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- E-commerce Marketing
Setting an appropriate budget for a Google Shopping campaign is crucial to the success of your e-commerce business. An inadequate investment can limit the visibility of your products, while an excessive budget may not guarantee a proportionate return. Here are some tips for determining the ideal budget and understanding the implications of an inadequate investment.
Tips for determining budget:
Market and competitor analysis: Assess how much your competitors are investing in advertising and identify keywords relevant to your industry. The average cost per click (CPC) on Google Ads varies between 1 and 2 euros for the search network, while on the display network it is generally less than 1 euro.
Setclear goals: Establishing specific goals, such as increasing traffic, generating leads or increasing sales, will help you determine how much to invest.
Calculate a percentage of revenue: Many companies allocate a percentage of their revenue to marketing. This percentage can range from 5 percent to 35 percent, depending on the industry and the competitiveness of the market.
Consider seasonality: Identify the times of the year when demand for your products increases and plan your advertising budget accordingly.
Implications of an insufficient budget:
Investing too little can lead to limited coverage throughout the day, running out of budget before the day is over. This means that your ads will not be visible for the entire day, reducing sales opportunities and potentially leaving room for competitors. In practice we entice customers to buy, and when they decide to do so, they don't find us, they find our competitor.
Advertising costs by business sector:
Investing too little can lead to limited coverage throughout the day, running out of budget before the day is over. This means that your ads will not be visible for the entire day, reducing sales opportunities and potentially leaving room for competitors. In practice we entice customers to buy, and when they decide to do so, they don't find us, they find our competitor.
Setting a daily budget for a Google Shopping campaign requires a careful analysis of your e-commerce's annual revenue and the percentage of advertising investment typical in your industry. Here is a table summarizing the average percentages of turnover allocated to advertising for various business sectors and an estimate of the recommended daily budget, based on a hypothetical annual turnover of €500,000.
| Sector | Percentage of Turnover Allocated to Advertising | Annual Budget (€) | Monthly Budget (€) | Daily Budget (€) |
|---|---|---|---|---|
| Apparel and Fashion | 8-10% | 40.000 - 50.000 | 3.333 - 4.167 | 110 - 137 |
| Food | 4-6% | 20.000 - 30.000 | 1.667 - 2.500 | 55 - 82 |
| Consumer Electronics | 6-8% | 30.000 - 40.000 | 2.500 - 3.333 | 82 - 110 |
| Financial Services | 10-12% | 50.000 - 60.000 | 4.167 - 5.000 | 137 - 164 |
| Tourism and Travel | 7-9% | 35.000 - 45.000 | 2.917 - 3.750 | 96 - 123 |
| Health and Wellness | 5-7% | 25.000 - 35.000 | 2.083 - 2.917 | 68 - 96 |
| Automotive | 7-9% | 35.000 - 45.000 | 2.917 - 3.750 | 96 - 123 |
Note: The daily budget is calculated by dividing the monthly budget by 30.4, which represents the average number of days in a month.
These estimates are approximate and should be adjusted based on the specific needs and goals of your e-commerce business. It is critical to constantly monitor campaign performance and make necessary optimizations to ensure an effective return on investment.
Author: Loris Modena
SENIOR DEVELOPER
Per Ind Loris Modena owner of Arte e Informatica, began working in the computer industry in 1989 as a systems engineer in charge of maintenance and installation of computer systems. He starts programming for the web in 1997 dealing with CGI programming in PERL and later moving to programming in PHP and JavaScript. During this period he approaches the Open source world and Linux server management.