A common question from prospective clients or even friends is, “how much should we be spending on Internet Marketing. Is there a benchmark?” That  question is best answered individually for each client, but there are some general guidelines to what other companies spend.

Businesses of every size often budget their marketing dollars on what they can afford, based on profitability. We advocate a ROI calculation and wise investment to meet the company’s growth goals. As the goals change, the % of revenue spent on marketing will move too.

If you take a look at “industry averages” here is what typical companies spend:

Of course, no businesses is “average” so consider the following points affect the percentage of your revenue that should be spent on advertising.

1. What business are you in?

Consumer retail companies will always spend substantially more on marketing than a B2B manufacturing company. Advertising, even Internet marketing, can be expensive but it is absolutely essential for most retail and local service provider companies. 15% per year is common for these businesses; particularly if they are new to the area of have new products they are selling. As your business becomes established, this percentage can be gradually reduced to find the “sweet spot” of marketing expense vs. profit.

B2B advertising often requires more targeting than consumer advertising. Television and most radio are usually not appropriate for a medium sized B2B manufacturing or distribution company as those mediums require mass appeal to stay on the air. Of course, Internet marketing will give “by far” the highest ROI, but these companies also need to use telephone lead generation, industry-specific journal advertising, highly targeted direct mail, catalogs, and trade shows. It’s interesting to note that 74% of the money our clients move from other advertising into Internet Marketing comes from Trade Shows. 5% to 7% is a good benchmark of revenue to marketing investment for the average B2B company.

Its vital is to test, measure and analyze the best percentage for YOUR company. If you’re spending 5% now and find that doubling marketing to 10% percent increases your profit by more than you have invested, you’ve come out ahead. Measure the ROI for each marketing investment and you will eventually know where your sweet spot is for % marketing to revenue.

2. How important is “location” to your business?
It’s tried and true you either invest in “location” to drive traffic to your business or in “marketing” to get customers in the door. Just check out mall rents to see the result of this theory. A known store in a busy mall may spend no more than 1 to 5 percent of its revenue on advertising, while it’s sister store in remote strip mall may spend 10 to 15 percent.

3. What is your competition up to?

If your main competitor is ranked #1 in Google for every search term that would bring you profitable customers, you can’t afford to let them steal those potential customers that could be yours. If you’re just entering a market and want to take business away from an established company, you’ll need to spend a higher percentage. Many times the older companies have become complacent. We see it on the Web all the time, when we ask potential clients who are their major competitors, they have no idea who is stealing business from them online.

If you are the “Big Dog” in your market and have been a leader for many years, a little research may show that new competitors are using extensive marketing campaigns, particularly Internet Marketing. You may have to re-look at your marketing investment.

4. What can your business afford?

Cash is cash, and in the current economic downturn (I’m being kind here in Dec 2008) staying in business means having cash to meet payroll, no matter what your marketing needs. But, that can only work for the short term. Marketing has to continue in every viable business.

Your business plan and marketing plan should have some discussion of the “minimum marketing % of revenue” that starts to drive the business into the death spiral. Most companies start the year with optimistic budgets and then cut marketing mid-year if they are not making the sales. How many know what the lower limit really is? Do you?

5. What does the future hold?

Unlike radio, Television, and print advertising, much of Internet Marketing requires long range planning and investment. In more traditional mass marketing, you can whip up a great TV add in a few weeks and air it at your favorite sporting event to drive customers to your business. Google paid ads work much the same way, they are instant, targeted, and you can adjust the spending as you need the business.

Other parts of Internet Marketing like Search Engine Optimization for high Google, Yahoo, and MSN rankings require long range planning and month after month work to reach and maintain the high first page rankings. Another similar area is Online Social Medial Marketing where you have to invest time and money now to have a position established when you need to get your message out through these new marketing medium.

Marketing is moving “online” at a rapid pace now. If you wait to invest while your competitors are moving out to get high Google rankings, establish networks on LinkedIn, and optimizing their online paid advertising (pay-per-click) campaigns, you will be left in the virtual dust. If companies are averaging 15 % of their marketing budgets to Internet Marketing now, what do you think it will be next year, in 3 years, in 2018? The longer you wait, the higher the online hill will be and the more expensive it will be to catch your competition.

a

How Much Should Your Company Spend on Internet Marketing?

They also usually have a small bag of tricks to break out so creativity is minimal. Getting noticed by your customers these days (our definition of marketing) absolutely requires creativity because of all the competition for peoples’ attention.

Pay per click (or PPC) marketing

Running a campaign for any local or regional business is a no-brainer because you can pick exactly what keywords you want to bid on (e.g. contstruction equipment chicago), and you can bid so only people in geographic areas can see your ad (e.g. “construction equipment” but only for people in the Chicago metro area, as determined by google’s IP tracking. This usually has a legitimate setup fee if your company is doing a seriously good job on it because it is not as easy as google makes it look and if done poorly can cost you 2-5x more in ad costs than it should. There is also a monthly management fee as they knock out underpeforming keywords, test new ad copy, etc - it is (or should be) a constantly changing program.

If you’re not doing PPC, start it today… I’m serious. Quit reading this, go start it up, and come back because the rest of the article rocks.

What about SEO?

Search engine optimization is all the rage these days, which involves getting a site ranked in the regular, unpaid section of search engines. This “free traffic” can have a tremendous ROI for obvious reasons, but does involve some cost to get there. SEO typically has 2 components.

1. onpage optimization where we make sure search engines can tell your site is about what you think it is. Search engines decide this based on extensive user studies so you’re really benefiting your visitor by having this done for your site. This is more complicated than most local designers or IT guys think and the information on the web is often outdated - even 1 year ago could be outdated, and there is so much speculation as to what actually matters. You need someone who does this all day and has a track record of making companies filthy, stinking, rich.
2. offpage optimization, where we “make your site more popular” in the eyes of search engines by getting other sites in your relative market and a few outside, to link to your website. This is a time-intensive, confusing, and often frustrating aspect to an Internet Marketing project, so link building typically is very expensive. You can’t usually trust it to overseas (Indian) providers unless you want other sites in your market incessantly spammed and ticked off at you.

To be honest, if you rent construction equipment in Charleston, there are probably very few competitors, so heavy-duty linkbuilding is unnecessary, but what if you have a very competitive local market like “Commercial Real Estate” or “Commercial Banking” but aren’t at the point where a $2k/month link building project is something you’re willing to stomach?

A Great Idea, Even Though It’s Not Real

The following video received well over 500k visitors in a couple days from Youtube. IT IS NOT REAL, but it brings up an amazing point about internet marketing.

and now check out the site http://www.jonesbigasstruckrentalandstorage.com/. These guys really committed to the joke, down to the last detail. Phone number is from the southside, web company is, too. Even the building is accurate.

How This Guy Could Rank #1 in Google By The End of the Month

Pretty funny in our opinion… If you’re saying, “Matt, so what? You just said this isn’t a real business, and why would Youtube help me anyway?”

You would be right - most people aren’t checking Youtube for how to find a storage facility, commercial banker, etc.

But tons of websites and bloggers are watching Youtube. This video made it to the first page, so it will probably end up with millions of views. Better yet, you have all kinds of people talking about it on the web already trying to figure out if it’s real or not.

The key is they gave a web address in the video, and all these bloggers and websites are linking to the site.

If this comedian who created the video just optimized his site for the phrase “storage chicago” and a few related ones, his site will get enough links so search engines like Google, Yahoo, and MSN will almost assuredly rank him on their first page if not #1 overall for those terms….

Even though this isn’t a real business.

Crazy, I know but how else is a search engine supposed to know what is the best company? They do it by relevance and popularity.

Takeaway for your business

I understand many markets are too stodgy to have a guy talking about being drunk, smoking weed, etc but I’m saying creative thinking with viral content can get you serious traction on the web. Search engines are moving even more toward mixing in user’s actual results with how sites rank, too. So, this method of marketing could be even more important as the next few years play out.

How to Implement

First, I recommend getting a company on your team who is actually good at this. Chances are if you produce it internally, it will be awful (see local television commercials) unless you have the funniest or most creative people in the universe in-house. I wouldn’t even include yourselves in the creative process - just farm out everything but giving the okay on the concept and release.

If you find some good local talent (preferably nobody over 35 yrs old - the kids innately understand this media without being patronizing or obvious) it could run 1/3 or less the cost of a linkbuilding campaign. Granted, it’s a bit more of a crapshoot, but have you seen the costs of print ads these days? You don’t even know if the ad or their traffic will convert into sales unless you have considerable experience with media buys, either.

Hope this spurred on your creative juices. Btw, if you are in the Chicago area, you can go see Toby perform his comedy live. Oh, at btw - while I wrote this little article, their video picked up another 45,000 views on Youtube. If you want to learn more about social media, give us a shout.

a

How to Do B2B Internet Marketing for Local Companies

An illustration is let’s say that bluewidgets.com gets 10,000 visitors a month at the eventual cost of $1 per and converts 5% to leads (500 leads). Out of those leads, 10 percent buy their widget (50). The cost per sale is $200.

bluewidgets uses online sales assessments or tests to analyze their sales team and finds one member of the team isn’t suited for the job but would rather serve the company better in another position. They then use the same sales test to find a new team member who is a perfect match.  The combination of losing an underperformer and gaining a superior performer bumps the closing rate to 15%

The cost per sale drops all the way to $133.33 - a 33% decrease of cost for every sale coming in through that online channel.

Your online marketing team could and should be able to squeeze the maximum profitability from your web page, but incredible boost in productivity and profitability can be made by getting the right players in the game at the right position.

a

The Power of Sales Tests and Assessments

I’m talking about multi-language translation issues for companies operating in a multitude of languages. Keeping content relevant to all the cultures, while keeping it fresh can be an absolute nightmare. Then you have the issues of keeping all these employees trained up on the system, which even with the advent of tools like gotowebinar, can take a toll on training budgets.

Problems with Researching WCM Software

Fortunately there are some excellent Enterprise WCM products out there. Often though, the person or team tapped to do the research is carrying on all their other daily responsibilities. Selecting a piece of software which will profoundly impact a 10,000 employee global organization and cost in the low 6 figures can paralyze even the best of us.

The solution we like is to leverage other people’s knowledge and not recreate the wheel. Forrester reports are some heavy b2b comparision studies which typically cost around $1000. Their value in just time saved going through demos from underqualified vendors are worth the cost in itself, but they also help b2b companies be better shoppers of enterprise web content management systems - how much could choosing the right (or wrong) WCM impact your company financially over the next 5 years?

Forrester Enterprise-level WCM Report for Free

The best part is we came across Web Content Management Review .com, which must have struck a deal with Forrester to offer this report for free. This isn’t one of those “valued at $995″ bonuses you see on late night TV - they really sell these reports (and people buy them) at this price. The WCM vendor comparison study can be such a valuable resource for clients. Personally I like it because now I can pass clients off to a trusted research document. Saves them time, saves me time because now we can mess around less with the guts of a site and go straight to the marketing, and everyone is happy in the end.

a

How to Research Enterprise Level Web Content Management Systems

Why is this so important? The keyword represents much more than many b2b marketers realize - it is the very intent behind why the visitor is on our site in the first place.

After discussing with a few b2b marketers, I realized there are a growing number of sites which also refer visitors to products they use, typically referred to as partners. Some of these are less sophisticated transactions where it may not be worth collecting the lead and guiding them through the sale manually. (e.g. for a $30 commission off referring a new WebEx customer). In these cases, the relationship is often brokered by affiliate networks such as Commission Junction or others who manage the transaction and payments via special tracking links which credit us with referred traffic.

If we are collecting our own leads, it’s easy to place the conversion codes on our page, and a partner is often willing to place our codes on their thank you page if we’re referring significant business. What if the partner does massive volume and requires some business history before they’ll place the tracking pixel? What to do then?

If you are familiar with affiliate networks, you know they have subid tracking, which means you may append a code to the end of the tracking link and it will show up next to your transaction next time you refer a lead or sale. This can be matched back to keywords to determine profitability. However, this takes massive amounts of time and work to manually cobble this information together or create a custom system for tracking. Companies like Google have serious predjudices against affiliate relationships for some oddly hypocritical reason (since they own an affiliate network themselves) so don’t be looking for this feature anytime in the near future.

So what is a company to do, that is growing into the expanding but still relatively untapped pay-for-performance realm?

The solution we found is optimizemysite. Released by Jeremy Palmer, it tracks any number of projects and does so with significant time and cost savings. I’ll give you an example of how it helped us.

Our company needed a solution to track a growing number of projects based on affiliate relationships. Some merchants didn’t allow us to place ppc engine’s tracking pixels. Even if they did, the data was sometimes unreliable. We had a tracking solution in mind, but no way could we put our one coder on that job. Then we learned about optimizemysite.

The benefit to our company came from all the small projects we overlooked because we were too busy with larger ones. One example is a small campaign that was roughly breaking even on a $2k monthly paid search spend after 8 months. Tracking pixels consistently overstated results because of a quirk with our merchant’s cart and we didn’t see enough potential to have an employee do granular tracking by hand. We set Optimizemysite to work and within 2 months, we turned a breakeven campaign into one producing a 50% ROI every month. Cherry on top was his optimization cost us almost nothing in terms of labor.

Hopefully this mini-case study is of encouragement to you. If your b2b information site has been looking for ways to increase revenue and directly-brokered on-site ads are not selling as well as you hoped, consider the realm of b2b affiliate peformance marketing, and try optimizemysite. From what I hear they will be adding nearly full automation in the gathering of reports, so get in on what is still the relative “ground floor” of this software before the price blows up.

a

Tracking on a Keyword Level for B2B Performance-Based Marketing

MSN’s search reach is only about 10% of the US market. Plus, more sophisticated searchers like most of your clients tend to use Google. Add in that MSN’s web interface is maddening to use at times, and that worked out that most companies skipped MSN and their 6-7% market share.

However, for that same reason, b2b organizations should absolutely be marketing on adcenter. Why? Less competition means lower prices and in some cases, you could be the only advertiser. Pick your pages and keywords correctly and you could get the equivalent of a full SEO program’s results in MSN for a fraction of the cost.

If you need someone to help save your ailing pay per click campaign or get you started, give us a call. About 90% of companies using pay per click are losing money on it. Our clients are in the other 10%. Enough said. 

a

MSN Adcenter Campaign Management Tool Beta Released

If either of our companies are going to be truly effective, we have to be ruthless that people are getting only what they give us full permission to send them. We intend to clean up our act among all our clients and apply these practices to all future projects.

• There is a strong business case that we are just making people angry when we send them something they didn’t ask for.
• When our own website visitors opted-in to our email autoresponder, we have seen nearly a 100% conversion to personally contacting us.

We will be putting attention on getting new leads to double-opt-in with

• an irresistible offer
• and compelling message.

If they don’t double-opt-in, too bad for them but we won’t be sending them info to jam up their inbox with what could be easily called spam.

Fortunately in the B2B community, it is accepted practice to request phone numbers on lead forms so we can follow up with a phone call but that’s the end if there is no double-opt-in. They would then be scrubbed from our lists.

a

Keeping B2B Clients out of "Email Spammer Prison"

Mindvalley labs, creator of Underground Keywords (also known as Keyword Butler) is their most recent addition to the keyword community. They had quite large shoes to fill given Google’s recent addition of quantitative searches to their (free) keyword tool, so could Underground Keywords prove it’s value?

Scam Factor?

It’s funny - this is actually a really great tool and something that many Internet marketers and ad agencies have had coders produce similar versions of in-house. However, the product is promoted via Internet Marketing circles so it looks like a rip-off. You know the tell-tale signs, right? Long copy sales letter, wild, attention-grabbing headline (Russian Mafia? C’mon) and the list goes on.

What I want to tell Mindvalley is that they don’t have to stoop to such depths to sell a product. You know what their reply would be? “You’re right - we don’t.”

Mindvalley sells this same product under a couple different brands in order to attract different customers. The tool is the same - just the marketing tactics to reach their target market are different. Somehow you and I both ended up hearing about Underground Keywords so I’m not sure what that says about us but no matter. The tool could be rebranded as something that appeals to the stuffiest b2b marketing consultant (like me) and I would still buy it.

Case Studies: What does Underground Keywords Deliver?

We tested Underground Keywords in many different scenarios but I’ll tell you about the one you would probably care about first

Case Study #1 - Retail product test in narrow niche

We have been working with a particular retailer and have what we would call a “mature campaign”, in that we now only search analytics for new keywords every few months. We’ve pretty much mined every keyword out of this market besides the really long-tail terms that might bring a click every few months.

So for fun we ran Underground Keywords on this campaign…

It returned over 117 negative keywords for another brand sharing that name that was in a completely different field. We were aware of this field but only had about 20 negative keywords for this.

Why is this so important? In Google Adwords and other PPC platforms, your clickthrough rate is a major determining factor in your ad price (even with the addition of quality scoring). By removing our ads from displaying on all these irrelevant searches, we vastly improved our CTR, allowing our ads to display for less at the same ad position (better profits) or show higher on the page for the same cost (more sales volume). Either way, we win.

We didn’t get a slew of new keywords but as we mentioned, we’ve figured out about every permutation of how to ask for it. What we hadn’t considered was how NOT to ask for it.

Case Study #2 - Wide retail market niche

We picked a wide market in the diet field (can’t tell you since we’re entering that one - sorry). Google adwords keyword tool returned 144 keywords with that in the root. We love google’s keyword tool. Underground keywords returned 322 and these aren’t junk keywords - they are ones where we went, “Wow, I wouldn’t have thought of that.”

Basically this tool helps shortcut the learning process of becoming an expert in the field. It’s essentially a supercharged keyword scraper and while you can probably code something similar yourself, I can’t even imagine how long it would take or how much it would cost. Plus, whenever search engines block scrapers (as they are prone to doing), we can just let the maker of Underground Keywords take care of it. That leaves more time for us on campaigns.

Underground Keywords vs Wordtracker

At only $97/yr it stands about 1/3 the price of wordtracker. Another advantage over Wordtracker is that Underground Keywords pulls its data from more than just Dogpile and other minor metacrawlers. WT’s searches are estimated from slightly over 1% of overall search and the people using those engines are not what I would consider to be a representative slice of the overall population on the web

Bottom Line about Underground Keywords

When we consider how much extra revenue can be brought in with such little incremental effort, we can’t help but give Underground Keywords a definite thumbs-up for anyone from a budding independent Internet Marketer to a full-service advertising agency.

a

Underground Keywords Review - Scam or Keyword Weapon?

a

How Qualified is Your SEO Company

Plus, it’s a nice opportunity for us to win some swag in the process.

Contest #1 - Affiliate Confession

The first contest comes from upstart affiliate confession, whose blog contains great nuggets about handling relations from the affiliate side of transactions. What many b2b companies don’t realize is that affiliate offers can be a way to monetize commercial or retail traffic that may end up on their site and offset their otherwise wasted ad costs

For example, a company who produces Asian and vietnamese wholesale products bids on keywords that also could bring them homeowners looking to buy just one.

What do you do with all those irrelevant leads? How about at the contact form, segregate them - if they match your lead scoring criteria, work on the relationship. If they don’t though, send them an autoresponder series of related retailers of whom you are an affiliate - and use these costs to offset your ad costs. Whoknows, you may find this pays well enough to split out your own site just doing this.

Almost forgot - this second contest at affiliate confession is cosponsored by vat19.com and ends soon so get those entries in!

Contest #2 CDF Networks

Chad over at CDF Networks who worked out a nice little contest to promote his blog along with Market Leverage, one of the strong up-and-coming networks in 2008.

Chad’s blog is one of the top ones we’ve seen in the pay-for-performance marketing space and eschews the typical earnings claims and self-aggrandizing comments seen from affiliate marketers (work on commission basis from large web companies to increase sales & leads) and instead reveals tactics and methodologies to increase leads and sales.

Definitely worth putting in your RSS if you either work as a pay-for-performance marketer or if your company is considering employing an affiliate program to boost revenue.

Contest #3 - Jonathan Volk

Last but certainly not least is super affiliate Jonathan Volk’s contest with Market Leverage. His age by no means reflects his experience and overall knowledge when it comes to pay per click and pay for performance marketing. Besides giving back to the affiliate community via his blog, which keeps marketers up to date on the latest trends, he also engages in contests within the industry to keep it light (SEO battle vs. Jon Fisher & Aojon.com)

a

MarketLeverage Affiliate Blog Contests