August 27, 2020 –

Am I willing to invest enough money in order to drive the value of more than 1 sale in order to grow my business?  This is a very fair question when it comes to digital advertising.  In fact, questions about how any investment can yield a return should always be asked.  For example, when hiring a Financial Advisor, a person is trusting that the money this F.A. manages on their behalf will not only be safe but they are also trusting this F.A. will make them money on their investment in the long run.  That same principle applies to any digital advertising investment as well.  Furthermore, the principal of setting realistic expectations comes into play in both financial investment and digital advertising investment.  Is it realistic to expect that investing $1,000 into the stock market will yield $10,000 in return, or 900% ROI, in less than a year?  If the answer is Yes, then please introduce me to your F.A. so I can hop on that unicorn of a gravy train!  However, if $5,000 is invested into the stock market, is it realistic to expect this investment to grow to $10,000, or 100% ROI, in less than a year?  The answer is, Yes, and I would also consider that a great investment.

 

We run into this conversation quite a bit when business owners are deciding whether or not to invest in digital advertising for the first time.  We feel the mindset compared to above must be taken into consideration here as well.  Say, for example, a business’s average order value of 1 “widget” sold nets $20,000 in revenue. Is it realistic to expect that a $500 per month investment on a Google campaign will drive multiple sales of “widgets” per month?  The answer is, No.  Ask yourself, how is $500 supposed to fuel multiple $20,000 sales of “widgets” that ultimately results in $40,000 or $60,000 in sales?  This type of return means getting up to $119 back on every $1 invested, or 11,900% ROI.  Again, please let me know where to find any investment vehicle out there that has these types of returns with such low risk.  However, what does seem realistic is investing $10,000 per month on a Google program in order to drive at least 1 sale per month.  This investment level allows the program to not only eliminate  the risk from your initial investment but also provides the program enough power to drive the goal of the 1 desired sale  and thus yielding $2 for every $1 invested, or 100% ROI. This approach would be a positive realistic expectation that has low probability of not creating a positive outcome, which is a great position to be in when involved in any type of investment.  One sale per month would also be a low success rate for a Google program of this investment level, so imagine if your monthly investment produced two or three sales?!?!  Now we are cooking with rocket fuel!

We ask that readers please take this all with a grain of salt after reading.  Setting realistic expectations is all based upon what your business sells or what services are offered, price points, lifetime value, etc.  But, the good news out of the gate is there is a model to fit pretty much all businesses!  The hope here is that the parallel we have drawn to financial investment helps the business owners out there that are on the fence about this to at least start the conversation about taking their company to the next level!

If you would like to learn more about how to leverage your digital investment to its fullest potential and grow your business, please reach out to us anytime!