Advertising Goals
Determining your advertising goals helps you have a clear understanding of what you want to achieve so that you can budget for each activity that helps you achieve these goals. For example, the budget for advertising that leads to more sales is very different to one that helps you bring in new leads. Some of the other goals you might aim for include increasing brand awareness and increasing your subscriber numbers.
When setting these goals, you have to be as specific as possible. Instead of aiming to “increase sales”, you would do better to define your goal as “increase sales by x percent”. Specific goals are easy to measure so that you can see if your budget is producing the ROI you expect.
Define Your Strategies
Choosing your strategies is critical to helping you come up with the right advertising budget. In determining your advertising strategies, you need to decide which strategies would work best for your business. Some of the strategies you can use include:
- ● PPC advertising – PPC ads are paid ads that appear when someone searches for keywords related to your ads and landing page. Because of how targeted they are, PPC ads can help you reach leads who are ready to convert. Remember that PPC ads can get quite expensive if you do not optimize your PPC campaigns.
- ● Social media marketing – This involves connecting with potential clients on social media with the aim of getting them to visit your website and convert. Social media marketing has a high ROI, as you know that potential customers you already have an existing relationship with are much more likely to convert.
- ● Social media advertising – As with PPC ads, this involves running paid ads on social media platforms. Social media advertising is a good way of creating brand awareness and telling people about what you offer on your website. Social media advertising works very well for ecommerce businesses, but that does not mean other types of businesses cannot use this strategy.
Other strategies that apply to your business overall but not necessarily to your website include local SEO, email marketing, content marketing and traditional SEO.
Research How Much Each Strategy Will Cost
Regardless of whether you will do the advertising in-house, hire a digital marketing team or a freelancer, you need to know what each of the strategies you put in place will cost.
Having an in-house team will require that you pay out for salaries, office space, as well as the equipment they will use to complete their jobs. Hiring a freelancer will save you from paying for office space, but know that you might have to pay for the software they use to help get people to your website. This is nothing to worry about because the cost will be included in their quote.
Hiring a digital marketing team is the most expensive option here, but the main advantage of hiring such a team is that you will get everything you need in one package.
If you decide to hire a digital marketing team, you can expect to pay $500-$20,000 for SEO, 5-20% of your advertising budget for PPC, and $250-$15000 for social media marketing.
Consider Where Your Business Is
Your advertising budget will also be determined by where your company is in its growth cycle. Businesses that are in the growth stage will usually need to generate a lot of revenue relatively fast. Because of this, you might need to invest a lot more to get quick, frequent wins.
If your business has passed the growth stage and is now in the planning stage where steady revenue is the goal, then you might not need to invest in expensive advertising strategies. Here, you might need to focus on inbound marketing, customer retention and earning new customers over the long-term. This stage affords you the ability to stretch your budget over a longer period.
Look into Your Past
If you have done some advertising in the past, your past budget will give you a lot of information to help you frame your budget better. An analysis of your past strategies will tell you where you spent money that did not lead to the results you were looking for and where you need to focus your budget this year or this financial period.
Your past advertising strategies will also tell you what you overlooked and that could help you position your website better. For example, you might have been focusing on the wrong social media platforms for your type of business and the type of customer you would like to attract. By knowing this, you can turn your attention to more appropriate platforms.
Creating an appropriate advertising budget for your website is challenging because no two businesses are alike and business goals differ from one business to the other. That said, a thorough examination of your business and the advertising strategies that work or do not work for your business is a very good place to start.