How much budget should I spend on online marketing?
One question we have been coming across a lot is “So how much does it cost to advertise online? How much should we spend on Facebook? How much should we spend on Search?” Or even “What should be our online budget in the next year?”
If you are asking yourself this question or about to go into a meeting about this topic, I don’t envy you, because I know that many managers will want you to come up with a very specific number, and once you’ve put that number in your report or forecast or budget plan, someone may raise their hand and challenge you on that figure!
Well, here is our take on this question, and it may raise eyebrows in some of the corporate board rooms: How much money to spend online? AS MUCH AS WE POSSIBLY CAN!
But OK, don’t stop reading here, this is only half of the answer. This could turn into a disaster, if you now stop spending millions on billboards and TV, and instead pump your million dollar budget into Facebook ads.
So, by the time you have established online channels and campaigns that have proven to be profitable for your business, then you really can and should spend as much on these campaigns as you possibly can!
The best thing about online campaigns: In many cases, there are ways to link your advertising spend back to specific results and even specific revenue and profit numbers. After receiving 1.000 clicks on this ads, how many items did we sell? (You establish the number of conversions and the cost per conversion). Once you have mastered to get all these numbers together on one spread sheet, something magical will happen and the entire room will light up. Sort of.
But to get there, is perhaps the hardest part in this journey – trialing a number of campaign types, ad creatives, channels, bid levels, keywords, placements etc…. That’s what you have to go through BEFORE you can open the flood gates and increase your budgets.
So, coming back to our budget plan, I suggest you have a discussion with your manager and perhaps the entire management team about why the budget for online advertising should be a rather fluid affair, that can be modest initially, but should be able to grow substantially once you have delivered a proof of positive ROI.
In the meantime, happy campaigning!