Investment in digital media will depend on each business, on how much money they have available to designate to these kinds of campaigns, and the objective that they seek to achieve.
If you are just getting started with your online store and your brand is new, before focusing on generating sales, you should prioritize the relationship with your potential customers by getting them to visit your website and to get to know you.
On the other hand, if you manage a brand that is already installed in the market, your objective will be to turn the traffic that you generate on your site into sales and to obtain a good return on investment.
Based on what your objective is, you will think about how to distribute your investment among these three bullets:
✅Attracting new visitors to your website and social media
✅Building a relationship between the customers and your brand
✅Generating sales from the people that visit your site
If your focus is on the relationship with your potential customers, the percentage of the investment designated to that will be greater in proportion to what is designated to generate sales. If, on the other hand, you are already in a position with your store in which you can focus on sales, the proportion will be the other way around.
Once the issue of the objective is clear, it’s best to take a look at the store’s turnover.
For Adtomic campaigns, we tend to calculate the necessary investment to be around 5% of your total sales. This will depend on many factors, which is why this calculation isn’t exact and will be different for each client, according to their characteristics.
When it’s time to begin using our tool, it’s ideal for you to speak with your executive to coordinate an investment package that will be best for you.
Is investing more always better? 🤨
No! It’s extremely important to us that the investment be justified by the results. Be it for the potential to increase sales or for the possibility to continue growing your brand recognition, whenever we think about increasing the investment, there has to be a reason that validates such a decision. Your money is important, and we aren’t interested in wasting it!
That’s why, concerning performance, it’s essential that you be able to calculate an objective return on investment (ROAS). This implies considering the percentage of your profit that you’re willing to invest in digital marketing. The ROAS calculation is income/investment x 100.
👉By having a defined percentage of Return on Investment that makes you feel comfortable and allows you to balance the books will be much easier to esteem the investment.
What happens when the investment increases is that the ROAS decreases (because it’s one of the parts of the circle). So, there comes a point where continually increasing the investment won’t allow us to reach our ROAS objective.
If we increase it, it will be most probable that sales will grow, but maybe the profit margin will shrink. That’s why one must decide if the focus will be placed on selling more quantity or in optimizing the ROAS.
Is it normal to get started with a lower investment than is expected? 💰
In order to find the balance between investment and the ROAS, it’s best to run for the first month with a certain investment and to see over time, according to the results, if it’s necessary that you increase it. At the beginning, we recommend setting a maximum investment in order to spend a little more in case we see that the results allow us to do so.
Moreover, the first month on our platform is the warm-up. This implies that we will probably not obtain the best results during this period. Our numbers need to learn and acquire data in order to later optimize campaigns. Along those lines, it’s recommendable to begin with a lower investment in order to later increase it when the platform has its cogs nice and greased. We leave you with this article in which we tell you what the warm-up period is about.