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Online Marketing: Is Paid Advertising Worth The Money?

By Edited Apr 29, 2015 0 0

Many people launch online business on the premise that setting up shop on the Internet is almost free, and that organic traffic will bring riches without any sort of investment. They set up their business website and the online shop and optimize it for the search engines as much as they can, but traffic doesn't come and they end up abandoning what could have been a successful business. Sometimes to make something work it's actually necessary to invest more than time and hard work.

Why Do Online Business Fail

It takes money to make money, and while the Internet seems to be synonym with do-it-yourself and self-taught entrepreneurs the harsh reality is that for every successful implentation of good money making ideas there are a hundred failures that never see the start of their second year. Not many business are greeted with crowds of interested visitors the day they launch, either online or offline.

Many business owners focus on SEO to increase their site traffic passively, but don't count on the fact that SEO can take weeks to months to actually start bringing in traffic. Even if you are the first to launch an innovative product or service, a copycat with a good paid marketing campaign can position itself as market leader well before your website starts appearing on the first pages of the search engines, and by then it can be too late. Paid advertising bridges the gap between long term organic traffic and the need for a constant stream of traffic from the day you start your home business.

Benefits Of Paid Advertisement

You can get free advertising, and the Internet is full of tutorials about how to get free traffic through SEO, social media and others. However, a well managed PPC campaign remains the quickest way of getting qualified traffic to your website. It also offers more guarantees in terms of real, qualified traffic than any SEO campaign or social media viral video, and in many cases it can be set up quickly and without specialist technical knowledge.

Paid advertising can also be a good complement to other long term marketing alternatives, such as SEO. It is possible to use PPC ads to test your SEO keywords, by starting a short term campaign and seethe click through and conversion rates for your audience.

PPC and Search Engine Marketing

Most people turn to search engines such as Google or Bing when they are looking for something on the Internet. People intending to purchase something often do that hoping to find reviews, price comparisons and other useful information before choosing a retailer. All of them most popular search engines offer some sort of ad platform that will display your ads alongside related search results for the trigger keywords of your choice. This is known as PPC advertising.

While it is true that many people disregard paid advertisement and click only on the organic search results, it has also been discovered that people are more likely to click on a particular link if they see both paid and organic ads for it on the search result pages.

How Much Should You Pay For Advertising

The main thing to keep in main when deciding on the budget of an advertising campaign is that the campaign must produce more than it costs. You are paying for traffic to your site, and that traffic should convert into sales. To know how much should you pay advertising consultants you should start there, at the sales point, and work backwards.

First of all, decide how much your average sale is worth, minus taxes, production and processing costs, etc... If you have website traffic statistics you may be able to estimate the average sale value for different segments of your audience. Segmentation is key to reducing costs on paid advertising and increasing ROI, so you should try and get segmented analytics of your website visitors as soon as you can, but if you only have global values use those for starters.

Once you know the average value of a sale, calculate the percentage of daily visitors that actually buy something. This is your conversion rate, and multiplied by the average value of a sale gives you a rough estimate of your top price for a visitor belonging to that audience segment. How this applies to each campaign will depend on how you pay for the campaign, and its terms (pay per click, pay per mill, pay per action). But generally speaking the price per click multiplied by your conversion rate should be lower than your average profit on a sale or your marketing campaign will cost you money.

So, Should You Use Paid Advertising?

My answer to that question is yes, provided you also invest on other long term traffic generation channels, such as SEO or Social Media marketing. If you are worried about your marketing budget draining away, you can always use Google Adwords or other low cost PPC alternatives to keep a tight hold on the purse strings but that can involve a lot of micromanagement. And remember, advertising is a company expense and you can claim it back from your taxes.

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