Episode #5 | Advertising Budgets, FaceBook Ads, Google Ads, and Promoting Your Business
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This weeks episode focuses solely on a topic that has come up in many previous shows, namely advertising. We talk about where, why, and how to advertise and promote your business as well as when its even the right time for rethinking your strategy.
We also recommended two books to help with the topic today.
- The Wizard of Ads: Turning Words into Magic and Dreamers into Millionaires
- Copywriting Secrets & Tactics by Herschell G. Lewis
Show Notes
Rethinking An Ad Budget… and More
I own a small mom and pop computer repair shop, going on our 5th year. we have one employee and although my wife and I are working all waking hours 6.5 days a week, we are just not making enough to hire a second tech. Our advertising budget has grown by 20% for the last 4 years, and is currently at $30k. should I cut that back down to 15k and hire a part timer, or do I leave it as is and hope for more business to generate more revenue to afford another tech?
- Jim Saul
Without knowing exactly where the advertising budget is going or how you are measuring the results to know if there is any fat waiting to be trimmed, we need to explore these areas first. Having said that, the basic computer repair business is a tough one to be in with low margins and relatively high overhead associated with storefront and inventory costs. The highest margin part of the business is the labor associated with the repairs. I wonder if you’ve considered a few things:
- Have you considered selling maintenance contracts on computers? How about pre-selling a bundle of hours per month to business clients at a discounted rate? If you get them on a contract and have a minimum of say 5 hours at $50 per hour, the client is basically going to pre-pay you for $250 of service whether or not you ever render it. I don’t know what the numbers should be in your case, but this sort of offering could be a big differentiator and give you something new to market to existing and new clients.
- Speaking of selling, when was the last time you raised your prices? If you hike up your labor rates by 10%, and you lose less than 10% of your business (highly likely), your margins increase and you are better off!
- Are you focusing on providing services to small business clients in your area rather than simply focusing on walk-in retail business? You’ll be able to offer far greater value to them, and therefore get higher earnings. I highly recommend going to MeetUp.com and joining a couple of local business meetup groups. Then go mingle and pass out cards.
Actively and personally selling your services would likely be the best return on investment you could make from an advertising perspective.
Now, in this case, a re-examination of Jim’s business may also be in order given that there is a very low percentage of income derived from clients who claim the lion’s share of his time and attention. Listen in to hear why…
Facebook Vs. Other Advertising Alternatives
Is facebook advertising worth the expense? how does their targeting marketing work, since they have plenty of profile into to use for targeting? What other online methods are worth pursuing?
–David Dear
Facebook does a couple of interesting things:
- They allow targeting by age, gender and location.
- You can choose pay-per-click (CPC) or impression (CPM).
Is it worth the expense? That depends. If you have a highly refined profile of your ideal customer and Facebook as enough people like that t present your message to, then I would say yes. But if you aren’t exactly trying to target a very specific demographic, you may be able to find lower cost impressions.
I’ve never been a big fan of Google AdWords, because they are costly and unpredictable. But how about finding some sites where your target clients hang out and offering to “sponsor them”. Sites like non-profits or community groups will often put your banner on their site if you simply cover their Web hosting expense. But where ever you advertise, you need to give the ads the opportunity to take hold. 3 months is a minimum to get the number of repeat impressions you are going to need to start gaining mind share.
Starting and Promoting a new Business
I’d like to get your thoughts on starting an e-commerce business. I’ve researched my product line and it seems like I can fill a niche that is currently under served and still make a decent profit. The risks are fairly minimal since I’ll be selling products that are custom made for each order and I won’t have to carry inventory on hand. My research shows the initial costs to get the website setup for one year will cost me less than $1000 which is an acceptable amount. I’d have to spend time getting the images loaded and the website “pretty” but other than that, I could be up and running within a few days or so.
To recoup the initial development investment, I’d have to sell three products; however, advertising and SEO could end up costing quite a bit more. I’m not sure how much advertising and SEO is going to cost me but I think I can do most of the SEO on my own from reading books and using the techniques employed in my wife’s e-commerce website which is doing ok and getting better every year. Should I go for it? What advertising costs can I expect to incur. How can I best reach my unique market? I’m actively learning how to best utilize Twitter and know what I need to do on Facebook. I’ll primarily use Google for advertising.
What else do I need to consider?
–Joel Barrett
Based on the amount of consideration you’ve given this, and the fact that you have experience with your Wife’s site, I feel comfortable saying Yes! Go for it!
- I like the fact that you don’t have to incur the cost of inventorying merchandise. Just in time delivery is a great model.
- Your Web costs sound reasonable. Hosting should be cheap. Depending on how skilled you are with coding, the cost could be right. However, if you were to go to E-lance and get a developer to build the e-commerce site I’d guess closer to $2,500.
Advertising is always going to be a major challenge with launching a new project. I need to know more about your product to talk about reaching your market directly, but I’m a big fan of niche advertising as opposed to the shotgun approach.
- So developing relationship with Webmasters of related sites so you can cross promote products and services is a good idea.
- Joining Meet Up groups with people who might want your offerings is excellent.
- Finding popular bloggers who specialize in your type of product and sending them an evaluation piece (or a free one if applicable) is a good way to drive traffic and build invaluable backlinks – necessary for SEO anyway.
- You may sample a few Google text ads, but don’t waste too much money that way. Better to spend $100 on more permanent ad mechanisms like ReviewMe.com, or PayForPost.
Finally, look into the Word of Mouth Marketing Association.
4) Hi Cali, I have a growing e-tail store selling t-shirts. On a day-to-day basis we always come out in the black, making back the advertising costs we put in for the day. We advertise exclusively online. However, now we are at a point where need to start expanding the business into more advertising venues, or even getting our merchandise into retail stores.
But the BIG ad venues like MSN.com or even Adwords are still expensive for a small business when the cost of your goods or services are not selling for several hundred dollars. How do we bridge that gap and get larger exposure without breaking the bank? Or how can we compete in a marketplace like Adwords when the average cpc for our keywords is around a dollar, and our daily ad budget is only a few hundred dollars? One cannot make their money back using that system.
–Alan Sealas
T-shirts are a commodity business, with the exception of the design. So standing out really requires creativity in marketing. I tend to think of Google and other ad networks as being able to capture prospects when they are actively buying. But it’s not at all appropriate for demand generation. So, the single best thing I can think of is to generate demand by getting your best designs on people who are seen a lot. Like Cali for example.
Find popular video bloggers, develop a relationship, and put your T-shirts on them! It’s cheap! Your cost is nothing compared to the cost of Google clicks. The trick is to find out what they like, and let them have it! So follow them on Twitter, subscribe to their podcast, or whatever it takes, but get them to take a look at your Tee’s and maybe even let them tell you which ones they want! Or, tell them you could even make them a custom design if they like!
The reason people choose Google is because it’s the easiest route to advertise. “I’ll just throw some money at this issue, and we’ll see what happens.” But that is not what advertising is about. Advertising is about building a sustainable brand. That lasts beyond just one impression or one click.
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