You’re Now Selling Consumer Products Online… How Much Should You Expect To Spend On Advertising?

You’re Now Selling Consumer Products Online… How Much Should You Expect To Spend On Advertising?

The EpochBG Group Have Been Sellers On Amazon For Over A Decade With Hundreds Of Brands Represented In Our Stores And 7-Figure Monthly Sales Revenue.

We Are Actively Seeking Brands To Join Our Retail Group On Amazon. As The Number Of Brands Joining Our Retail Group Grows, There Are Recurring Issues We Experience With Small And Growing Brands.

You're Now Selling Consumer Products Online… How Much Should You Expect To Spend On Advertising?
This EpochBG Jan 2020 Newsletter Explains How To Figure Ad Spend Budgets

Many New/Small Brands Are Not Familiar With Developing And Running Ad Campaigns.

What Is Not Generally Recognized By Brands Is That Their Competition Are Running Ad Campaigns And Not Competing Successfully At This Level Will Likely Result In Product Sales Not Meeting Expectations.
Data You Need To Know To Determine Required Ad Spend:
  • What Is Your Target Revenue?
  • What Is Your Return On Ad Spend (ROAS)? In Other Words, For Every Dollar You Spend On Advertising, How Many Revenue Dollars Are You Going To Generate?
  • What Is Your Average Order Value (AOV)?
  • What Is Your Average Conversion Rate On Your Website?
  • What Has Your Click Thru Rate (CTR) Been In The Past?

Ad Budget Calculator Example

Sample Data:

  • Target Monthly Revenue Is $20,000
  • Return On Ad Spend (ROAS) Is 4:1
  • Average Order Value Is $50. This Is For Product Sales Only. Do Not Include Tax Or Shipping Dollars. Your Website’s Analytics Will Provide This Data.
  • Website’s Conversion Rate Is 2% For This Example. This Is An Average Rate. Our Amazon Store’s Conversion Is Over 17% By Comparison. Your Website’s Analytics Will Provide This Data.

In This Example, We Will Assume Your Ad Campaigns Have A 1% Click Thru Rate (CTR). Actual CTRs Can Be Anywhere From 0% To 5%. Your Campaign Platform (Adwords, AdRoll, Facebook, etc) Will Provide This Data.

Let’s Assume You Are A Relatively New Brand Just Getting Started. Online Sales Are Assumed To Not Be Significant (Since You’re Just Starting Out) So All Revenue Moving Forward Can Be Attributable To Ad Generated Revenue.

Remember Your Competitors Are Spending Money On Ads So Its Likely Unrealistic That Your Brand Will Grow In Sales Without Investing In Ad Campaigns.

Let’s Say If You’re Just Starting Out Your Monthly Revenue Target Is $20,000 In Product Sales.

A Decent ROAS Is 4:1. This ROAS Means That For Every Dollar You Spend In Advertising, That Advertising Will Generate 4 Dollars In Product Sales. This Is An Average ROAS. Typically, ROAS Targets Are 5:1 To 10:1.

Therefore, To Hit Your Target Revenue Simply Divide Your Target Revenue By Your ROAS. In This Case Its $20,000/4 = $5,000 Ad Spend Budget.

To Determine What Your Ad Campaign Must Accomplish You Need The Above Listed Data To Figure That Out:

1. Divide Your Monthly Revenue Target By Your AOV To Determine The Number Of Monthly Transactions You Need. In This Example That Would Be $20,000/$50 = 400 Monthly Transactions.

2. To Determine The Number Of Visits You Must Have To Achieve The 400 Monthly Transactions, Divide The 400 By Your Website’s Conversion Rate. In This Example, Its 400/.02 = 20,000 Monthly Visits.

3. To Get The Number Of Impressions Your Ad Must With Potential Customers Divide The Monthly Visits Required By Your CTR. In This Example Then: 20,000/.01 = 2,000,000 Monthly Impressions.

Table Summary Of Above Example

Ad Spend Example

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