Shoestring Marketing Strategy 4:
Paid Advertising

This article contains older information. Go here for newer information on advertising and affiliate marketing.

I know that paid advertising sounds scary to shoestring e-merchants, but I am convinced that some form of paid advertising is important if you wish to grow your business, since paid advertising motivates others to carry your marketing message to their own networks of site visitors and e-mail newsletter recipients. I'll discuss three types of advertising that small businesses can afford.

1. Sponsorships and CPM Advertising

Traditional advertising pays the publisher to carry an ad in the publication priced in proportion to how many people are likely to see the ad -- readers, subscribers, etc. It is often sold on a CPM (cost per thousand "impressions") basis. For example $10 CPM means that it costs $10 for 1,000 people to see the ad, or 1 cent per impression. While targeted B2B websites like WilsonWeb.com charge higher-than average CPMs, you can sometimes purchase semi-targeted banner advertising at $3 to $10 CPM, and expect a click-through rate (CTR) of 0.4%, more or less. When you do the math, $3 to $10 CPM at a 0.4% CTR comes to 75 cents to $2.50 per visitor to your site.

Another approach to paid advertising is to purchase an ad for a fixed cost per week or per issue, no matter how many visitors or subscribers happen to see it. For example, I am selling 2-Line Ads (www.wilsonweb.com/ads/2-line-ad.htm) in Web Marketing Today (118,000 subscribers monthly) and Doctor Ebiz (58,000 subscribers weekly), for US $250 and $150 per issue, respectively (the equivalent of $2.12 CPM and $2.59 CPM, respectively), with a substantially higher click-through rate than banner ads. (10% off when you place 3 or more ads at a time.) I've just started selling Sponsored Links (www.wilsonweb.com/ads/splinks.htm) at the bottom of each webpage in my 1000-page website on a weekly basis. I've priced these links to appeal to small businesses -- and you'll find other publishers offering similar bargains. Look for newsletters related to your site and investigate ad prices for small ads. You may be surprised at what you'll find. (Through July 14, I'm also offering exclusive one-week sponsorships of my entire website for a shocking low weekly cost. You'll never see this deal again!)

2. Cost per Click (CPC) Advertising

One very popular small business approach is to pay for advertising on a cost per click basis (CPC). The best-known of CPC sites is GoTo.com (www.goto.com) where you can bid on search terms. For example, when I searched today on "list hosting," the bids for the top three positions were: Lyris (10 cents), SparkList (9 cents), and ProfitMail (8 cents) -- but this charge is assessed only if someone clicks on the listing. You can get started with GoTo.com for a minimum of US $50 initially and $20 per month, and minimum bid of 5 cents per click-through. There are many similar sites (www.payperclicksearchengines.com) that have no minimum bid, though none with the reach of GoTo.com. However, since you only pay when someone clicks through, you can save money by using a combination of these less-visited sites with lower bid prices for keywords.

3. Cost per Action (CPA) Advertising

A third approach that is becoming quite popular is cost per action/acquisition (CPA) advertising, often known as affiliate program advertising. While the set-up fees to begin your own program may vary from $200 to $1300 or more, such a program allows you to recruit and pay affiliates only when a link on their site results in a sale or sign-up on your website. For example, I've set up an affiliate program (www.wilsonweb.com/affiliate/) to help me sell subscriptions to my premier Web Commerce Today e-commerce newsletter (www.wilsonweb.com/wct/) and my e-books (www.wilsonweb.com/ebooks/). I pay a generous 20% commission to my affiliates, but only after the sale is actually consummated, which gives me money to pay the commission. (That's more than the average program, which usually pays a commission of 4% to 15%.) Setting up and running an affiliate program is no trivial venture, but it is a very cost-efficient way to advertise your products and services. You can find helpful information comparing various affiliate management software programs from a merchant's perspective in my new e-book Report on Affiliate Management Software: User Feedback and Editor's Choices (www.wilsonweb.com/ebooks/affilisoft.htm).

I encourage you to experiment with paid advertising -- don't be afraid of it. Even shoestring e-merchants need to spend some money to make money. Your goal is to find an effective form of advertising for your goods and services that is affordable from a cost-per-sale perspective and therefore sustainable on a month-to-month basis.