- through contextual advertising (cost – 3 rubles per 1 impression);
- through distribution of leaflets (cost – 4 rubles per 1 delivery).
For contextual advertising, the expect conversion into sales per month is 1% (100 people out of 10,000 who viewe the impressions will laos whatsapp data make real orders). The selling price of 1 cake is 3,000 rubles (with a cost price of 2,500). This means a product in two ways that the monthly revenue due to the advertising campaign will be: 100 * 3,000 = 300,000 rubles.
Cost of a contextual advertising campaign:
10,000 * 3 = 30,000 rubles. Accordingly, the cost of attracting a client: 30,000 / 100 = 300 rubles.
The expect conversion rate for leaflets is 2%. Leaflet distribution will bring in revenue: 200 * 3000 = 600,000 rubles.
Cost of a leaflet campaign: 10,000 * 4 = 40,000. Customer acquisition: 40,000 / 200 = 200 rubles.
Let’s calculate (in a simplifi form) the profitability of sales:
1. When promoting through contextual advertising:
3000 (price of the cake) / (300 (client acquisition) + 2500 (cost of the cake)) * 100% = 7.14%.
2. When promoting through leaflets:
3000 / (200 + 2500) * 100% = 11.1%.
Thus, despite the more cookies blocked? learn how to solve this error on wordpress expensive display — 4 rubles, the profitability of sales when distributing leaflets is higher than that of contextual advertising, due to a higher conversion (2%). Consequently, we budget 40,000 rubles — slightly overpaying in comparison with contextual advertising, but at the same time expecting that investments in the campaign will bring more money.
Important! When determining the requir volume of use of promotion channels, you should not:
- try to calculate the volumes of competitors (since they may be satisfi with other profitability indicators);
- limit expenses on certain channels due to a lack of available funds (underinvestment in advertising – direct losses);
- make the advertising budget dependent on sales dynamics (the reverse effect has practical significance, but only for the purpose of assessing the effectiveness of the campaign, not for planning it).
At the same time, it would not hurt italy numbers to analyze the marketing policy of competitors: this will help avoid obvious mistakes when determining a promotion strategy (which may contradict the consumer logic of the market).
The following should also be taken into account:
1. Many types of tasks are difficult to tie to digital indicators (and, accordingly, calculate profitability).
Typical examples are conducting research work, analyzing data on competitors. The costs of these procedures can be significant, but there is no guarantee that they will pay for themselves as a result of the campaign.
It is quite problematic to calculate the conversion of offline advertising on radio and TV, bulletin boards. Here, the success of the campaign is probabilistic, and this should be taken into account when planning the budget.
2. If the company’s marketing budget is excessively large (at the time of the campaign), it will be necessary to prioritize funding for channels.
It will be necessary to determine which of them can be most effective and deserve priority investments. There are different approaches to solving this problem. A common method is to divide
channels into 3 types:
- typical working channels (with proven effectiveness – based on the example of previous campaigns, including competitors) – contextual, target advertising, SEO;
- non-standard channels of the competitive line (which can have high efficiency in potential, since competitors had good real results) – for example, promotion through bloggers;
- experimental (fundamentally new, never previously use by the company – and there is no data that competitors could have use them before), for example, promotion through chat bots.
If the business is completely new, a product in two ways then for the initial “promotion” priority should be given to the first two strategies (in the approximate proportion of 75 and 20% of the marketing budget). Experiments should not be ignore – about 15% of the money should go in this direction.
If the campaign is not the first for the business and it already has a significant market share, then marketers will already have data on the effectiveness of the tools use earlier. As a result, experimental or competitive solutions that have proven effective can be transforme into standard ones – and then the budget can theoretically consist only of standard ones. With a significant change in market conditions (for example, with the emergence of unique niche opportunities), the company can significantly win against competitors precisely by adopting unexpect experimental solutions.
Rules for successful budgeting in marketing
Taking into account the above, the following a product in two ways key recommendations for calculating the advertising and marketing budget can be identifi:
1. Focus primarily on your own experience, but also take into account the results of your competitors so as not to repeat their mistakes.
2. Do not allow unreasonable limits on campaign expenses, and if there is not enough free money, differentiate expenses, highlighting the primary ones (while not forgetting the importance of the “experimental” part, which can bring unexpected results).
3. Whenever possible, justify the budget with goals a product in two ways and objectives that are specific, achievable and measurable, and that are related to sales profitability and other significant indicators for the business.
There are various ways to optimize costs (for example, through competent outsourcing, reducing current production costs of the advertising department).