The cost of online marketing can vary greatly from one platform to another. Marketers usually have different expectations regarding the cost of their campaigns. Sometimes, they try to compare apples to oranges or go by what they think are the “basics” of online marketing without looking at the big picture. This can lead them to make inaccurate assumptions and come up with inaccurate figures. To help marketers understand online marketing cost-effectively, we’ve put together a simple model that estimates the average cost of an online marketing campaign.
Step 1: Set Up Your Average Cost of Marketing (ACM) Account
The first thing you’ll need to do is set up your average cost of marketing account. You can do this by clicking the Create Account button at the top of any Marketing Planner page. Doing this will take you to a page with the header “Welcome to the Marketing Analytics Platform!” Below that is a link to set up your ACM account. You can use your email address or phone number to get started.
Step 2: Define Your Campaign Parameters
Once you’ve set up your ACM account, take a few minutes to define your campaign parameters. You can start by clicking the Gear icon at the top right-hand side of the screen. This will bring you to the Settings page for your account. From here, you can click Edit at the top of the page to launch the Campaign Definition page. You’ll need to specify the types of materials you’ll use in your campaign (e.g., websites, emails, ads, social media posts), the target audience (i.e., the groups of people you’ll be advertising to), and the metrics you’ll use to track its success (e.g., leads, sessions, transactions, etc.).
The more you can put into the parameters of your campaign, the more accurate your cost-per-acquisition (CPA) and cost-per-sale (CPS) estimates will be. You can always come back and edit your parameters at any time, so feel free to add more information as you think of it.
Step 3: Include Any Additional Campaign Information
In addition to defining your campaign’s parameters, you’ll also need to provide some additional information about it. You can do this by clicking the Campaign Details button at the top of the page. The more you can provide about your campaign the more accurate your cost-per-acquisition and cost-per-sale estimates will be. For instance, if you’re using Google Ads, you might want to provide the number of daily budget ads or the duration of your campaign. The same goes for other platforms (e.g., Facebook, etc.).
Step 4: Estimate Your Campaign’s Overall Cost
Now that you’ve set up your account, it’s time to estimate your campaign’s overall cost. For that, you’ll need to go back to the Campaign Definition page and click the Calculate button. Doing this will bring you to a page with a purple button that says “Finish Calculating.” Once you click that, you’ll see a table that contains all the information you entered into the campaign. From here, click the Download CSV link to download a campaign cost report in.csv format. This is a tab-delimited file that you can download and use wherever you like. Some examples of the data included in this file are:
- Cost per acquisition
- Cost per sale
- Average order value
- Total billable hours
- Budget
- CPC(cost per Click)
- CPL(cost per Lead)
- LTV(lifetime value) of a customer
Step 5: Use The Data You Need
Now that you have your cost data in hand, you can use it to make more knowledgeable decisions about your online marketing strategy. Some tips on how to use this information wisely include looking at what worked and what didn’t work during your campaign (e.g., which websites performed the best). To make better use of this data, you might want to set up a simple workflow so you can easily track its impact over time. Some tools that can help you do this include:
- Marketing Performance Score (MPS)
- Marketing Optimizer
- Marketing Automation
- Pricing Optimization
- Customer Lifetime Value (LTV)
- Salesforce
Average Cost of Marketing: It’s Not What You Think
To wrap things up, let’s take a look at how accurate our model is compared to other popular ways of estimating the cost of an online marketing campaign. The data for this comparison was collected from a variety of marketing experts and platforms (e.g., HubSpot, Marketo, Pipedrive, etc.).
Retargeting
When people think about the cost of an online marketing campaign, usually they think about offline advertising (i.e., ads that you put in person). Inaccurately, so. While retargeting does play a role in online marketing, especially when it comes to displaying ads on social media channels, the cost of retargeting is often neglected. To be precise, the cost of a retargeting campaign can be significantly higher than what is usually thought to be the case. Why? Because most companies don’t include the cost of the user’s visit in their calculations. To give you an example, let’s say you’re running a retargeting campaign for an e-commerce store and you want to show an ad to someone who previously visited your website but didn’t make a purchase. Without including the cost of that visit, you’re setting yourself up for an expensive mistake. In the case of our e-commerce store example, that mistake would be paying for a retargeting campaign for a mere $1 sale.
Display Advertising
When people think about the cost of an online marketing campaign, usually they think about online display advertising (e.g., ads that you put on websites and social media platforms). While display advertising does play a significant role in online marketing, the cost of display advertising is rarely mentioned in informal discussions about online marketing costs. Why? Most companies don’t include a lot of the backend costs in their calculations. To give you an example, the CPG side of our company does not include a lot of the website costs when they’re preparing their budget because they think those are obvious (and they’re right because those are the costs that you see when you visit a website). In reality, there are a lot of hidden costs that you and your marketer might not think about (e.g., the cost of designing and building a website, etc.). To put things in perspective, the budget for our e-commerce store’s display advertising for the month of March was about $13,500. While this might not seem like a lot, if you consider all the hidden costs (i.e., the cost of the user’s initial visit and the cost of getting the attention of that user) it quickly adds up. To give you another example, if you look at the CPG side of our company, you’ll see that the budget for our display advertising in March was about $6,600. While this is a significant difference, if you take a closer look, you’ll see that this one budget item accounted for about 70% of our total online marketing spend for the month of March.
Social Media Marketing
When people think about the cost of an online marketing campaign, usually they think about social media marketing (e.g., ads that you put on social media platforms). When it comes to social media marketing, most companies think that the cost is simply the sum of the budget for the various platforms they use. While this is usually the case, it’s not entirely accurate. When someone calculates the cost of a social media marketing campaign, they usually don’t include a lot of the backend costs (e.g., the cost of creating the account, etc.). To put things in perspective, the cost of our e-commerce store’s social media marketing in March was about $3,500. While this might not seem like a lot, if you take a closer look at the various platforms and the costs associated with them, you’ll see that this one budget item accounted for about 60% of our total online marketing spend for the month of March.