A few weeks ago we set up a new Adwords campaign.
Based on past experience, everything was looking good and we should have been reeling in the leads, but….
Not even one tiny little lead.
After a puzzled 48 hours, we finally figured out the problem. By mistake, our daily budget had been set to £1.
So how much should you spend on your online advertising?
It’s a question which companies struggle with all the time – but unfortunately, there is no magical answer. Your advertising costs are going to vary depending on who you’re trying to reach, what you’re promoting and on what platform, and a variety of other factors.
It’s very frustrating, and as a result of the uncertainty, companies often either rely on guesswork, or allocate whatever “sounds reasonable”.
Inevitably they end up spending massive amounts and seeing nothing in return, or spending very conservative amounts which never allow them to reach a substantial number of people.
The mistake is that they think about their online advertising budget in fixed terms. They would be much better off thinking of their advertising budget in terms of phases.
Phase 1. PILOT CAMPAIGN. Most advertising campaigns don’t work perfectly straight off the bat. It takes a lot of testing, changing and optimising to get your advertising working well.
So at this stage you want to put just enough money into your advertising to get it right.
You need to pay for enough people to see your ads, and then click on them, so that you can tell which ads work and which don’t, until you hit on a winning formula.
But of course, it’s not enough to have a lot of people clicking on your ads. Are they taking up the offer on the landing page you’ve sent them to? Opening your emails? Making enquiries? Actually buying from you?
Make sure the whole process is working. This usually means taking at least a few hundred people through it.
Phase 2. SCALING. Once you know that your online advertising is generating a Return-on-Investment….
Ie. you can confidently say that for each pound you’re spending, you’re bringing in £3 to the business….
Or that it takes £400 to bring in a new client with a lifetime value of £3,000….
You need to ramp your advertising spending right up.
After all, if you had a machine in your office which spat out £3,000 every time you put £400 in, you’d spend all day feeding it money, right?
At this stage plough as much as you possibly can into your advertising, because the more you put in, the more new customers you’ll have.
And why put a limit on success?