One of the most difficult challenges in working with clients is the misconception that online marketing is free or the expectation of unrealistic results with minimal budgets. Online marketing can be low cost, but you must consider the product or service that you are offering, how competitive your industry is, and how much new business you need to generate to make online marketing worthwhile. Every business has budget constraints for their marketing efforts, but what online marketing offers that no other medium does is the ability to track your advertising spend to the penny. This allows you to optimize your most effective online marketing techniques and either tweak or discontinue the methods that have not been as effective.
What is the cost and margin on your product or service – If you are selling a product that has a long sales cycle(over 3 months) and requires multiple proposals and customer interactions, it is likely that your product has a higher price tag and likely a decent margin built in. With that considered, you will have a prospect that is comparison shopping as well as not the sole decision maker, therefore it will take a decent investment to reach these prospects and convert them as they are searching for the providers that offer the highest value. Attracting and closing these prospects with a $100 or $500 monthly investment is not likely. A good estimation would be to start at an investment of 40% of the ad costs in an industry magazine to start and optimizing your activities do reduce acquisition costs. After that, you should increase your spend until the point of diminishing returns.
How competitive is your industry – One of the biggest misconceptions is that every business can spend the same amount on online marketing and be successful. This is simply not the case because some industries are much more competitive that others. More precisely, some particular products and services are more competitive which means you could have one service that can generate leads at a lower cost than a more competitive service that you offer. If a lawyer attempted to start online marketing with a budget of $500 per month, my recommendation would be to save your money. Legal advertising is one of the more competitive spaces and not making the proper investment will produce disappointing results. You must make the proper invest to generate the amount of business that you need and to be competitive in your industry.
How much new business do you need to generate - If you have an annual goal of growing revenue by 10% and that equates to $50,000, do you think an investment of $1,000 will get you there? Probably not. Online marketing needs to be viewed from a return on investment perspective. If you expect to make a return on investment of 30 times your investment, you may be leading yourself down the wrong path. It will vary by industry, but your revenue growth should be estimated as a multiple of your marketing spend and it needs to be realistic. If it is not, you will probably be disappointed.
When expectations and willingness to invest are in the right place, online marketing will be phenomenal for your business, but they must be in the right place. If your expectations are unrealistic then so will the results you receive. If you understand the three criteria that I covered and complete a true assessment of those criteria, then online marketing can truly work well for you.
I really appreciate that you keep coming back to my site, it's loyal people like you that make what I do worth it. If you have any questions feel free to email me. Oh and since you obviously like our site it'd be great if you could share it with a friend... They'll love you for it!
