Small Businesses Guide To Distributing Online Advertising Budget

Small Businesses Guide To Distributing Online Advertising Budget
March 16, 2015 Chris Tomlinson

Small businesses typically run on pretty tight operating budgets. But with competition looming from rivals who have better online presence, they have no choice but to invest in online advertising. This guide will take you through the fundamentals of splitting your online advertising budget.

But first things first – advertising online is not the only way to reach out to your customers online. If you have a website, then you could invest in optimizing the website for Google search so that you can rank number one for the major search keywords. However, this is a long term strategy and often volatile to technological changes that are outside your control. As someone who advises a lot of small business clients, one point I always stress on is the need to maintain a decent advertising budget. This will help counter any volatility in your organic search presence.

There are multiple avenues to advertise online. The most popular medium is Adwords that is owned by Google. This is basically advertisements that appear alongside the search results on Google. While this is by far the most popular online advertising choice, this is not the only one. Because of the competition that exists in this platform, the cost of advertising over Google can sometimes be quite expensive. Even local small businesses like plumbers and roof contractors may sometimes shell as much as $30-$35 for every click. As a result, this advertising channel is not for everyone.

Another place to explore advertising is local directories classifieds. A huge chunk of people looking for small business services still seek out the likes of YellowPages and Craigslist to find contractors. Also, quite a few of these directories have a very good search engine presence. Which means that, even if your own website does not rank on Google, you may reach out to customers through occupying prominent positions on these directory websites that rank on top.

According to Marian Berege, a small business owner who owns a wedding planning business in Perth, there is a sweet spot for every business with respect to distributing the ad share and for her business, the distribution was 70% for Adwords and another 30% distributed equally between Facebook and Gumtree, the eBay owned classifieds website.

However, not all businesses may have a similar sweet spot. In Marian’s case, Facebook serves as a great marketing tool because of the niche that they cater to. Businesses that serve a more utilitarian need like roofing or plumbing may not invest as much in social media.

How do you determine the sweet spot? Here is a quick six point rule that will help small business owners determine the ad distribution strategy.

Step 1 : Find established businesses in your niche. This could be from any city or country, as long as it is in the same industry as yours. Make a list of twenty of these top businesses.

Step 2 : Use a tool like Alexa or Quantcast to know the share of traffic from various websites. Regardless of whether this traffic is paid or organic, it will give you an idea of what channels work for this niche. Make a top five list of channels to target

Step 3 : Allocating 20% of your ad budget to each of these five channels.

Step 4 : Optimize the campaign for each of these individual channels for at least a month or two to ensure you get the best possible result from the particular channel

Step 5 : After a two month period, drop the worst performing channel, and redistribute the budget among the remaining four.

Step 6 : Continue this process of adding or deleting the channels till you arrive at the “sweet spot”.

Are you a small business owner? What is the typical advertising budget allocation in your niche? Share it with us in the comments.

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