Internet Marketing Costs (Hmmm)
Well, Sam Swenson at Blueline (now co-founder of Tricycle) never finished his blog about how much a website costs. I am really disappointed about that because I really want to know :-). I thought I would do my part in cutting through the Internet fog and give you a run-down of how much Internet marketing should cost.
Guess what?! It really isn’t going to be that conclusive, because, as you heard Sam say regarding websites, “it depends.”
Here is what I can do to help though. The type of marketing you do will make the difference. Most common is search marketing, which consists of paid search marketing and organic search engine optimization. I can’t really help you decipher what you will pay, but more how you will pay, and how to evaluate “which costs more.”
I recommend reading my really confusing look at paid search marketing to begin with :-).
Next, take a crash course on the benefits of fixed vs. variable cost structures — my very short tutorial is as follows: Fixed costs require greater risk, but after break-even have higher returns, whereas, variable costs are easier to plan for but will reduce your leverage.
Okay, so what does that have to do with search marketing? Well, organic optimization is usually a fair chunk of change (say $3-10,000), upfront or over a specified time period. It takes on more of a fixed cost structure. You pay a fee and then your watch for your ROI. Every dollar you make in product margin from organic search efforts is put toward breaking even, after you break even, every dollar you make in product margin goes in your pocket (simplified…).
Paid search marketing takes on a variable cost structure where you are paying per click, per purchase, or per conversion, etc. Under this model you will pay some of your product margin every time you convert a lead. A lot of times there is some sort of fixed monthly cost for paid search too, but you can divide that out into the field and treat it as a variable cost if you like (doesn’t change analysis a whole lot unless management fees are higher than your ad spend).
In conclusion, if you have a high risk tolerance and you like the idea of reaping rewards in the future for your efforts today organic is a good choice. If you are risk averse and you want to match your costs to your revenues paid search will suit you well. This analysis, in its simple version, ignores things like traffic quality; organic search traffic tends to be more prepared to convert. In most cases, you will want to use a little of both to “hedge” your bet :-).
