The Danger Of Spending Money On Advertising

You can promote your web site in many ways for free on the internet and off the internet.  You can give out business cards, put a sign in your yard or on your car, put an ad in the free classifieds, get listed on search engines, and so forth.  Advertising for free has one thing in common no matter how you do it: Any business you get from your effort is free from expense.  And by expense I mean actual outlays of cash.  Advertising always has a cost and for free advertising, the cost is usually your time.  Still, you can spend gobs of time advertising for free and you won't worry about paying your mortgage payment, you just won't get to watch as much TV or do things outside of your business as much.

When you start spending money on advertising one thing will be perfectly clear: You will get business but there is a cost that you will feel.  And sometimes your paid advertising will get you less business than your free advertising.  Yes that's right, often you will get business that will not match what you were able to generate for free.  So why spend money on advertising?  Because eventually you will want to do things bigger than you are able to do with free advertising.

Paid advertising is not cheap.  Some advertising is more effective than other advertising though.  For instance, I can spend 25 to 50 cents per click through for google advertising, but I notice that visitors from google will spend more time on the site than visitors from stumbleupon.  Still, I pay only 5 cents per click from stumbleupon so I can get 5 - 10 more click throughs with them than google.  I am still evaluating the actual results, but I believe that stumbleupon is actually more effective because some people that visit will link to the site by giving it a thumbs up.

I tried advertising on ebay by selling a domain name.  Now I did have a high reserve on it so there was no danger of actually selling it, but several people did visit the site because of it.  I would say I got about 21 clicks for $10, or around 50 cents per click.  That is not too impressive but it was a good test becaue I thought it might do better.

It is always good to test advertising, both media and format, before going larger with it.  Usually I'll spend $100 - $200 on a test to see what kind of results I get.  If the test works well, the sky is the limit on how much you can spend.  I used to have a contract with Excite to spend $3000 per month on banner advertising.  You can go much larger than this though.  You usually spend this kind of money after you start making at least this much money with your business by the way, because advertising will not give you an immediate return on your investment.

In fact, it is probably a good idea to plan out your advertising, to see what your return on investment probably will be and how long it will take you to make money from your efforts.  You can usually figure this out based on your current marketing results if you can gather the right kind of data.  Mainly you want to know what an average customer spends over what period of time, and what kind of dropout rate you have.

In our past business, we tried advertising in many different ways.  I used card decks, small display advertising in magazines, a full-page ad, banner advertising, and several other forms.  Magazines have good hang times, as they stick around for long periods of time.  Banner advertisements are better over time but die quickly.  So there are different advertising strategies that can be used with different effects.  Overall we found that our best advertising was what we could get for free, it just took a lot of time to get it.