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HOW MUCH SHOULD I SPEND ON ADVERTISING AND PROMOTION?

At the time of 2022, capturing the attention of the user on the Internet is becoming more and more difficult.

The overabundance of content takes its toll and no business can do without marketing. Otherwise, under the influence of advertising, customers will begin to leave competitors, which capture more of their attention.

Автор статьи: Анна Туркуман

Дата публикации: 2022-02-16 17:36:09

Многим предпринимателям и владельцам бизнеса сложно найти баланс между чистой прибылью и Many entrepreneurs and business owners find it difficult to strike a balance between net income and ad spend. How much to spend on promoting a product or service is an individual question, depending on the niche and demand.

Promotion costs depend directly on the type of advertising chosen. More information about the types of advertising can be found here (link to "Advertising. What? Where? When?").   
The most expensive and least effective advertising is the media and outdoor advertising. To replace them and during the prosperity of the Internet, respectively, advertising through this channel leads to much more target audience and a higher conversion rate. It is divided into several types, each of which has its own target orientation and effectiveness:

  • Video advertising
  • Сontextual advertising
  • SEO promotion
  • Promotion in social networks

To understand how much you need to spend on advertising, first you need to decide on its type and purpose. And for this you need to conduct a thorough analysis of the market and target audience.

HOW TO DEFINE THE MOST EFFECTIVE TYPE OF ADVERTISING?

The most appropriate type of advertising depends on the type of business activity.

For example, the conditional owner of a store selling some product in a shopping center does not need to invest heavily in promoting his brand on social networks and other online resources. His business is aimed at a "live" buyer, so it will be more effective to hold a promotion or other type of advertising. Its cost will depend on the scale of events and the frequency of their holding.  

But online stores or some kind of creative activity already simply need advertising in the Internet space. This is the only way to increase traffic to the resource, increase its awareness and attract customers and partners. But there are many means of promotion on the network, and each of them has its own nuances and it is necessary to correctly determine what exactly suits us. To do this, we need to clearly define our target audience, what they need and what they expect from us.  

For example, if we have a natural cosmetics business, then the main sales channel will be an online store. And the target audience includes girls and women who take care of their beauty and health. In this case, it will be useful and effective: promotion in social networks, contextual advertising and native video advertising on order. Why? Because the target audience for the product that we offer is in the segment of mass interest and can be found on social networks and bloggers of similar subjects. That is, to determine effective ways to promote on the Internet, it is important to clearly understand who our audience is, how they think and where they spend their free time.

It is worth noting that banner advertising, due to the increase in its popularity and large-scale use on various thematic resources, has lost its effectiveness, since most users have the so-called banner blindness. Banner blindness is an effect that manifests itself in the fact that the user is so used to the banners that appear on the sites that they stop paying any attention to them, to the point that they do not even see them. Users began to pay less and less attention even to bright and attractive banners. There has also been an increase in distrust of third-party links appearing here and there. In addition, a huge number of people use ad blockers, which greatly reduced its usefulness.

Expensive but very effective are native and video ads. It’s worth starting with the fact that the return of the audience and performance is much easier to track through interactions with the publication or statistics of increased traffic to your resource directly from a trusted blog. But the main advantage is that native advertising does not try to “suck” something into the user and disappear, but presents it in an interesting, accessible and understandable manner with a description of all the advantages and disadvantages, as a review of a product from a blogger trusted by our potential buyer . 

An entrepreneur can determine and choose the appropriate types of promotion on his own, after conducting a complete analysis of the market. But due to the lack of experience in promoting through the new format, some fundamental points for each type of advertising may be omitted or not taken into account. It is recommended to consult with a specialist or hire one. 

HOW TO CALCULATE THE ADVERTISING BUDGET? 

The marketing budget includes the costs of market and target audience research, ensuring the competitiveness of the product, informing the client about the product or service (advertising, SEO, SMM, promotions, participation in exhibitions, etc.), creating a brand image, organizing product distribution and sales network. All such activities should be included in the marketing budget.
 
Now advertising spending directly depends on these factors: 

  1. Competition on paid channels. 
    Promotion by organic methods becomes more and more difficult every year. Therefore, many newcomers to the market immediately resort to attracting paid traffic. As a result, competition is growing on this basis, marketing is becoming more complicated and the cost is growing accordingly. Moreover, both the cost of attracting through available tools and the creation of promoted content (design, copywriting). 
  1. Banner blindness and ad blockers. 
    Every day we all come across an incredibly huge amount of banner advertising. Increasing the concentration of this type of ads per page has led to a huge increase in competition and a decrease in the effectiveness of marketing channels. As a result, “banner blindness”, its intensification and spread to referral programs and viral content.    
  1. Availability of marketing tools. 
    In theory, the availability factor should reduce the cost of advertising as such, but ease of use and a low price tag have leveled the field of competition. Now everyone has access to good promotion channels, including marketers, businessmen, and bloggers; accordingly, accessibility is offset by the costs of overcoming competition. 
  1. Fast competitors.
    Before, any business start-up could count on their competitors to be big, stupid, and slow. There is no more than that, since we have all become smarter and faster, and especially competitors. Now large players create special divisions that monitor the market, looking for potential competitors in order to buy them out or sweep them out of the market completely.
  1. Content overload. 
    About 10-15 years ago, business competed only with boredom. The advantage was the lack of competitors and a wide variety of content, which steals the precious attention of the user. Now the flow of information is just crazy and the user has less and less free time, so everyone stops working on organic traffic and tries to buy out the consumer's time.

Marketing spend example:

  1. Branding
    The individual design of branded product elements (from a trademark and business cards to letterheads and brochures) is needed to create a holistic image of your company among customers and partners. Do not forget that branding creates the first impression of your company, on which its success largely depends, so it is better not to save on branding.
  1. Web site 
    If you just want a website, then you can create one yourself in a couple of hours by spending $100 on a domain name and hosting. But if you want your web resource to grab attention and sell products or services, as well as match the branding, hire experts to create quality work.
    Specialists will help with positioning, SEO, content and adaptation to mobile platforms, develop the structure and design, and help with site setup (security, user personal data, payment gateways, integration with social networks, etc.). Depending on the complexity of the site, individually approximate price tags are formed, you can see here.
  1. Social media 
    It is not necessary to be on all sites wherever possible, since maintaining one page is not an easy task, but maintaining social networks more than 3-4 at the same time is difficult, and if the posting is kept constant, the quality of their maintenance will drop. It is better to choose a couple of social networks with the maximum concentration of the target audience and hire an SMM manager, guaranteeing regularity and quality.
  1. Content Marketing 
    Any serious business requires consistent, high-quality content to drive attention, traffic, and money for your business. You can create content using:
    • Freelancers
    • Internal content department
    • Staff members create content themselves, with no specialization in     design or copywriting
    • outsourcing department

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