One question we commonly encounter from clients is, “how much should I spend on paid advertising?” The answer to this question is extremely varied depending on the budget you have to work with and the goals you’re trying to accomplish. Paid advertising is fully customizable depending on these factors, but a bigger spend is almost always going to get bigger results. Here are the four biggest factors to consider in calculating what amount is right for you to spend on paid advertising for your business.
The first step to calculating how much you should spend on advertising is to establish how much you have to spend. Figuring out what your budget is for marketing in general and for paid advertising specifically will allow you to gauge what your advertising limits are. Essentially, you can spend as much or as little as you want when it comes to paid advertising. Your budget dictates your spend, but what you spend will dictate the results you see. The more you spend, the bigger your success and ROI will be. However, if you don’t have much to put toward paid advertising, it’s still possible to run smaller campaigns within your available budget.
How much you should spend on paid advertising also depends on your campaign goals. If you’re only trying to get initial page views and traffic to your website, you can spend less in order to get the results you want. However, if your goal is to convert to sales or send emails to customers who have added products to their cart without purchasing, these campaign goals will cost a little more. The further down the sales funnel you go, the more it will cost to see the results you want. Figure out what the goal of your campaign is, and gauge your necessary spend from there.
Size of Your Following
The size of your following will also partially dictate what you’ll need to spend in order to see maximum results. If you have a small existing following, you’ll need to be prepared to spend more money in order to get your desired result. A small following might not see your content because there’s not much exposure, and, therefore, you’ll need to spend more on paid advertising in order to earn more exposure outside of your existing base. If you have a large following, you don’t need to spend as much in order to see results because you have more eyes on your content already.
What You’re Selling
The final factor to consider when calculating your paid advertising budget is what you’re trying to sell. If you’re selling an inexpensive product, it will be more inexpensive to get results. This is because the product isn’t a large investment for consumers to make, so it’s easier to convert to a sale. People spend $5 on a product much more quickly and more easily than they would a $100 or $1,000 product, so inexpensive products require less in order to convert to sales. If you have a service or a luxury product, however, it will take much longer in order to go through the sales funnel and convert to a sale. You will need to create more ads, create more landing pages, and spend more time making a customer feel comfortable enough to invest their time and money into what you’re offering. This costs more money, but your return on investment will be greater.
Ultimately, how much you spend on paid advertising is entirely up to you, and any budget can be accommodated. However, the more you invest, the bigger your return will be. If you need help calculating an appropriate budget and getting the biggest return possible for your investment, give IDG Advertising a call today. Our SEO and digital advertising team will be happy to work with you and get you started on the road to sales success.