This is a very popular question, as far as advertising online is concerned.
Unlike traditional media that mostly has a fixed price for advertising, advertising online is mostly bidding-based.
That is, the highest bidder for a specific market or slot wins.
If you bid $.40 per click for a specific spot or keyword (as in Google) and then I bid $.45 for the same spot or keyword, I automatically win that spot/keyword for outbidding you, and my advert will be prioritized (displayed) over yours.
Now to the question of what you should bid…
Wrong question!
See, I used to ask this question too in the past. But recently, I realized that it’s a very wrong question to ask – in fact, it’s the worst question you can ask as a business owner or marketer.
In the past, I used to set daily budgets between $20 per day to $50 per day.
What was my reason for choosing those figures? They just sounded “okay” enough to advertise with.
But that was a foolish way to go about it.
Remember Dan Kennedy’s famous saying? He who can spend the most money to acquire a customer wins, ultimately.
In essence, “advertising budget” is a myth, and you shouldn’t have one. Your goal should be to be able to spend as much as possible to acquire customers…till you outspend your competitors.
How to?
First step however is to have several products and services that people want and are actually buying, then you can bundle them to create irresistible offers.
And if your offers are converting (people are buying them), then you can plug them into several funnels in your value ladder (the different levels of serving your customers).
Once you have several funnels that are converting, then you’ll be confident enough to spend as much money as possible on your funnels, knowing you’ll make even more money back.
Even if your funnels aren’t profitable, a funnel that breaks even will still make your business grow exponentially.
How to grow your business without a profitable funnel?
Let me start from the very beginning and use a made-up scenario as example (it’s close to what I’m currently working on for my business anyways).
So let’s say you are a skincare expert, and you have several products and services that you offer to help people achieve their dream skin. You have digital products like eBooks and videos, then you have physical products like cosmetics and supplements, you have a spa where you offer skincare services and procedures, and you also consult.
Firstly, it has to be established that people want and already buy each of these products and services individually.
Next, you have to determine how to bundle these products and services (and others you can come up with) into irresistible offers (products/services + bonuses + discounts + whatever you can add) for each level of service…from lowest to highest.
Next, you create funnels for the different levels of your business, and plug your offers into these funnels.
For example…
So let’s say…for the person meeting you for the first time, they read a very informative blog or watched an educative video from you. At the end of the video/blog, you ask them to download a special report for free, just so you have their email. And once they do that, you offer them a one-time discount to buy your physical book on skincare practices for $19.
That’s one funnel.
Your next funnel, one that gives them even more value, can be fully digital. It could start with your book, and then move to a video course on some DIY skin routine at a very discounted price. Let’s say $47. And then end with an online or even physical event as the upsell.
Another funnel can start with your lowest-priced physical product, a soap. Then upsells a full kit that has soap, moisturizer, scrub, sunscreen, etc. Then you upsell them with even more products, and perhaps a skin-glow supplement to sweeten the deal and make it irresistible.
At your highest level of service, you could offer one-on-one skincare consultation, after which you upsell them customized skincare products and procedures in your spa.
You don’t need to have this many products/services in your business; just ensure that you have at least a funnel at each stage of your customer journey/value ladder, linked into each other, all aimed at helping your dream customers fulfill their ultimate desire of having a healthy, flawless and glowing skin.
What next?
Now that you have great funnels, you want to make sure they are converting well on their own, that is, people are buying them.
The best that can happen to you is that the funnels are profitable. The next best is that they, at least, break even and offset your ad cost.
However, if they aren’t profitable or breaking even, they can still work to make your business very profitable.
That’s the essence of having several funnels at different levels. That way, you can introduce the next funnel to anyone who buys and goes through one funnel.
Let’s say you spend $20 to acquire a customer and at that initial stage, you get back $12. The good thing is: they are already in your funnel and you don’t need to spend a dime to sell the next thing to them. You simply use email (or text or call or whatever) to send them into your next funnel. Hopefully this is where you recoup your ad costs and even make some profit.
If the initial funnel was a break-even funnel and you don’t lose any money acquiring each customer, then any other thing they buy from you will be pure profits. Russell Brunson says when you have a funnel that breaks even, you have a million-dollar-per-year business!
Because you’re basically getting customers and leads for free, you can afford to spend as much money as possible to acquire them, knowing you only have to introduce them to the next funnel to make all the profits you want. (Now imagine you’re already making profits from your front-end/initial funnel!!)
This is when you become unstoppable and you stop thinking in terms of “advertising budget”. The concept of “no ad budget” suddenly makes perfect sense to you.
If you need context to put this concept into perspective, just imagine you have a box that gives you back $2 every time you put in $1, what would you do with it?
Exactly my point!
I wish I had this mentality years before now!!
Cheers!
