Every other week, On Small Business reaches out to a panel of young entrepreneurs for answers to some of the most pressing social media and technology questions facing small business owners. The following responses are provided by members of the Young Entrepreneur Council (YEC), a nonprofit organization comprised of entrepreneurs.
Q: Google AdWords, Facebook ads, promoted tweets — with so many options, where should business owners invest their online advertising budgets?
Anthony Krumeich, CEO and co-founder of Bloodhound in San Francisco, California:
With the prevalence of social media in today’s world, there are countless places to market your business. Before throwing money at the various channels, you need to look at your business’ specific circumstances to find where your best ROI will come from. Are you a startup in a crowded space? Try using very targeted Facebook ads and promoted tweets to reach customers that aren’t already being engaged by your bigger competitors.
If you notice that no one in your space is taking advantage of promoted tweets, paying five cents per clicked tweet can yield a noticeable bump in web traffic. If you have a larger budget, paying to be one of the top search results on Google for your most relevant search terms can result in huge traffic being driven to your site.
The bottom line is simple: large companies can afford to dominate the bulk of many social media channels but small businesses need to be much more creative in their approach. If you are trying to find a starting point, identify where your long-tail market is and figure out where the holes in your competitors’ marketing strategies are. Build from there.
Joseph Ricard, founder of Plum Investors in Miami, Florida:
From my experience, I used to say, “Don’t spend on PPC” and instead put it all into generating organic results. But sometimes, depending on the market, it may make sense to do pay-per-click marketing. When we rented Ferrari’s, it made sense to spend $1,200 a month in PPC, but we only did this while our organic results for “Miami Ferrari Rental” came up number one in Google.
Sometimes you have to do multiple forms of advertising. It’s good to test a PPC campaign for a short period time on an affordable budget. If you spend $100, and you profit $110, then you know your PPC is bringing you a 10 percent margins. After you define your metrics, then you can spend more. With our Ferrari rental, we were targeting other markets, and searching for our marketing from their geographical location only.
In order to come up on organic results (the best return on investment), one important tip is that you need to write a lot of good articles and share content that is relevant to what service or product you are selling.
I think Facebook ads worked better before the company went public. Now that they have integrated the “Like” feature into the News Feed on mobile devices, it just gets you a “Like” for your fan page, (which you paid for) but doesn’t get you a real action on your product. People tend to just click “Like,” but that doesn’t convert them into customers directly. Promoted tweets are a good way to get your Twitter followers up, but I have not seen the conversion yet as I have in offering out discounts, using SEO and having PPC campaigns.
Matt Hunckler, founder and president of Verge in Indianapolis, Indiana:
If you’re just getting started, it’s best to launch any online advertising campaign by making an educated guess based on industry best practices. For instance, online consumer retail will probably have more success on networks like Facebook and Twitter, while enterprise B2B would likely have more success on networks like YouTube Video Ads and Google Adwords. More information on your industry’s best practices can be found in books, on blogs, and from mentors in your vertical.
But don’t start spending that hard-earned cash just yet. The true answer to the question, ‘Where you I should invest my marketing budget?’ can be summarized in two words—test it.
Set up systems of measurement before you start any marketing campaign so you’ll know whether it was worth while or not. What is your desired outcome for this campaign? Which metrics best measure that outcome? At what level are you currently performing, and what are your goals? These are questions you should ask yourself before picking which tool to try. Advertising online should be a calculated and methodical practice -- cut out the things that don’t show a strong return on investment and invest in the ones that do.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
Do you have questions you would like to see answered by these young entrepreneurs? Share them with us in the comments below or via email and we’ll pass them along to the YEC for future series.