Know-How Exchange : E-Marketing

I'm not going to be able to give you specific answers to this question because there are too many variables I don't know.

In my experience it's not about how much money, it's about what you're getting for your money. How much are you bringing in for each dollar spent, in each of the mediums you use for advertising?

If you have poor advertising you'll never spend enough.

Another factor is what is the long term value of each of the customers you do bring in?

For something to compare your return to: $1 in direct marketing advertising expenditures return, on average, is about $11.65 in incremental revenue across all industries. According to the DMA Power of Direct Marketing https://www.nmoa.org/catalog/dma/dma_powerofdm.htm

Hope this helps a bit.

Dear rickm,

So, you've been on line for about a year, yes? (according to
Alexa stats, this seems to be the case, although I might be wrong).

And you projected revenue of over $25 million? In your first year?Hmm. That's a of logos on shirts and you're lucky that your other businesses are large enough to soak up the loss you mentioned.

But here's the thing: who's buying? How often are they buying,
and what's their average spend, per customer, per month, and
per transaction?

Then, what are your design, production, processing, ordering, fulfillment, and shipping costs? Have you factored all of these (and your other fees, taxes, salaries, expenses, disbursements, and costs) into your mix? I'm sure you have but what you may not have done is look at all those costs as marketing costs.

How might you streamline some of those back-end processes
in order to improve your customer experience? How might you improve your online presentation and your whole customer
buying process?

Might better ways to increase revenue be to:

1. sell more stuff to more current customers through up sells?
2. offer incentives to increase the transaction amount per customer at the checkout?

In your niche, what are other companies doing to create the demand on which you hung your $25 million dollar projected revenue hat? What do they offer that you don't? What do you
do that they don't?

Have you bought from these people, gone through their entire buying process and married and compared it against yours?

What's different? Better? Worse? The same?

How many orders do your current customers abandon before they are complete?

Then on top of this, have you asked yourself some probing and possibly uncomfortable questions about what you offer and who it's being presented to, what is it that what you offer will do for people, and what you want them or ask them to do next?

if not, and before you spend a bundle of money trying to fix things, you may want to review your processes in fine detail.

The days when any company could attract buyers by throwing large amounts of money at a marketing problem are done. They're finished. Whoosh!—gone!

Building market share isn't a case of spending your way out of a problem. No workee!

It is not what you spend, it's what that money buys you in terms of not only eyeballs, but also in terms of relationships. It's how you use that money to solve people's problems, not how you spend it to show off your company.

I know that this is a difficult and finely balanced concept and that to many people, there may not be a huge difference, or relevance for that matter. But something somewhere isn't working and spending more money on things may not be the best solution.

In the same way that it's not what you say, it's how you say it: it's not what you spend, it's what it buys you.

The vital key here is to ask how is what you're currently spending positioning your service, its benefits, and your values in front of QUALIFIED, and EAGER BUYERS, and how is that dialogue then conditioning the minds of these people as site visitors and shoppers BEFORE they become buyers and customers?

Are you getting or attracting the traffic and are you then converting a high enough percentage of that traffic into qualified buyers to sustain your projected revenue?

I know this asks more questions than you might have bargained for but the questions I've asked are intended to help you rethink things before you try and spend your way out one problem and possibly into another.

I hope this helps. Good luck to you.

Gary Bloomer
Wilmington, DE, USA

(Aside: your footer has a number of typos, starting with "takes text-outline: prepare")

Since you have analytics installed, you should be able to discern what your conversion rate is. Of the # of visitors, how many order? Of those that do order, how did they find you? Simply put, do more of what's worked.

Also - you might want to focus on organizations that are likely to purchase many items from you at once, rather than one-at-a-time sales.

The amount you need to spend to generate the revenue you need can be estimated pretty well, but it will require an in-depth, specific analysis of the factors affecting your business, your target audience, and your marketing mix/plan.

It's not at all uncommon for a new business to require 24-36 months to payout, but it's also not impossible to reach payout in a year. It all depends on the marketing plan and the execution. (That means things like the advertising effectiveness, landing experience, keyword management, etc.) It also depends on your gross margin, the lifetime value of a new customer and a number of other factors.

You may want to call in an outside consultant to take a look at what you're doing and make some expert recommendations. In this case, it sounds like that could be a good next step for you.

Hi, rickm

When it comes to web advertising, the costs are so much smaller than, say, TV advertising, that it's hard to compare one vs another. If you are talking about 400K marketing budget for just purely web marketing, that sounds darn a lot for me. But it sure depends on what you are doing, what tools you are using.

There are many ways to advertise online relatively inexpensively, but as Moderator noted, you need to know first what may help you and what may hurt you and do a thorough analysis of the tools you are planning to pay for doing marketing.

I would suggest putting together a list of all possible tools - do a spreadsheet where you will see types of campaigns, possible revenue, conversion cost, time required for different tools to start conversion. Compare the efforts, and then stat testing the cheapest ones.

Having certain conversion number in mind, you will be able to see how fast you can achieve your goal using different types of marketing and what budget you may need to do that.

Whatever happens -

Good luck!
Natasha Chernyavskaya
Artographica
Los Angeles, CA

Hi rickm,

I would like to suggest you to try implement the CVP (Cost-Volume-Profit Analysis) https://en.wikipedia.org/wiki/Cost-Volume-Profit_Analysis

it could really helps to you to define the needed budget.

hope this helps to you.

Hi,

Marketing Budget usually varies from Industry to Industry. Well a thumb rule can be a 2% - 5 % of the sales figure.

Swap