Advertising online can be a highly effective way to connect to prospects who are ready to buy right now, or very soon. You can connect directly with the precise kind of person who needs what you’re selling and is ready to buy now, which helps stretch your marketing dollars further.
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However, if you’re new to digital advertising, it can be difficult to keep digital ad spending under control. With so many options and pricing models at play, complexity can drive up your ad costs and result in a nasty financial surprise when the bill comes due.
Fortunately, there are practical and straightforward things you can do to manage your budget. Use the following four strategies to lower the costs of your online ads.
Understand the Pricing Model for Your Paid Ads
First and foremost, it’s crucial to understand exactly how you’re being charged, and when the obligation to pay is triggered.
Let’s take AdWords as an example. Google’s program offers two different ad opportunities:
- Search ads: Your ad shows up in search results pages on Google, matched by the search phrase the user typed into the search engine, which you selected when you created your campaign
- Display network ads: Your ad is displayed on third-party sites, matched by relevance to the page content
Google search ads, as with many other similarly structured ad programs, is based on a pay-per-click approach that uses the CPC model. CPC stands for “cost per click.” Each time a web user clicks on your ad, you’ll get charged a small amount — hence, cost (of the ad) per (each) click.
In Google’s program, both your CPC and your ad position (i.e., how prominent your ad’s display position is) depend on a number of factors:
- How competitive the keywords are (that is, how many other people are trying to buy ads based on those search phrases)
- Your Quality Score (more on that below)
- Other factors including geographic location and industry
Every advertiser who uses Google’s search program is assigned a Quality Score — a rating from one to ten that’s designed to reflect the quality of your ads. The higher your QS, the lower your ad cost. So, if your QS is 9, you’ll pay less than another advertiser with a QS of 4 for the same ad, with all other factors being equal.
Google’s display network, on the other hand, uses three different cost models:
- CPC pricing: You pay when someone clicks on your ad; best for campaigns designed to drive users to your own website
- CPM pricing (cost-per-mille [thousand] impressions): You pay for each group of 1,000 views; best for campaigns designed to increase brand awareness
- CPA pricing (cost-per-acquisition, or specific transaction): You set a target CPA price, then when your ad leads to a specific conversion (transaction, or acquisition), you pay that cost; best for campaigns designed to drive sales
The average CPC across all niches or industries is $2.32 for search ads and $0.58 for ads on the display network. The lowest average search CPC per industry is $0.19 (Dating and Personals), while the highest is $5.88 (Legal).
So you can see there is a wide range of potential CPC costs, even on an averaged basis. As a general rule, the most expensive the product (or service) being sold in the ad, the more expensive the ad itself. Using the right kind of network and type of ad program for your ad campaign goals will help you keep your total advertising expenditures down.
Raise Your Quality Score
The Quality Score is a Google metric assigned to each advertiser, but the principles behind this concept will help you no matter where you’re running your ads. The QS is based on your click-through rate (CTR) – the percentage of people viewing your ad who then go on to click on it. The higher your CTR, the higher your QS will be, and hence the lower your ad cost.
There are tons of articles with advice on how to improve your CTR out there on the web. Some are current and some are outdated, but at its core, your CTR is about two things:
- The ad itself: How well it’s targeted to users, whether it’s compelling and well written; the degree to which it evokes an emotional response; and
- How well the ad is targeted to the audience: Using well-researched keywords and ad copy that’s aligned tightly to the keyword or search phrase helps improve targeting, as does understanding the demographics and psychographics of your intended audience.
Additionally, your ad’s call to action must be tightly aligned with all other campaign elements, including your goals, the ad’s creative elements (copy and images), and the audience you’re targeting. “Buy now” doesn’t resonate with someone who isn’t ready to buy. They’re looking for information, so something along the lines of “get your free buyer’s guide” or the like works better.
When your ad isn’t well aligned with other campaign elements, your ad will earn a low CTR, which will decrease your QS and increase your expense over the long run.
Improve Your Ad Scheduling
Another way to lower your digital ad costs is to control the scheduling of your ads. Dayparting (or ad scheduling) enables you to specify the specific stretches of time on a daily basis when your ads get displayed. It’s a great strategy, especially for small businesses with physical locations and limited hours of operation.
For example, a pizza parlor that opens at 4 PM each day may not see a lot of benefit in ads that run around lunch time or earlier. Or if your goal is to increase shopping, dining or foot traffic on the weekends, when the area around your store is busiest, you can restrict ads to run only on the weekends.
Restricting your ad to display only during the times when your “hottest” prospects will see it and can act on it helps lower your cost either directly (for example, in a CPA structured ad purchase) or indirectly (by increasing your QS, say).
Many ad management platforms and networks, such as AdStage, as well as individual networks such as Facebook and Google AdWords, will let you schedule your ads accordingly.
Let Less Expensive Forms of Marketing Pick up the Slack
It may seem odd to think about other kinds of marketing strategies in terms of reducing your digital ad budget, but digital advertising should be just one channel your company uses to drive users and makes sales online.
In particular, blogging is still an effective way to increase brand awareness, provide valuable resources to prospective customers, and build trust with your audience. All of these enhanced intangibles cumulatively help increase sales and revenue.
For example, business sites that include a blog enjoy over four hundred percent more indexed pages on Google and other search engines. That’s a whole lot more opportunity to reach and connect with your ideal prospects. What’s more, for B2B businesses, blogging results in 67 percent more leads.
If you’re already blogging regularly about topics that are relevant and interesting to your audience, try expanding to other formats and networks, such as YouTube videos or LinkedIn. And consider investing more in your email marketing program (or starting one if you haven’t already). Email marketing boasts one of the most impressive ROIs of all forms of digital marketing: For each dollar you put into email marketing, you can expect an average of $38 in return.
Finally, don’t forget offline advertising, which is still effective for many industries and locations. While television ad rates continue to fall, it’s a good time to negotiate with sales agents for lower costs or more flexible terms. And radio advertising carries a respectable ROI, returning $12 in sales for every dollar spent.
As always, it’s important to take a thoughtful, strategic approach to any digital advertising campaign. Take care to research your keywords and use the ones that match closely with the intention of search users, as well as how far along the buyer’s journey they’ve progressed.
Craft your ad copy carefully. If the creative elements aren’t your strong suit, consider outsourcing the copy and art, if applicable. Schedule and target your ad as precisely as possible, and make sure every aspect of the campaign aligns with the other elements (i.e., match the ad’s message to user intent to the ad’s call to action and the landing page you send this traffic to, once they’ve clicked on your ad).
Above all, be prepared to experiment a bit. Run the same campaign but change a single element to see if that results in a higher CTR or conversion rate. Digital advertising can be highly effective for small brands, as long as they’re willing to do the work and patiently refine their campaigns for optimal performance.