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11 April 2012

Top Tips

Tips for Advertising Online

There are many ways to advertise your eCommerce store online, from affiliate marketing and pay-per-click, to social media. Each has its own benefits and depending on the type of business you are operating, some routes may be more appropriate than others. This guide introduces some of the main methods of advertising online; what they involve; and how you can take advantage of them.

Affiliate Marketing

If your business has limited resources, affiliate marketing can be a very cost-effective option if you are looking to reach a wider customer base, without having to employ people to run big campaigns. Simply put, affiliate marketing is the practice of businesses rewarding other businesses for each referral or conversion generated as a result of marketing on their behalf. One website is used to drive to traffic to another.

For example, an online florist (the “publisher”) may free up part of their marketing space on their website to include an advertisement for plant fertiliser which is produced by another company (the “merchant”). The advertisement itself is normally hosted for free; however, each time a customer clicks on the advertisement and goes on to purchase plant fertiliser, the florist will then receive a percentage of the income from that sale.

There are several ways whereby a business can be compensated for being an affiliate. The majority of affiliate marketing schemes use the PPS (Pay Per Sale) system, where an affiliate only receives payment for each sale generated through the scheme. An alternative to this is the CPA (Cost Per Action) method, which rewards affiliates for specific actions being undertaken, e.g. when a form is filled out, or an order is made.

Generally, publishers use affiliate networks to find and participate in affiliate schemes which are suitable for their website. Similarly, these networks allow websites offering affiliate schemes to reach wider audiences by offering their scheme to all of the publishers who are participating in the affiliate network.

The advantage of using affiliate marketing is the fact that it typically incurs no cost to market your products because it uses a pay-for-performance model.

PPC (Pay Per Click)

Typically, PPC is used in search engine marketing and allows businesses to create ad campaigns which are shown each time a user searches for a keyword which a campaign has been based around.

It works by paying an publisher (such as a search engine like Google, Yahoo!, or Bing) a fee each time your advertisement is clicked. The fee is determined by a bid amount which the advertiser places before the advertisement is activated. An “auction” takes place whenever a user searches for the keyword that has been bid on. Because your bid will target variables such as location, date and time, industry etc., each bid that has used these same criteria will be compared and the winner (i.e. the highest bidder) will be determined. There can be more than one winner and generally speaking the advertisement’s position on the page is influenced by the bid amount. However, there are other factors such as quality and relevance that also play a role in determining where the advertisement appears.

The biggest advantage of a PPC campaign is the ROI (return on investment). Here is an example:

Imagine your conversion rate is 2%. Your advertising budget is £1000 per month and the cost per click you’ve bid on is £0.25. The item you are advertising retails for £29.99

Budget (£1000)/Cost per Click (£0.25) = 4000 Clicks

Clicks (4000) x Conversion rate (2%) = 80 Conversions

Conversions (80) x Item Price (£29.99) = £2399.20 Sales

£2399.20 - £1000 = £1399.20 Profit

Additionally, PPC also drives a large amount of traffic to your website as long as the campaign is active, which is particularly helpful for new websites who are looking to build awareness.

Social Media

Social media can be an effective way to market your business online, if pursued in a dedicated, focussed, and proactive way. Networking platforms such as Facebook, Twitter, Google+ and LinkedIn all offer their own forms of advertising, but the essence of social media is to interact with users personally; build relationships, and promote brand-loyalty in an organic way.

Facebook: The biggest social networking platform in the world, Facebook operates a system similar to PPC, except that marketers bid on demographic information rather than keywords. For example, you may want to advertise to women aged between 30 and 50 who live in London and are keen netball players.

Twitter: Twitter allows people to communicate instantly, share their thoughts, and transmit information the world over. It’s free and a great platform for businesses to shout about what they are up to. There are four ways to boost your online presence with Twitter.

  • Engage your target audience by building relationships naturally and targeting your sales propositions holistically
  • Pay for your tweets to be promoted in Twitter searches
  • Pay for your conversations to be promoted (using the hash-tag)
  • Pay for your account to be promoted in “Who to Follow” suggestions

Google+: New to the social networking scene, Google+ business pages allow users to interact with your brand by adding you to their “circle” (network). This is a very powerful tool because Google will prioritise search results based on the pages the individual user is connected to. For example, if user A has +1’d a page for a clothing store, each time they search for a keyword relating to clothes, the company’s page and/or website will be given a certain amount of priority over other companies. As a result, having a Google+ page can be a highly rewarding way to cultivate relationships with your customers and build your brand.

LinkedIn: Primarily a network for professionals, LinkedIn is particularly useful if your business offers B2B services, e.g. accountancy, legal advice, translation etc. Like all of the aforementioned platforms, LinkedIn suggests people in your extended network who you may want to connect with, and therefore it is a great way to find out about people working in your industry or related sectors.

So, whichever advertising channel you decide to use, it's important to remember that not every method will be suitable. Depending on your marketing goals, budget, and and audience, you should carefully consider the merits of each.  

Social Media ROI is a hot topic right now, and lots of industry figures are talking about the best ways to measure it. Do you have any tips or advice on how to get the most out of social media? Does it encourage any tangible business outcomes? I'd be interested in hearing your thoughts.

If you'd like more information on how online advertising could help your business, feel free to get in touch.

By Adam Cowlishaw

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