The Right Amount for a Local Business to Spend on Advertising

What is the right amount for a local business to spend on advertising? Many companies are afraid to fork over the amount of investment that Adwords tends to require. But I think White Shark Media hits the nail on the head in their recent article “How Much Should Local Businesses Spend on Google AdWords?”

Many companies are worried about things like “How much are my clicks going to cost?” or “How much money per month will it cost me?” These are the wrong questions in my opinion. As White Shark put it:

“One of the biggest concerns that I hear from new advertisers is that they’re worried about the added costs of using Google AdWords. They worry about how that expense will cut into their existing profits. The words to notice here is how Google AdWords and advertising, in general, is being regarded as an expense that will take revenue away instead of an investment that will bring revenue.”

The best way to turn AdWords from an expense to an investment is by using tracking.

Tracking essentially makes the difference between whether you think that Google AdWords is an expense of it’s an investment. Knowing what you get out of your expense makes it an investment. Investments with positive returns you increase, expenses you seek to decrease.

More simply put, you should pay as much as you can as long as it remains profitable for your business! If you can look at your numbers and know that for every dollar you put into Adwords, you are making five, then why the heck would you want to limit that budget?

But if you don’t know those numbers yet, where is a good starting point? I totally agree with White Shark in their urging for business to start aggressively rather than with a small budget and scale. Here are their reasons:

  1. “You will be able to see in a shorter time frame whether an advertising channel will produce workable results or not”
  2. “You’re more likely to succeed because you will be able to compete on even terms with other advertisers”

I think those reasons are great. I would also add my own reason why I think this is a better idea: It allows you to cut down your advertising costs quicker. 

With Adwords, you are going to start broad, because you don’t know what will work or won’t work. But as you start to see more and more results, you see which keywords, ads, etc. are performing more cost effectively. The faster you figure this out, the faster you begin to lower the costs and increase your margins.

How Much Should Local Businesses Spend on Google AdWords? | White Shark Media

 

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