Every business debates how much spend they need to develop their paid media strategies. The answer depends on the company’s stability level, historical performance, financial situation, and business model. You need to consider many aspects while deciding your firm’s paid media spend. There is no doubt that this is a smart investment decision for your enterprise.
Digital advertising involves putting your money in places that provide the most opportunities for profit. In this article, we provide you three out-of-the-box ways in which you could use your company’s spend.
1. Begin From Your Revenue Target and Plan Backward
The main goal of most businesses is to create sustainable revenue that boosts growth over the long term. To decide the best-paid media strategies for your company, you need to plan backward from the revenue target.
Most likely, your business objective is to improve revenue. To meet this goal, many departments such as sales, marketing, and customer support work together. You can identify the revenue percentage delivered by each business unit buy analyzing its historical performance. In the marketing aspect, you have many goals that feed the department’s responsibility, including earned, owned, and paid objectives. Your firm will then launch multiple campaigns to achieve this target, including initiatives involving paid media.
This data can help you calculate the amount of investment you need for your business’s paid media programs to achieve the targeted revenue.
2. Consider How Much Money Your Company Can Afford to Spend
Data modeling is effective only when the needed information is available. You need to make an honest judgment about how much funds your firm actually has. Analyze your business’s profits and cash flow to learn many funds it can afford to spend on its paid media strategies.
If you start with an unaffordable budget, your firm’s paid media programs will definitely be doomed. Therefore, it’s essential to begin with a reasonable budget that you can be committed to over the long term. Even with a restricted budget, you can utilize paid media effectively for marketing. This can be achieved by selecting purposeful channels.
We advise you to start with initiatives that can drive conversions. Campaigns around retargeting and intent-driven search can effectively increase revenue. As your company and budget grow, you can implement other awareness-based strategies later.
3. Regularly Re-Assess Your Budget to Boost The Impact
Last but not the least, your firm’s paid media spend should flex and bend to address your business’s evolving demands over time. You should experiment freely when analyzing your spending to identify the profitable areas in your campaigns and tweak your budget to address them.
For instance, if you’re just starting to advertise on Facebook and Google, you could be monitoring conversion metrics such as CPL (cost per lead) or CPC (cost per click) to assess your campaigns’ success. However, these aren’t the only metrics your firm should be monitoring if your objective is to improve revenue.
ROAS (return on advertising spend) is an insightful metric that indicates the business effect of your company’s paid media campaigns. You can calculate it easily if you have the proper attribution model. To compute ROAS, you need to divide the revenue generated by a specific campaign by the money expended on that program.
ROAS goes beyond merely valuing campaigns that only drive leads or clicks. It enables you to learn which initiatives drive the most revenue. With this data, you can bolster your case for added investment for future initiatives.
We advise you to use this data to reevaluate your spending every quarter. This would give your campaigns the needed time to deliver reliable results. At the same time, you’ll have sufficient time to tweak your investment as required to achieve your company’s year-end targets.