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How to: Set a realistic digital advertising budget

As consumers spend more and more time on their devices, paid digital advertising is a logical channel to increase brand visibility. Compared to broadcast advertising, digital advertising is notoriously “cheaper.” Small businesses, start-ups, nonprofits and beginners from larger organizations often ask us: how much does digital advertising cost? With budgets that are either very lean or they’re testing a new ad platform and don’t want to waste precious funds, advertisers commonly wonder how low they can go with ad spend and still make it worth the money and time.

Understand how digital advertising is priced

First, it’s important to know how different digital ad platforms price the ads that are served. Some are based on cost-per-click (CPC) while other platforms are based on a cost-per-thousand (CPM) impressions served. Some ad platforms, such as Google’s paid search advertising network, is an auction-based system where advertisers are bidding against competitors for a higher search ranking for certain keywords.

How to set a budget that’s “worth it”

When launching a campaign, it’s not uncommon to test a few versions of your ad against each other to see what works best. Differing creative, unique copy, and adjusted targeting can all have varying results – and letting each run for a period of time can give you an idea of what’s working and what’s not. However, it’s important not to go overboard. We’ve learned firsthand that excitement over a variety of new creative doesn’t mean it needs to go out all at once. With a small budget and lots of ads, you could easily be dividing your ad spend in such a way that no individual ad is receiving a high enough spend to get the attention it deserves.

Digital ad budgets also vary based on platform, objective, ad type, audience, etc. Keep in mind that these platforms utilize machine learning to best optimize your campaigns and find the user that they think is going to be most likely to take your desired action. Your ad budget needs to be large enough to feed the algorithm and give you the historical learning data that you’ll need for your campaign to be successful.

If you’re running multiple campaigns targeting multiple ad sets, you are going to need a bigger budget. You can’t run a full funnel strategy off of a $300 monthly budget on Facebook. If your goal is lead gen, you are going to have to spend more than you would if your goal is just brand awareness. A realistic starting budget would be $500/month of ad spend per platform to see any type of valuable results.

Know when your budget isn’t going to cut it

A small budget isn’t always a campaign killer. The secret is spending it on a campaign that won’t burn through your budget without gaining any traction. We’ve seen great success in utilizing Facebook ads (one of the more affordable forms of digital advertising) to increase visibility and sell tickets to events. Facebook is a great place to target “warm” audiences – or those that are already familiar with your business. Set your campaigns up to reach followers of your page, people that are connected to your followers, or individuals that may already be aware of your services.

It can be tempting to place your ad on a more distinguished platform (LinkedIn, or your local media network) but be sure to price out your estimated impressions and compare your estimated reach across channels. For small budgets, the limited visibility your spend will get you may simply not be worth it.

Follow the metrics and make changes as necessary

The most important step (in any of your marketing efforts) is tracking your progress. Establish a baseline and keep an eye on traffic, impressions, and increased awareness/brand interaction over the course of your campaign. Are you seeing your desired results? If you’re running multiple creatives, is one performing best? Consider shifting your ad spend to prioritize the ad that’s getting the most attention.

Fluent IMC is a Maine marketing agency specializing in integrated marketing communications. Our expertise ranges from brand strategy and marketing planning to digital marketing and online advertising to public relations and communications.

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