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eCommerce Marketing Tip27 – The Right Amount to Spend in Marketing

 

Let’s me start things off by saying that there are only two ways to make money in business – sales and marketing. Now ask yourself, if you can’t make money without marketing then why would you limit the amount that you are willing to spend on your marketing campaign?

It seems really crazy but you’ll see a number of huge companies out there that say “our marketing budget is $2,000,000 a year”.  That’s basically like saying that you only want to make a certain amount of money in a year. It’s absurd to think that you could lock in a marketing budget and actually stick to it which would mean that’s what you are prepared to make for the year or for whatever period of time it might be.

Now it’s not to say that everyone needs unlimited funds to throw at marketing or that you should just invest as much money into it and expect good things to happen because it just doesn’t work that way. What I’m trying to say is that people often severely limit their business by setting fixed parameters around their marketing budget.

3 steps for getting the ultimate marketing spend

The first step is defining a budget and a time period for testing your marketing campaign. It is a given that you need to have tracking in place so that you know exactly what ROI you are getting on your marketing investment. Let’s say for example that in your ecommerce business, we allocate a budget of $5000 dollars to test some adwords over the next 3 months.

Step number 2 is sticking to that set period and investment then assessing what’s giving you the best ROI that you can keep doing and what you need to stop doing.

The third step is defining a ratio of your marketing investment versus the returns that you are getting. Unlike having a fixed budget if you have a ratio and you keep hitting that ratio, the more traffic that you can drive that is converting to sales the more money you are going to make on the back end. All these should become very predictable over time. Let’s say you put $1000 dollars on the front end and $5000 comes out the back end like a machine.

That’s the beauty of doing business on the Internet – everything is transparent and can be tracked so it’s easy to see exactly what you are looking for as you setup a predictable machine that just keeps pumping money through. It may sound corny but that’s exactly the kind of opportunity that ecommerce businesses offer. The only time that one should set a fixed marketing budget is for testing purposes only.

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eCommerce Marketing Tip27 - The Right Amount to Spend in Marketing