For small business owners life is not easy at all. They do not have the money to hire all the people they would need to look after various activities, such as HR and marketing. They constantly have to improvise and work harder to supplement lack of a large budget for advertising and customer loyalty programs. And, under the burden of too much stress and work, they may commit mistakes which cost them a lot.
One of the most important core activities for all businesses is advertising. And this is exactly where a lot of financial mistakes are made, both by large and small businesses. Over- or under-budgeting for advertising can cost you in terms of customers and sales on the one hand, or investing too much in strategies which do not work on the other.
In this article we will discuss the most common mistakes small businesses should avoid in preparing and monitoring their advertising budget.
1. Creating and Maintaining a Static Budget
Even governments and large corporations make adjustments to their budgets. Small companies must do it, because every dollar lost for them is a serious blow, compared to larger companies and their budgets. There are moments when you should invest more – such as around holidays, or when you are preparing to launch a new product or a significant customer acquisition program. On the other hand, there are other moments when you should stop a campaign because it does not yield the expected results, and invest the money elsewhere.
2. Over-Correcting the Budget at Every Step
The opposite of the static budget is the budget which you keep changing and tinkering with from day to day. Some ad campaigns do not give you overnight results, such as AdWord campaigns or SEO strategies. You have to let the campaign run with the same budget until you reach the first milestone moment. This is when you should take a look at the results and decide what needs to be done next.
3. Not Monitoring the Adequate Key Performance Indicators (KPIs)
What matters more, click-through rate (CTR) or conversion rate? Which metrics are more relevant for your ad campaigns? If you do not monitor and A/B test the right ones, you could be spending money without getting any return on investment.
It is essential to know what to measure if you want to have relevant data which helps you plan your advertising budget. If you have a high CTR for an ad but low sales at the end of the funnel, you did not really reach your goals. High CTR and low sales usually means that something is broken in the middle of the funnel between the ad and your landing page. More A/B testing would help you find and correct the mistake and allow you to spend your ad budget on ads which truly bring you sales.
4. Not Monitoring a Campaign
So you set up an AdWords or a Facebook™ ads campaign and you let it run…and run…and run…just like the arms of the clock ticking away the time. However, instead of time, these campaigns tick away your money.
When you are busy with several different things at the same time, it is easy to forget about an already planned and initiated ad campaign. But it should not be left at the end of your daily schedule, if you still have some time left. It should be among your top priorities, just as anything which may lose you money unnecessarily.
Do not put a significant portion of your ad budget in your first campaign. It may or may not work. You can stop it or change your bid to a higher value later on, but the money already spent is not coming back to you. Over-enthusiasm is just as bad as scepticism when it comes to social media and online advertising.
In general, small business owners make mistakes in believing that the more they spend from day one, the faster they will acquire customers and a higher Google ranking. Starting small with your ad budgets per campaign is the smart way to build your customer base and gain revenues from ads, which you can then reinvest in advertising.