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What type of results should I expect from online marketing campaigns?

Very few businesses, if any, can prosper without some level of marketing. And no, "word of mouth" isn't marketing! LOL More on that later. Here, we will discuss the different types of online marketing, what type of results to expect from them, and how to measure the success of each.

There are many different types of online marketing, but for the newer small business, there are three primary categories:

1. Website Marketing (paying for ads on websites)

2. Email Marketing (bulk email)

3. Relationship Marketing (person to person)

With each type of marketing, the key is to estimate how many people will see your ad, what percentage of them are likely to become customers, and whether the potential profit generated will be enough to justify the campaign (called a "Return on Investment", or "ROI").

As a guideline, most businesses expect to see a gross return on their campaign of 900%. Meaning, if you invest $100 into a marketing campaign, then it should result in $1000 worth of sales. That's gross sales, not profit. This can vary, of course, depending on your profit margin, but we will use this estimate throughout this article for a point of comparison.

Website Marketing

A website marketing campaign refers to advertisements that are placed on popular websites, such as Google, Yahoo, and of course, this website. This is an ever-changing market, so the cost and results will vary greatly from one website to another, and even from one quarter to another.

The reason for the varying costs and results depend on several factors: how much traffic is on the website during your campaign, how well the ads are placed on the website, the number of advertisers per page, whether there are advertisers similar to your business on the website at the same time, etc. Naturally, a website with more traffic is going to charge more to advertise than a less popular site, but you would subsequently expect better results.

First, let's discuss how to determine the potential ROI (Return on Investment). To do this, you need to know the average number of impressions for your ad. This refers to how many times your ad will actually be shown.

On average, you should expect about 2% of your ad impressions to turn in to click-throughs; meaning, the site visitor clicked on the ad to go to your website. So, if your ad is shown 100,000 times in a month, then it would be fair to expect 2,000 visits to your website.

This does not necessarily mean that the person will be a customer, though; at this point, it's up to your website to close the sale. It's worth noting that, if a reasonable number of your new site visitors did not complete the transaction, then your ad may have been misleading, or worse, your website may not be doing a very good job of leading your customer into a purchase (a slow site, or a site that is difficult to navigate, is the most common culprit, but that's a discussion for another article).

To determine an average number of visitors that turn in to customers, you need to compare several marketing campaigns. This is important for a new website; not only will it give you a guide on how much of a return to expect on future campaigns, but it can quickly alert you to any problem with your new website. It's better to lose $100 in your first month to find out that there's a problem with your site, than to struggle for a year just to find out that an error was making you lose customers!

For the sake of an example, let's assume that an average of 2% of your website traffic usually becomes a customer, and that you're considering a website marketing campaign that promises 100,000 impressions for $30. Of those 100,000 impressions, you should expect 2,000 visits to your site; then, you should expect 40 of them to turn in to a customer. To justify the $30 expense, you should expect to sell at least $300 to these 40 people ($7.50 each).

Email Marketing

There are two types of email marketing; opt-in, and unsolicited.

The term "spam" refers to unsolicited emails; meaning, the list agency picked up the email address from an unknown source (usually from a forwarded email), and you have no idea whether they would be interested in your product, or if it's even a real email address. These campaigns are usually very cheap, but have a terrible return.

On average, you can rent a spam (un-targeted) list for about $0.001 per name (100,000 for $100). But, you can only expect about a 0.001% response, so of those 100,000 names, only expect 100 of them to follow the link in the email to your website.

Following the same example as before, let's assume that an average of 2% of your website traffic usually becomes a customer. Of the 100 responders, you would only expect 2 of them to turn in to a customer. With the goal of a 900% gross return, to justify the $1,000 expense, you should expect to sell at least $1,000 to these 2 people ($500 each).

As a further negative, many internet providers and website hosts frown heavily on sending spam, and it can get your IP address blacklisted with antispam software.

An opt-in list (aka, permission-based), though, is very different. This is a list where the owner of the website has specifically given permission to receive emails, and in most cases, have specified the type of products or services for which they want to be contacted. If you've ever signed in to an online account, or downloaded a program, and checked a box that says something like "please notify me regarding [some product]", then you have opted in to a list. Because this list is much more targeted, it is more expensive, but should have a better return.

An opt-in list can cost anywhere from $0.01 to $1 per name (100,000 for $1,000), but can have a response rate of up to 25%! Meaning, of the 100,000 recipients, you can hope to have 25,000 visit your website. If 2% of your traffic becomes a customer, then with the goal of a 900% gross return, to justify the $1,000 expense you need to sell at least $10,000 to 500 people ($20 each).

Relationship Marketing

In the "real world", relationship marketing refers to meeting potential customers in person, like at an Expo, or even just handing out business cards at an event. Online, it is similar, but a little different.

Online, relationship marketing refers to meeting people online, with the goal of discussing your product or service, with the hopes that your discussions will encourage the other participants to become customers, or possibly refer others to you.

Be forewarned, though, that there is a fine line between relationship marketing and spamming! Spamming a message board would be posting something that is nothing more than an ad. These are usually very frowned upon by both the site owners and the readers, and do little (or nothing) to increase your business.

An example of a good relationship marketing campaign might be a licensed contractor visiting the "Home Repair & Decorating" message board on this website daily, to answer home repair questions and offer advice to the readers. He might participate in other discussions, but would usually sign each of his posts with something like John Doe, licensed contractor so that everyone knows who he is and remembers him. In many cases, people to whom he has offered advice may become a client, and after he participates in other friendly discussions, the other regulars of the message board that respect his opinion might begin to refer new visitors to him.

This type of marketing campaign doesn't usually cost anything (although some message boards to have monthly or annual costs), and can have a very high return. It usually takes quite a bit of time (usually a few months) before you begin to see a return, but the results can be long lasting, so it's definitely worthwhile. Our advice is to spend an hour or so each day participating in industry-specific discussions. A professional, friendly online presence can go a very long way in attracting new customers!

Contributed by: GoNC Network

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