Friday, 20 November 2009

Objectives: The web marketing process (part 2)

This article is part 2 of a series. You'll find part one here.

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The key to success in web marketing is the objectives you set. As the saying goes, if you set out to achieve nothing, you'll probably succeed. I'm the sort of person who considers such sentiments to be nice in a theoretical way, but of little practical use. Especially when I'm busy.

Fortunately, in the web marketing process there are concrete benefits to be had from your objectives. The main benefit is that you'll make more money. Here's why...
  • You know exactly how many visitors you need to get to your site to reach your profit target
  • You know how much money you can invest to reach your profit target
  • If the amount you can invest won't deliver your target, you don't spend
  • If the amount you can invest delivers more than your target, you can reduce the investment (e.g. if it's needed for other things)
  • As your ratios improve (over time) you'll develop the ability to determine, in advance, whether or not any given paid advertising is likely to return a profit
  • You find out where you need to promote to best reach your target audience (get more from every dollar you invest)
I suppose a cynical person may feel it all sounds too good to be true. Let's get started, then you can see for yourself that setting objectives within the web marketing process is both useful and practical.

Your Campaign Budget:

First things first – how much money are you prepared to invest in your next marketing campaign?

If you're brand new to marketing, you may not be sure what you're willing to invest. In some ways, it doesn't really matter for your first campaign, as long as you can afford to lose the money.

The plain fact is, when a person starts out in web marketing, there's a good chance the campaign will make a loss. Consider any such loss to be an investment in your web marketing education.

For now, it's far more important that you pick an amount you can afford. Don't waste time trying to figure out what the 'correct' amount to invest might be.

Your Desired ROI (return on investment):

I take the view that marketing campaigns are investments. I expect them to deliver a return, and I like to set a specific target ROI. Here's how that looks using example data...
Campign budget: £1,000
Desired ROI: 10%
Target revenue: £1,100
As you can see, in this example I'm aiming to turn £1,000 into £1,100. Most of my campaigns run for 30 days, so that's 10% per month – a lot better than the return offered by my bank.

Average Income per Sale:

The average income per sale is the amount of money you expect to earn, on average, from each product sold during the campaign.

If possible, use your company's net profit on the product being sold. This net profit figure should exclude the cost of the campaign itself. Why? Because that's already covered by the campaign budget.

Let's Recap:
  • You have a budget of X dollars
  • You're looking to generate a return on that budget of Y percent
  • You expect to earn Z dollars per sale
With these 3 figures, you can work out everything you need to know about your campaign. In particular, you can find out how many visitors you need to visit your web site to achieve the target ROI.

Sound good? In the next instalment, we'll take a look at how to do just that.

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