Calculating the Cost of Website Marketing

Posted: 2012-01-26 10:42:39

effective market stall

Like all marketing, website marketing is free!

That is, if you get a large enough return from the sales made as a result of the marketing.

The way things should work is that,  if you spend more money on marketing, you should make more sales. The marketing is then part of your operational costs, or cost of sales .

Ideally, It shouldn't really matter what your marketing spend is, because the more you spend, the more you make. Ideally.

In reality, as John Wananmaker  once said: "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

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

The Basics of Website Marketing

First, back to basics.

Website marketing is either about finding new customers, or persuading existing customers to spend more. 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 clearer.

Let's 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 even more to come to the site?

"More" you say - much more, the more the merrier. Of course the point of marketing spend is not to have lots of visitors to the website, it is to solicit enquiries and sales.

So it is much better to get 100 visitors and have 50 sales than 1000 visitors and still only 50 sales. This is because a site that can get 50 sales from 100 visitors is much more efficient and effective than one that can only glean 50 sales from 1000 visits.

Identifying the Wasted Half

With website marketing, calculating which half of the marketing spend is good and which half bad is easier.

This is because you can design landing pages for various campaigns and clearly see which half is working and which not.

However, we know that a 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 a sale.

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 gaining 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.

It is why the effectiveness and efficiency of the website is so important. Spending money on acquiring new visitors for an efficient and effective web site will give a much better return.

Final Word

Gaining additional visitors to you website is much more cost effective if you site is converting visitors to customers well.

Before investing too much on website marketing to raise the profile of your website, make sure the website is performing the best it can be.