How Much Should Your Company Spend in Online Marketing?

  • By: Cris M.
  • Mar 14, 2013
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We are often asked the question: How much should my company spend in Online Marketing? There is no straight answer as every industry is different.

Consumption online has grown significantly over the past 5 years and it will continue to grow. Your business can take advantage of the online marketplace growth. In order to get there you will need a professional website and an online marketing investment.

In Australia most large corporations have not been pro-active and innovative towards their internet business. Therefore, doors were opened to new innovative companies to fill in this space. The competition is more distributed in the vast world of the internet.

We recommend you check competitors online, such as which position they are ranking on Google and what strategies they are following online. Then ask yourself: can I do better?

Large corporations have traditionally allocated a marketing budget to spend over a period of time. The budget was then distributed into several campaigns and media channels (TV, Radio, Magazines, Direct Mail, etc). Many of these traditional media channels are generally unaccessible to the majority of small companies.

Traditional media channels don’t necessarily provide an effective way to measure the return on investment. Half of the money spent on advertising bring no return whatsoever. The question is: which half? It is important to focus on online marketing actions that will allow you to track the results.

ROI (Return of Investment) is the way to look at your investment in online marketing. One of the great advantages of the internet marketing is the huge tracking ability on every online action, and consequently measuring the return. In simple words, if the action is working, keep going with it. If the action is not working, stop it.

Basic Example for Online Marketing ROI:

You want to turn over $10,000 monthly on your new online store. Your gross profit on selling this amount is $4,000 (40%). Let’s say you can allocate $1000 (10%) for online marketing to achieve the turnover, hence leaving you with 30% gross profit.

The first step will be to invest $1000 for a few months to understand what sort of ROI you can get for your money, and from there scale it accordingly.

Online Marketing Learning Curve

These first months will also provide you with an insight of what strategies work for your specific industry. Look at the first three months as a learning curve, where you are testing several different online marketing strategies. Learn, refine, test it again until you find your ‘pot of gold’.

There are several different actions and channels available, such as SEO, Adwords, Advertising in other websites, blogs, Social Media, just to mention a few.  Overtime you will find out which one works best for your type of business.

You might be able to do it yourself, but we strongly recommend you approach a professional online marketing firm. Professionals online marketers which will:

  • Point you in the right direction.
  • Provide ideas.
  • Speed up your learning curve.
  • Work quicker and be more effective with your money.
  • Allow you to focus on your core business, where you competitive advantage is.

When talking about investment in internet marketing, always think in terms of the return over the investment. You will find that this approach, in most cases, will even tell you how feasible your online business is.

Google doesn’t care if your company is large or small. It cares that you offer a compelling content, competitive products and smart approach towards your consumers. If consumers want you, Google will want you too.

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