How much does it cost to advertise online

We recently read that the average small to medium business is spending almost $5,000 annually advertising their business online. Whilst we were a little surprised by this figure, when you break it down to a weekly figure of approx $100, it is easy to see how that money adding up.

Growing your business through online advertising has never been easier and that is why we are seeing lots of SME’s running their own advertising. That said, there’s a lot of information to get your head around, and for newcomers to online advertising, it can be a little intimidating to say the least.

Unfortunately, simply asking how much it costs to advertise online often leads to a lot of confusing answers. The best answer—even if it’s the most frustrating—is “it depends”, because online advertising covers a very wide range of possibilities.

The very short answer is that online advertising is very inexpensive, you can start running a campaign for $5 and have your business placed in front of potential clients, however we are going to give you a brief guide of what you should know, if you’re interested in starting or just want to learn more about advertising online.

Where can I spend my advertising money?
There are multiple platforms that you probably use everyday, that will let set up an advertising account and start showing your own advertisements. Some platforms, such as Google Adwords are as simple as writing the text that you want to show, compared to having the option to create an image that is displayed as a banner image across other websites.

Google’s AdWords is a great starting place if you know the words that people would be looking for if they are looking for your products or services. You can create a list of targeted keywords, enter the price that you are will to spend for each click and/or a daily budget and then Google will send you traffic whenever a visitor clicks on your advertisement.

The other platform that is collecting a lot of small business advertising dollars is Facebook. The difference when advertising on Facebook is that instead of creating a list of targeted keywords, you create a list of targeted users, this could include targeting via location, through to very detailed demographic data and interests. When advertising on Facebook you can still enter the price that you are will to spend either as a daily budget or lifetime budget, and then Facebook will send you traffic whenever a visitor clicks on your advertisement.

Approximately 80% of Australian businesses have a Facebook page, and as such once you reach a certain size, they have made it harder for those businesses to feature in their followers news feeds. This means that you now need to pay to promote your updates to your followers and other users of the Facebook platforms.

How much does it cost to get 1 visitor click through?
Back to our best answer we can provide, “it depends”, as there are a lot of factors that go into the ad auction. Not sure what an ad action is, don’t worry this usually happens automatically unless you are a larger advertiser using sophisticated tools to select who to show your ad’s to.

Ultimately every time a visitor lands on a page that displays an advertisement, there is an auction to advertise to that user. The winner that gets their ad displayed is not necessarily the one that pays the most, you also need to have an ad that gets clicked on regularly to the rank at the top of the ad auction.

For example if advertiser ABC is offering $10 per click but is not receiving any clicks, the platform is not receiving any PPC (pay per click) revenue, however if advertiser 123 is offering $1 per click and 10% of the times that the ad is shown a visitor clicks through, the platform is making money from those clicks. In the example above the platform is making more money off the smaller cost per click than the higher one as more people are clicking and over a whole year those smaller amounts would add up to more than the more expensive option.

With all PPC the price is variable and you can usually set the price that you are willing to pay for each click, again spending more does not guarantee that you will get more clicks. This advertising model is mostly associated with the Google AdWords platform. Depending on the level of competition within your industry, your cost per click can be anywhere from a few cents to a few hundred dollars. That being said, the typical average is $1 – $2 per click.

What if I want to advertise to lots of people, regardless if they click or not
The other method of buying advertising is CPM, which stands for Cost Per 1,000 impressions. This advertising format is predominantly associated with Facebook advertising and Google display network. There are reportedly over 15 million internet users in Australia, with the majority using both of these platforms regularly. CPM involves agreeing a fee to show your advertisement per 1,000 impressions and any clicks or interactions that you receive are relative to your spend per 1,000 impressions.

When reviewing metrics from CPM advertising it is important to know the difference and compare reach vs impressions. For example a campaign or audience on Facebook may have reach of 150,000, this number is the equivalent to the number of actual users you will reach or have your advertising displayed in front of.

That same campaign may have over 450,000 impressions, that means on average, each of your users identified by your reach parameters have seen your advertisement 3 times, or as a formula 150,000 users x 3 views each = 450,000 impressions.

Again based on your audiences interaction with your advertisement, the CPM cost will vary accordingly. Other factors that affect the CPM rate will include how specific your targeting is, like if you only want people in Sydney’s CBD that are females, the reach is restricted and as such you have to pay a premium to target these users, compared to using generic targeting to anyone anyone in Australia. In our experience having specific is worth the extra costs as it will prevent you advertisements being shown to the wrong people and them not engaging with them.

Ready to start advertising online?
If you want to use the Internet to advertise your business, choosing and budgeting for the right channels can be challenging. You can start with low budgets and build up your skills before committing to larger advertising spends.

Here at MyNext we have been working with people just like you, to lend a hand and get you started. We have years of experience creating successful multi-channel approaches and we work with you to define your businesses goals from advertising online. Contact us if you want anymore information or think we may be the team to work with you.

*Stats quoted in the article are from the 2018 Sensis Social Media Report