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What % of your sales go toward ad revenue?

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# 1
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I am  in the online t-shirt business. Roughly 15-20% of my revenue is going toward ads. 99% of this is Facebook ads.

 

I am wondering how much of your ad revenue is eating up your sales and what industry you are in?

Thanks!

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Re: What % of your sales go toward ad revenue?

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# 2
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Hi Jason
I guess you'll get a variety of different answers so diverse that the data will be of little value to you. The answer completely depends on the business and the business goals. For example, if my business was focused on growth, then I'd say 100%. If I was focused on something else, in the same industry, it could be 10%. It would also depend on market share and size. So the answer is more of a general marketing/business question as opposed to an AdWords question. Generally, around here, it's usually AdWords folks seeking support so I can't imagine you'll get a massive response.

For some perspective, I have clients spending 0% of the or sales on advertising and some spending 90%. The majority of that is on AdWords. Then you get to the grey areas where investment in content blurs the lines between advertising, PR and asset development.

So, how long is a piece of string? Smiley Happy

Re: What % of your sales go toward ad revenue?

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# 3
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Fair enough. I knew the answer would be relative to the industry, but I hear what you are saying by detailed it a bit more. Thank you.

Re: What % of your sales go toward ad revenue?

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# 4
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This is a really great question, but, as @Dave_Davis points out - not one that can readily be answered.

But here's the way I try and approach it... a friend once said (and I wish I could claim credit for this) that if you can get your online marketing working it's like buying €50 notes for €40... the question is "How many do you want?" The follow-up question is then "How many have you got?"

The thing is - we often forget that the calculation of ROI is often done without adding other factors, such as office rental, staff costs, electricity, etc. Just working on a sales value less cost of goods is misleading. You might make 20% on this, but your other running costs might be significantly more than this. The other thing to consider is the second part - how many have you got? The market may not be 100% elastic and you might find that you are hitting the law of diminishing returns very quickly as you spend more.

As Dave suggests, if you're going to growth then spend more of your revenue, but growth has to mean something. In the online world people often get misled by the promise of followers, visitors or clicks. None of these mean very much in and of themselves. If it were, then all these people selling 10,000 facebook followers for $5 would be millionaires.

Getting the balance right is a large part of what online marketers must do.

Re: What % of your sales go toward ad revenue?

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# 5
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I think that's the answer I wish I gave Smiley Happy Steve, as usual, you're spot on. For too many, it takes too long to realize that. Especially when coming from an online only point of view of marketing (which I did unfortunately before realizing the folly of my ways). I guess it's like cooking. You're recipe will be different to mine but the end product is supposed to be the same. It could go both ways.

Re: What % of your sales go toward ad revenue?

[ Edited ]
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# 6
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So in essence, if I am at X%, seeing profit and growth, that works for me. That same data may not work for the next business and that could be either way!

Side questions. Oddly my ads are 99% Facebook ads. I have a great knowledge base with them and am doing well. I built my brand as an online community and Facebook of course is the best social media way to do this. I can also really target the ads to a specific interest group.

I turn around and try adwords, google shopping, etc and I just do not see the same ROI with Google. Not even close and sometimes negative roi. Even then, I see little interest.

Is it possible that Google ads may not be for me or am I not understanding the platform enough? Sure, I can see this being like my other question where the answer is variable. But Google is king of ads, but I cannot cultivate a community there efficiently. I am sure it is because I lack some area of knowledge.

Thoughts?

Re: What % of your sales go toward ad revenue?

[ Edited ]
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# 7
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as to google-shopping --

the bid and quality determine outcomes on google-shopping.

facebook-ads and product-listing-ads are rather disjoint --
one tends to focus on socially-connected ads while the other
is much more broad and tends to focus on the physical item.

one strategy is to adjust bids based on product-groups
and specific ad objectives -- for example, targeting items
for certain seasons and raising or lowering bids accordingly.

growing a brand vs selling more items vs selling

at a greater profit may (should) effect (bid) tactics.

if the products are focused on the brand, that would generally mean
the brand would need to be popular or the products would need to be
designed to have a much broader appeal with respect to that category --
for example, t-shirts, flip-flops, or bottle-cooler-sleeves.

with respect to product-listing-ads, item categories such as t-shirts
typically require careful consideration of the specific attributes
related to that category; t-shirts fall under apparel and usually
do best when using all the required and recommended attributes
with relevant, valid, values -- especially size, color, pattern, material,
item_group_id, and either identifier_exists FALSE or a valid brand.

self-branded logo items usually have much
tougher competition from well-known brands --
especially if the brands coincide in any way.

 

title, description, and images, are also critical --

especially with respect to product variants.

landing-pages should be preselecting exact variants --

only in stock variants should be submitted and those

should be from a subset of inventory that meets either

the business goals and strategies or ad objectives;

e.g. bid lower on, or do not submit, low-margin items.

also, if similar items are listed from both a
private website and a marketplace venue,
this can necessarily result in poor quality.

more specifically, having similar items listed from multiple sites
is a policy violation and at the least, is self-competition that can
result in diluted listings over time.

depending on business goals and advertising objectives,
other ad-formats and campaign-types may be a better fit.

Re: What % of your sales go toward ad revenue?

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# 8
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Great response, thanks!