eCommerce Marketing Costs: Which Channels to Prioritize

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No one wants to be surprised by the cost of eCommerce marketing.

But with so much to consider, how do you know you’re paying a reasonable amount? After all, there are multiple channels to engage your audience, and tons of strategies you could do it with.

While the actual cost depends on a handful of variables, it’s not hard to get a ballpark figure if you know where to look. These are the critical pieces to consider when looking at eCommerce marketing costs.

The Top eCommerce Marketing Costs and Which Matter For Your Brand

While you can align your budget in any way that benefits your business, it's important to use the specific channels that lend to higher ROIs for your niche. For example, spending your social budget on LinkedIn doesn't work as well for eCommerce businesses since most consumers are on sites like Facebook and Instagram.

The main questions you'll want to answer, before deciding on where to spend your budget are:

  • Where do our customers congregate?
  • What are our goals?
  • How much can I spend to acquire new customers?

If you can answer these three questions, you'll gain insights into where and how to best spend your marketing budget. Just be sure to test your marketing efforts before deciding whether to move your budget to a different approach. Too often do companies prematurely shift their spending, leading to inadequate data for determining whether a channel is worth investing in.

This list of marketing channels will help you decide where and how to spend your marketing budget so that you can earn the highest ROI for your company.

Your Overall Marketing Budget

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According to the U.S. Small Business Administration, companies should allocate 7-8% of their gross revenue towards marketing and advertising. This comes out to an average of 10-12% of your net revenue. It's not unheard of for companies to allocate 40% of their total budget to marketing, but a majority are closer to the 10% mark.

Since everything is flexible, you can adjust these numbers as necessary. If you choose to aggressively market, in an effort to increase brand awareness, you can allocate additional funds to the cause. Similarly, if you're looking for consistent growth, you can find the minimum amount necessary to see an upward trend in your marketing numbers, and then adjust from there.

How you break up your marketing budget depends completely on goals and niche, but it's important to differentiate how each channel can return your investment. Acquisition channels like PPC and organic marketing will generally have higher costs than email marketing or organic. This is because each name added your list has a high potential value over the customer lifecycle.

Still, if you can't convert those acquired individuals, that money goes to waste. This is why spending money on channels like email marketing is critical to maintaining high revenue.New call-to-action

Email Marketing

There are significant variables in email marketing, but it can also be the channel that produces the highest ROI.

For instance, if you choose to create DIY campaigns, the expenses will be limited to what your platform costs, what you pay your employees for working on campaigns, and any templates you purchase. This is the most cost-effective method but doesn't necessarily return the best results.

If you're outsourcing your email marketing, you can expect price ranges starting between $300 and $600 a month. As you add elements like dynamic content, behavioral triggers, and segmentation strategies, the cost will climb.

At SmartMail, we setup and implement high converting lifecycle triggered email campaigns that commonly see 29x in ROI. While not every email will perform that high, earning these results yourself is challenging without years of experience and a dedicated team to manage the fine details.

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Before hiring an agency, ensure you know the length of the contract. Some marketing agencies will get you to sign into a long term contract. If you're not sure your budget can support a lengthy contract, consider other options.

We offer month-to-month scheduling for pay because we're confident you'll see positive results and decide to continue working with us. We don't need a long-term contract to deliver results.

Pay-Per-Click Ads

PPC ads can be extremely valuable if used correctly, but they can also take an enormous chunk out of your budget. The average PPC cost on Google is around $1. So for 1,000 visitors, you'll pay around $1,000. Many companies will spend up to 40% of their marketing budget here, and Google Ads average $9,000 to $10,000 a month for small businesses.

The benefit is that these ads target individuals that are searching for the specific products you offer. This makes the ads incredibly relevant to their search, increasing the chances you've acquired a new customer.

The problem with PPC comes from how much a keyword can cost. Companies are forced to bid for specific terms, so the price of a certain keyword can quickly climb if it's highly sought. And unfortunately, the cost of a keyword will only rise due to this competition, so you'll constantly be dedicating more of your budget just to stay on top. This also means your ROI goes down as the price goes up.

Additionally, any clicks that don't convert on your site is lost money. Whether it's an accidental click or someone content with browsing, you're paying for them to get to your site.

And finally, once the ads go away, so does the traffic. So if you see a sharp decline in sales of the advertised products, don't be surprised.

Facebook Ads

Facebook ads are similar to PPC but targeted directly to consumers who have a related interest in your product. Since users can "like" personalities, brands, and activities, it makes it easy to get the ads in front of exactly who your products are for.

The average cost for PPC on Facebook is around $0.55 per click in 2019. This is $2 less than 2018, and good news for any companies hoping to gain leads. The cost for an Impression based campaign averages $0.92 and doesn't mean your views will bring any revenue.

With Facebook, you're able to set a total budget for your campaign and adjust the parameters for the demographic you want to target. Facebook will continue to deliver your ads until your funds are depleted. You also have the option of running a continuous campaign where you assign an allotment per day, and Facebook will bill you monthly.

Facebook campaigns are also designed for a specific objective. This can be traffic, awareness, or conversions. As we alluded to earlier, this will affect the cost of your campaign, but you can see price estimates prior to executing.

Because of the adjustable budgeting, this can be a great way to run campaigns in conjunction with special promotions to quickly increase sales and boost awareness.

Organic Marketing

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Marketing Sherpa led a study, alongside Magento and eBay, that found eCommerce brands spend between 10-24% of their budget on search engine optimization (SEO).

Similar to email marketing, there are a lot of variables here. For instance, if you're doing it yourself, your costs could be as limited as a content platform and someone to write for you. Since Shopify offers a blog built into your store, the only real cost is what you'll pay your team to create content.

You can also hire freelance writers for as low as $50 to $100 an article, but understand you get what you pay for. Better writers will generally charge more.

If you choose to go with an agency, prices can increase dramatically, but you'll often get a strategy, as well as content that's optimized for SEO and drives conversions. Because organic marketing agencies specialize in moving the customer along the buyer's journey, content will often be more effective than what freelancers hired for single articles can provide.

Optimization

While not a distinct channel, it is an area you should consider allocating part of your budget. While most marketing spend is focused on acquiring new customers, optimizing your site, content, and user experience is often viewed as a secondary effort.

Instead, include optimization as a priority so you can make the most of the assets you already have.

No matter how good your ads are, if the user gets to your eCommerce store and can't find what their looking for or has difficulty making a purchase, you're going to lose customers. Convenience is key here, and the only way to know is to test.

A/B testing your emails or product descriptions can lead to increased revenue without adding significant costs. Using tools like Hotjar is an excellent way to spot where users are having trouble on your page, pinpointing the areas to optimize.

You should also consider tools for your other channels. For example, some companies provide tools for developing Facebook video ads that have higher ROIs. The email marketing platform you select can also have a tremendous impact if you're using all the tools to their full extent.

Weighing the Cost of eCommerce Marketing

“He or she who can afford to spend the most to acquire a new customer, wins.” —Dan Kennedy

While there are variables to the cost of eCommerce marketing, the ultimate cost comes down your total revenue. The more you make, the more you can spend. It's a continuous cycle that drives you towards success.

We recommend starting with 8% of your gross revenue, and adjusting as you see fit. If you want quicker growth, allocate additional funds. Just be sure you don't over-extend your budget for marketing. Planned, conservative moves will lead you to consistent growth.

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