Advertising is a vital component of any business’s growth strategy, but it can be challenging to determine how much money to allocate to it. As John Wanamaker, the marketing pioneer, once said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Fortunately, modern tools like YouTube ads allow you to track your ad spend to see how it’s performing.
In this post, we’ll focus on small businesses with budgets of $10,000 to $200,000 a month, discussing how to determine your advertising budget based on the actions that will grow your business.
Decide on Your Conversion Actions
The first step in determining your advertising budget is to decide which actions people will take that will actually grow your business. What are those conversion actions that need to happen for your business to thrive? This is crucial because it’s what you’ll track to determine whether your ads are working or not.
For example, if you’re an e-commerce business, you’ll want to track how many people initiate the checkout process and how many people actually purchase your product. On the other hand, if you’re a service-based business, you might want to track how many leads or opt-ins you receive, how many webinar registrations you get, or how many booking calls you have.
Build Your Advertising Budget around Your Conversions
Once you’ve decided on your conversion actions, it’s time to build your advertising budget around them. This is where you need to consider how much each conversion action is worth to your business. For instance, you might decide that a customer is worth $300, and you’re willing to spend up to $100 to acquire that customer. Therefore, your advertising budget should be based on this calculation.
One common mistake small business owners make is focusing on the wrong metrics. For example, they might want to create brand awareness, but they don’t have a clear goal in mind beyond that. Instead, you need to determine what you want people to do after they become aware of your brand.
Determining your advertising budget can be challenging, but it’s a crucial step in growing your business. By focusing on the right conversion actions and building your budget around them, you can ensure that you’re not wasting your advertising spend. Remember that your advertising budget should be tied to specific KPIs or actions that you want people to take. With these tips in mind, you can create a successful advertising campaign that will help your business thrive.
If you want to make money on YouTube, keep creating quality content that resonates with your viewers, and eventually, you’ll be able to turn your passion into a thriving business.
If YouTube ads is something you or your business are interested in but not sure where to take that initial first steps then you will want to check out our 2023 YouTube Incubator program.
We spend 3 days taking you from writing your video ad script, shooting your video ad, researching your perfect audience to launching your YouTube campaign.