Calculating the Cost of Website Marketing

Like all marketing, website marketing is free – if you get a large enough return from the sales you achieve as a result of the marketing.

Ideally, if you spend more money on marketing you make more sales: the marketing is then part of your operational costs, but it doesn’t really matter because while you are spending more, you are making even more. Ideally.

In reality, as someone once said (I paraphrase here) “half of my marketing spend is useful the other half is a complete waste of money – I just don’t know which half is which.”

Marketing a website in some ways makes this problem easier to solve, but in some ways also makes it harder.

First, back to basics. Website marketing does not have a cost – customer acquisition does. If we stopped thinking about the marketing spend and started thinking instead about the cost of acquiring a customer then we might find that our thought processes in this area might be a great deal clearer.

Lets now move on to spending some money to get some people to come to our website. Should we get 100 people, or 1000 people or more to come to the site? More you say – much more, the more the merrier.

Of course the point of marketing spend to encourage website visitors is not to have lotsĀ  of visitors it is to solicit sales, or enquiries at least. So it is better to get 100 visitors and have 50 sales than 1000 visitors and still only 50 sales.

So calculating which half of the marketing spend is good and which half bad is easier, because you can design landing pages for various campaigns and clearly see which half is good and which bad. However, what happens next makes the issue more complex. That is, the visitor is not good enough. We need qualified visitors who are already warm to our proposition and we then need to guide them to our goal of sale, or enquiry quickly and efficiently.

You can therefore not calculate the cost or return on your marketing spend on visitors alone – the ‘return to the business’ factor must be in there. It is the percentage return on the visitors that really counts, i.e. what percentage of visitors buy, or enquire.

If on average 1 in 10 visitors becomes a customer, the cost of sale is not one visit it is 10 visits, because we need 10 visitors to achieve 1 customer. If we are getting a return of 2 sales per 10 visitors then the cost of 1 sale is only equivalent to 5 visitors.

You need to have this simple calculation included in any evaluation you make about marketing spend on your website and ensure that all marketing spend is clearly focused on this percentage return figure.