Online advertising - How much money do you have to invest before something is sold?
How much money you need to spend on online advertising to make a sale depends on a number of factors. These include the
- Price of the product or service you are selling,
- the competition in your industry, the target group you want to reach, and
- the effectiveness of your advertising campaigns.
There's no hard and fast rule for how much you should spend on online advertising, but in general, you can expect to spend a significant amount of money in order to make a significant number of sales. For example, if you're a small business just starting out, you may need to spend a large portion of your marketing budget on online advertising to increase your brand awareness and drive traffic to your website.
The most effective way to determine the cost of online advertising for your business is to run small test campaigns and measure the results, then adjust and expand accordingly. With time and experimentation, you will be able to estimate the conversion rate and CPA (Cost Per Acquisition) to optimize your budget.
You should also consider not only online advertising, but also other marketing channels such as
- Email marketing,
- Content Marketing,
- Public relations and
- Using social media marketing,
to generate leads and sales.
How many visitors are necessary before a product is sold?
The number of visitors a website needs to sell a product can vary greatly depending on the product, target group, conversion rate and other factors.
You should know that a high number of visitors to your website is not necessarily a guarantee of sales. More important is the number of "qualified" visitors, i.e. visitors who are most likely to be interested in your product or service and are in a position to buy something. The higher the proportion of qualified visitors, the fewer visitors you need to make a sale.
A high conversion rate can also have a big impact on the number of visitors needed to make a sale. The conversion rate is the percentage of visitors to your website who take a desired action, such as making a purchase or filling out a contact form. A website with a higher conversion rate usually needs fewer visitors to make a sale than a website with a lower conversion rate.
To give a more precise answer: The average conversion rate on a website is around 2-3%. So if you have a product that costs €100 and the conversion rate is 2%, you need about 5000 visitors to make a sale, or 5000/2= 2500 visitors. However, this number can vary greatly depending on the factors mentioned above and the industry you are in.
It's important to track and analyze your website's traffic and conversion rate so you can make informed decisions about how to optimize your website and marketing efforts to increase qualified visitors and conversion rates.
Secondary calculation
Let's assume that a click on an online ad costs €0.20. To sell a product that costs €100, you need an average of 2,500 visitors. So the advertisement has cost you €500 for ads to sell a product worth €100. A click price of 20 cents is quite realistic. Depending on what you sell, the click price can be much higher or much lower.
If your monthly advertising budget for online advertising is a maximum of € 300, then you need about 1.5 months until something is sold.
Is it worth investing in paid online advertising?
You're probably wondering whether it's worth doing online advertising where you have to spend € 500 on ads to make € 100 in sales. In the end, you'll have to decide for yourself whether it's worth it. In any case, you should take into account that the more purchases you make and the more customers you have, the more repeat purchases you may have. For these repeat purchases, it is not absolutely necessary to advertise online, provided you offer good customer service.
And this is where email marketing can and should definitely come into play. So you should send informative emails to existing customers. But you should also consider content marketing and PR. So you need a good marketing mix.
How much should you spend on online advertising?
We have already explained that the amount you invest in online advertising depends on many different factors. A general rule of thumb is that you should spend around 5-10% of your total marketing budget on online advertising. However, this figure can be adjusted depending on your specific circumstances.
It is also important that you set clear goals for your advertising campaign and measure the return on investment (ROI) to determine whether the expenditure is worthwhile. This will help you determine whether you need to increase or decrease your advertising budget over time.
When it comes to setting a budget for online advertising, it can be helpful to experiment with different budget levels to see what works best for your business. You can start with a small budget and gradually increase it as you have more success. Many online advertising platforms, such as Google Ads and Facebook Ads, allow you to set daily or monthly budgets so you have more control over your spending.
It's a good idea to work with an experienced marketing professional or hire an advertising agency to help you make budget decisions and create effective advertising campaigns.
Is there a way to become largely independent of paid advertising?
This is possible with targeted content marketing.
It is a long way until content marketing activities have compensated for the costs of paid online advertising, but it is definitely worth it in the long term. With content marketing, you can make yourself largely independent of paid advertising.