Setting Small Business Advertising Goals
Small business advertising goals should guide your online ad campaigns. One of the first things you should think about when you are planning on buying ads is asking yourself: “What is the goal?” Whether you are a small business just dipping your toe into testing out the world of small business advertising or a giant business who has been buying ads for ages, a focused goal should always be front and center in your ad campaign.
Key Characteristics of Your Small Business Advertising Goals
When thinking about a goal, it should have a couple of key characteristics:
1. It should be attainable.
If your goal isn’t possible for you to accomplish, then it isn’t realistic and you should go back to the drawing board. Some common goals would be “I want my website to reach more users” or “I want to get more clients.”
2. It should help your brand become a better version of itself.
If you think that you can get new clients in Canada, but your business model only makes sense for you to work with people in the United States, then you should probably rethink your goal.
Key Performance Indicators
After you know what your goals are, you should choose KPIs or Key Performance Indicators. These specific metrics that show you if you have hit your goals or not. For example, if your goal is “I want to get more clients,” your KPI may be something like “get 10 new clients without paying more than $100 per client” or “get 10 new clients each month.”
These KPIs need to be actionable and measurable. Therefore, I wouldn’t recommend a KPI like: “Increase the number of times my brand gets mentioned by word of mouth in NYC.” That would be super difficult to measure, even if it did help your brand succeed. Things like cost or a timeframe are very useful measures to use. You can also use a few KPIs that together support your overarching goal.
Return on Investment
One way to decide what your KPIs should be is to look at your ROI or Return on Investment. In other words, how much does each dollar of ad spend give you in the long run and is it worth it? The general idea behind ROI is that you want to get more out of your ad dollars than you are putting into it.
For example, if you are a freelance coach and you typically charge $100 per hour and your typical client spends four hours with you, you could spend $400 per client on ad dollars before your ROI turns negative and therefore not worth the investment in small business advertising. Wondering where profit comes into play here? More on that later.
Tying this $400 ROI with our previous goal of getting 10 new clients per month, setting a monthly budget at $4,000 would be reasonable.
How did we calculate this? It is as simple as multiplying the 10 clients by the $400 ROI (10 x 400 = 4,000).
Monthly Budget Caps
When you know your max ROI, you can calculate your daily budget caps or the maximum amount of dollars you are willing to spend per day on ads. This calculation can be done by taking your budget ($4,000 in this case) and dividing it by the days of the month (typically 30 or 31, but we’re using 30 in this case), which come to a $133.33 daily cap, in our scenario.
Daily caps can be tricky, because many advertising channels either:
1. don’t stop your ad spend right when you hit your daily caps
2. give you diminishing returns if your daily caps are too low
Make sure to check your bids in relation to how much you are spending per day.
What’s a bid?
It’s the cost you’re willing to pay for the ads. For most digital advertising, it’s an auction where you are bidding against other potential buyers. For example: a general way to think of it is: both you and the Graphic Designer up the street from you might be bidding on the same Google keyword of “Graphic Design studios in NYC,” so your bid will help determine if your ad gets chosen over theirs. (It’s a bit more complicated than that, but it’s one factor.)
Ideally, each day you want to spend slightly less than your daily budget cap. This ensures that your bids are not affected by your daily caps by getting the “perfect” bid for your audience. This essentially means that if you have a budget of $133.33 per day, you would ideally be spending that full $133.33 throughout the day, and not just spend the budget by noon. I typically like to have my budget go under the budget cap, so I would aim to spend ~$120 of the $133.33 dollar cap.
Don’t Forget Expenses for Small Business Advertising Goals
Let’s take a step back to when we calculated our ROI (the $400 we came up with by calculating the average revenue made per client) for your small business advertising. Make sure you are factoring in all of your expenses to ensure you are setting the right goal.
There may be other costs associated with signing up a client, such as paying for a website and paying for rent. Of course, you’ll also want to set out how much you want to make in profit. Factoring in things like this will help you understand how much you are willing to pay on your ad spend. If your ultimate goal for beginning small business advertising is to increase your profit, be sure to evaluate those numbers in depth. Your monthly spend all depends on what your goal is for the ad campaign.
One last thing about ROI before moving on; there are other factors to think about when advertising than purely ROI. For example: you may secure a new client through your advertising strategy. That could yield great ROI. Then, perhaps that client recommends you to a friend… who recommends you to two more friends. Suddenly, your initial ROI is snowballing in your business into something bigger than you expected.
Often, companies spend lots of time and money determining how much they should spend on acquiring a new client through online ads and examining what the LTV (Long Term Value) of each client is worth.
However, as a small business owner getting started with online ad strategy, it’s OK if you just want to dip your toe in the water and see if advertising works for you without spending too much time and energy understanding the LTV of each client. You’ll discover more about that as time goes on.
Target Audiences & Advertising Channels
Now that you have chosen your KPI, try to understand who your target audience might be and where they spend most of their time. Typically, using advertising dollars online is an easy place to start.
Facebook/Instagram, Google and Amazon are usually the best options for most people, with ~70% of digital ad spending going there. It depends on what your goal is when deciding which of these advertising platforms you choose. Overall, I would say that Search ads on Google are an easy place to start because you don’t have to worry about ad images or videos, rather just text. Also, if you have an e-commerce product on Amazon, advertising there would make a lot of sense. Facebook/Instagram is also a great choice if you have a specific audience in mind and you think your product/service would resonate on the platform. That being said, there are many resources out there that favor one option over the other.
Or you may choose to go in a completely different direction, such as buying radio ads or a billboard. Doing your own research to understand which option is best for your product is an important part of your advertising strategy..
Tracking Performance of Small Business Advertising Goals
You now have your goals, KPIs and know where you’re going to advertise your product, but how can you track the results? Each of the internet companies listed above has ways of tracking the performance of your product. You want to make sure that you are bidding in a way that attributes the correct value to your potential customers. Most advertisers ask you to set a CPC (cost per click) bid for your ads and it can be difficult to know where to begin for this.
Typically, starting off with low bids and going higher is a smart way to begin. Alternatively, many companies allow you to set a CPA (Cost Per Acquisition) goal, which in the case we have been working with, is cost per client acquisition. This way, if you set a KPI of $100 per client, as in our previous example, you can tell the advertising platform what your goal is and they will spend your ad dollars in order to hit this goal.
Another bid type that you will likely come across is CPM (Cost Per 1,000 Impressions). This is where you pay every time someone sees your ad, not when they click on it. Whatever strategy you choose, make sure you keep an eye on how much you are paying. These systems aren’t perfect and sometimes you will start paying more per client than you had expected. In order to keep your ad dollars in line, make sure you are setting daily budget caps so you don’t spend too much more than you expect.
Small Business Advertising Goals Last (but Not Least) Tips
Here are some last tips before you set any advertising campaign live:
1) Make sure you are setting limits on where people are seeing your ads. Ie. If you are only taking on clients in Delaware, don’t set your ads live in the entire USA.
2) Double check your ads. Do they seem right to you? Would you sign up after seeing it? Is there a clear CTA (Call To Action), such as “sign up” or “learn more,” so users know what to do with your ad?
3) Do your audiences look right? Typically the more focused the audience, the more you pay per click, but if you do this right, your CPAs (Cost per Acquisitions) will go down, which is more important.
4) Did you add negative audiences? Depending on what platform you chose, you could be sending your ads out to more people than you expected. Ie. if your potential clients are only over the age of 40, you can choose to negatively target those under 40.
5) It’s a learning process. It’s very hard to set up a campaign perfectly your first time and even those campaigns that are set up correctly can sometimes require a learning period when performance is not very strong.
Using a client management software for small businesses will also help you streamline your processes and work more efficiently.
Whatever route you choose to go down in order to expand your business, make sure it passes the gut test to you, because if you don’t think it makes sense, most likely it doesn’t. Good luck!