At SaleSource we get asked this question a lot and the answer is actually really important. You have to understand the financials of your business. You have to understand how much is the cost or the investment of marketing so you can make the right decisions. And while the answer is really important, the question being asked is a little wrong. We believe that sales and investments like this are transactional. I pay X dollars to get Y widget, right? Email marketing is a great example of this. I know I'm going to send a thousand emails. A thousand emails cost 29.95 a month. Done, very transactional. Now if you turn that on its head and you said, I'm going to send a thousand emails but I want 48% open rate, and I want a 32% click through rate and I want a 12% conversion rate, how much will that cost? That's very different. That's an entirely different question and it's an entirely different answer. And that's not really how it's set up. If you were to talk to anybody about email marketing, and again we're just using this as an example, and you said, how much would that cost, that scenario? They'd look at you like you're crazy because that's not how that's set up.
Now flip that on its head. When we're talking about digital marketing and somebody asks the question, how much does digital marketing cost? We have to think about, literally, a million different data points as to how much this will cost, because costs for you are going to be entirely different than costs for somebody else. How much it costs for a 40 person roofing business out in San Diego is going to be entirely different than a cost for a brand new landscaping company that's just got one person. They just started in Tyler, Texas, right? Demand is totally different. The environment is different. Your goals are different. So when you're talking about what is the cost of digital marketing, there's not really a great answer exactly as to how much this will cost. Again, because it's not transactional. It's not, I pay X so that I get Y. It's very much based on millions of different data points. So we're going to jump in to a couple of those to help you identify what your investment into digital marketing needs to be.
We're painting with a broad brush here because the different channels are all going to have different data points that they use. Google Ads is going to be very different than Facebook, which is different from Twitter. Different from LinkedIn, different from Instagram. They all use different variables and different information about you and about your goals to identify what those costs are going to be. Some of that is going to be based off of search volume. Now if we're talking about Google, this is something that's very important. And Google has this information. They know how many people searched for landscaper near me in the past 30 days. They know how many people searched for landscaper near me for the past couple of years. So they can project and they can give a trajectory as to how many people are searching, what that search volume looks like, what the competition looks like. The costs per click, or what they assume those to be. Different things like that.
Now Google uses a secondary option. So just because it says, X keyword will cost five dollars per click, Y keyword will cost $1.25 a click, something like that, that doesn't always mean that's going to be your exact price. There are different things that you can do to adjust those costs. The time you've been in business. Have you advertised with them before? What types of keywords are you going after? And then even beyond that, when you have analytics and conversion tracking installed on your site, Google can use that information to identify if you are performing better than somebody else. Google's in the business of making money, so this is a great example. They want to ensure that their customer, who is the person searching and clicking on your ad, that's still their customer, is getting a great experience. Because if you are providing a poor experience or the ad they clicked on is providing a poor experience for their customer, they are concerned that their customer will go somewhere else. They might go to Bing. They might go to Yahoo. They may go to one of the other social networks. They may ask some friends. And they stop using Google to get their answer. That's a huge risk and a huge cost for Google. So they will give a benefit to people that have better results. If you have a higher than average conversion rate, you will pay a little bit less for that click. If you have a higher than average engagement on your site, meaning you have a better landing page, or a higher click through rate, more people are interacting, and this is all information that they have because you're tracking analytics and conversion data, they can take that information and they will give you a benefit because you are giving their customers a better experience. So you'll pay less for that click than somebody else will.
Are you going to know what that cost is right in the beginning? Absolutely not. It's all based on those millions of different data points. Facebook is another great example. Facebook does not have, nor does it provide tools that are going to answer a lot of these questions. So unlike Google that has historical search because it's intent based, I intend to find something, so I search for it and I find it, Facebook is all about who the person is, their demographics, their interests, what they've done in the past, things like that. And that can change on a minute by minute basis. So when you're targeting on Facebook, at that point you're looking at, who is my best customer and reaching them in that pre-intent arena. Based on their previous search volume, based on where they're located, based on where they live, based on income, based on zip code. Based on a million other demographics. Interests, pages they've interacted with, other ads they've seen. Those audiences change constantly. And because of that, the audience costs also change constantly.
Facebook doesn't provide any tools to identify what those costs are going to be in advance because they don't know what that's going to be for you, for the guy down the street, for the roofer in San Diego, for the landscaper in Texas. They don't know what that's going to be until somebody sees, views, interacts and clicks or converts off of your ad. So that is all based on the moment interaction. So what kind of tools exist to actually identify what your costs are going to be?
Marketing is a mix of science and alchemy. There are scientific parts where you can identify, Google's a great example. This many people searched last month. This many people should search this month, and this is what my cost will be. The alchemy part comes in when you start to identify or need to look into, what do I believe will happen? What do I believe about my business? And how can I test and data mine and understand what will actually happen for my business and my marketing in the future?
Here's the first tip I can give you. Just get started. Doesn't really matter what your budget is. Doesn't really matter what your targeting is, or things like that. It's better to do something and to identify some of these details than it is to do nothing and just sit around and try to guess. Start a small campaign. Now you're probably not going to or you may not see what you would consider success from this initial campaign. But that's not the goal. At this point, we're paying for information. So you run a $10-$20 a day campaign. The best ad you can build, the best call to action you have. And then we're going to data mine. We need to understand what audiences interacted best with your ads. What keywords worked best. Did you get conversions and what type of demographic or what type of person actually converted? What was the quality of those leads. Just because someone fills out a form or gives you a call doesn't necessarily mean that they're a great customer. But they could be a great customer in the future. Maybe your ad is too high intent. People are tire kicking, they're just researching. Maybe your ad is far to focused and you're trying to grab people at the very end of that conversion funnel. The very end of the sales decision making.
So by understanding this with a small budget, up in the beginning, you can start to understand a little bit of what you should experience in the future. This is one of the greatest ways to identify what your budget will need to be. If you take what you want your goal to be and you reverse engineer that back towards what you believe you're going to need based off the data that you've already gathered, that's how you can start to make these budgeting and financial decisions. You can't make these decisions without getting started, so that's tip number one. Just get started and see what the data tells you.
Really one of the most powerful tools in the marketer's arsenal is time. It takes time. You're not ever really going to be able to turn on a campaign and see immediate results, just that quickly. That is incredibly rare. Even for marketers that have been doing this for years, even for extremely established businesses that know their campaigns, they know their target audience, they know their customers. It's very difficult to just jump in, turn on a campaign and become a millionaire overnight. It doesn't really happen. So time is one of the most powerful things that you can have. Because again, going back to Google's example, they are looking at how people are interacting on your site. Are they converting? Are they staying there for a long time? Or are they bouncing really fast? What does that look like? And the more information they have, the smarter the algorithm gets, so the lower costs you pay. Same with Facebook. Facebook isn't really identifying what are they doing on your site per se, but they are interested in the kind of people you are targeting and how they are interacting with your ads. And again, when the algorithm has more information based on the goals that you have set forth, conversions, clicks, views, engagement, things like that, the algorithm gets smarter and can target better people over time.
Something else to consider, it takes a long time to drive from New York to California, right? So let's talk about that. We know that our goal is getting from New York to California. But we have a very small budget, that's like walking, right? You'll get there eventually, but it's going to take an awful lot of time to walk from New York to California. Now maybe you've got a little bit of a larger budget. Well, then now instead of walking, now you're driving. You're still covering the same amount of distance, you're just getting there faster. So if time is a factor, budget is usually the greatest thing that you can use to influence that. Now if driving is still going to take too long, now we got to consider flying. Again, more expensive, more budget, more data, more details, more information that you can use to identify your best customer, your best campaign, your best ad, your best audience, your best keyword, the best targeting you could possibly do. It takes more budget to get there, but you're still covering the same amount of ground. You're just doing it faster. So if time is a consideration and you need to move quickly, then budget is honestly one of the biggest and greatest things that you can do to influence that.
Now if you don't have a large budget, or you're still in that testing phase, that's okay. Just understand that you're walking from point A to point B, you're not flying. The more time you have, the more refined your campaigns can be and the better you can allocate your funds to get better results.
Something else to consider is what is your worst case scenario. Let's say that you've got a small budget, maybe it's out of season. Maybe it's a low season for you. You're not getting the results that you need, and you need to come up with some sales. You need to come up with these conversions. What is your absolute worst case scenario, so you can identify how long can I go with nothing before I get to a point where something's got to work or I have to make a serious decision? It sounds really scary to think about this and no one really wants to talk about the fact that marketing campaigns can fail, even for the top shopify stores. And marketing campaigns fail all the time. Especially if you want to start thinking about larger Fortune 500 companies or things like that. Think about all of their failed campaigns, and now we're talking about millions of dollars. That could be millions of dollars in advertising budget. That could be millions in talent acquisition. Could be product development, all of this. We see this constantly, where they put a lot of money into something and it turns out no one really likes it. No one buys it, no one interacts with it.
All these Superbowl commercials, we've seen that, right? Someone drops a million, two million, five million dollars on a Superbowl commercial and then, where is that company now? You might not hear from them or maybe that was all their marketing budget. Now they got to be quiet for the next year before they can build up enough customers and enough budget to get back to doing what they wanted to do. Marketing campaigns can fail all the time. So think about this because if you think about it and you identify what are your worst case scenarios, what's the absolute worst that can happen if nothing works, you can start to balance the idea in your head. And you can start to come up with alternatives, new solutions, or what your reaction is going to be should something not work.
No one wants to talk about the fact that they can fail. But if we think about it, then you can be prepared. You can prepare your next campaign, you can prepare your next step, your next strategy so that no one is shocked if it doesn't work, including you. If you're not surprised and you can see the writing on the wall, you can pivot and make a change. One of the greatest things about digital marketing is that you can change on the fly if necessary. You can make these adjustments, come back again and come back successful.
Now on that note, when we're talking about changing or pivoting or changing quickly, something else to consider is that a lot of times you just have to stick with it. Have you ever seen a dog in a swimming pool, and it can't really decide what side of the pool it wants to get out of. So it's pretty much just swimming in circles, all excited and expending a lot of energy. Expending a lot of time there, dead centre in the pool because it can't figure out which way it wants to go? That is exactly what it's like if you're just constantly changing your strategies, constantly changing your digital marketing campaigns or your goals.
You may feel like you're doing a lot of work and you are. You're spending a lot of energy and a lot of money trying to find out what's working, but instead all you're doing is just spinning in a circle. And eventually you're gonna wear yourself and wear your business out. So there is something to be said for sticking with it. Again, this goes back to give it time, right? If something's not working in 24 hours, that is not the time to make a change. If something's not working in a month, in three months, in six months, that's the time to make a change. And if you're working with somebody like us here at SaleSource – the best tool for finding dropshipping products, we are not a set it and forget it, and you shouldn't set it and forget it either. You can be making small optimizations and small changes, and you should. Don't dive into your campaigns and make major, massive changes because then you never know what works and what didn't. And you may be hurting yourself more. So optimizing, giving it time, understanding what your worst case scenario is, and then sticking with it are all incredibly important points for you to consider while you're building out these campaigns.
Finally, last piece of advice is to begin with the end in mind. Again, a lot of the digital marketing tools that are available out there don't really give you that budget scenario. And we've been trained, culturally, to think transactionally. Digital marketing isn't transactional. You cannot say, I have $500 a month. You give me 25 leads. That's not how that works. And there are companies out there that will say, oh we do lead generation or you buy leads. All that is, is a race to the bottom. You're just racing to the bottom of cost. You're racing to the bottom of the services that you provide and you're just trying to get the scraps when you're doing those, buying those leads like that. You're also building someone else's business instead of investing in your own. So begin with the end in mind here. You don't want to be held hostage by buying leads that may or may not be great for you. When instead you could be taking that time and spending that money and energy on building your own business and building something sustainable.
So identify where you need to be. Let's say your expenses are $5,000 a month. Then you have a 50% margin, right? How much do you have to sell, how many widgets, how many services, how many projects do you have to sell to make that amount of money so that you, you're not making anything, you don't have a ROI yet, but at least you're paying your bills. By understanding that, you don't panic when the hard times come. You don't panic or you don't over celebrate when the great times come. A lot of businesses are seasonal and we find that business owners will get really, really excited when they do incredibly well. A landscaper during the summer. And then in the winter, they're like oh my god. I'm not mowing any lawns. Well of course you're not. But maybe you celebrated a little too hard in the beginning and you went a little too fast during the summer, and you didn't really hold back and understand, I'm going to need to float myself through the winter to get to where I need to go.
Begin with the end in mind. You want to make a million dollars a year with your business, you want to sell a million dollars worth of product or worth of inventory from your eCom site, that's probably not going to happen overnight. That's also probably not going to happen if you are just getting started and you're competing against someone who's been doing this for years. Got brand awareness, got a lot of customers, got a lot of reviews. The amount of money, energy and time that you need to spend to get there is very different than what they have to spend to get there. So begin with the end in mind. What are my goals? And then reverse engineer to that to understand what you have to do now. Remember, we're traveling from New York to California. So we just have to decide how much time are we going to spend to get there? How much budget is required to do that? And to get to that point, we have to identify by testing first and understanding what this actually means for me and my business, because marketing is not a one size fits all. It's unique and it's variable for every single business, just like every business is unique and variable. So keep that in mind as you're building out your campaigns.