Episode 29: How to Compete Online with a Small Budget

Larger companies get most of the press and excitement with their 6 and 7 figure marketing budgets, but the majority of clients we work with are smaller. And smaller companies have to do things a little differently than the big guys. What impact does a small budget have on driving traffic? How should small budget brands compete online?

https://www.logicalposition.com/

TRANSCRIPT:

Jon:
Hey Ryan. So we get companies contacting us all the time, that don't have large, six or seven figure marketing budgets, and many times, those large clients get most of the press and excitement, but the majority of companies that end up investing in marketing are going to be smaller, and smaller companies have to do things a little bit differently. I want to ask you today, what impact does a small budget have on driving traffic and how do those small budget brands compete online? They obviously want to compete, they have to compete in order to grow, and I want to know what's the magic, how do they make that happen? I'm excited to talk to you about this today, and I guess I'll start pretty broad, in e-commerce, is there such a thing as too small of a budget?

Ryan:
Across the board as a broad general rule, no, but if you're really going to do something with your budget, then yes. I mean, you have to have enough budget to start moving things around and collecting data. And I think that initial starting budget, if you're a smaller business, is going to be important to determine how quick you can grow, how aggressive you can be, where are you going to find that opportunity to take the next step in the digital marketing evolution of your business? And I challenged a lot of business owners in this space, as I'm talking to smaller ones all the time. Like for example, yes, you can start with $100 a month budget, it's your money, and you can market it however you want, invest it however you want.
But if you're e-commerce, you're e-commerce so that you can sell everywhere and have your online store open all the time, even when you're sleeping. And so if that's the case, $100 is not going to get you very far in marketing across the internet. And so if you're going to do something that small, you really need to be hyper, hyper, hyper-focused, which does limit your potential and opportunities to find little pockets where you can really dominate or win. And so I would generally say less than $1,000, there may be better places for your money than trying to drive traffic with it online.

Jon:
Interesting. I was going to ask, and maybe you've just answered, but I'd love your take on this too, if I only have $1,000 a month to spend, is it worth doing it or am I just throwing my money away, when we're talking about driving traffic through traditional paid media sense?

Ryan:
That's a difficult one because most business owners that are coming up with this $1,000 and you're smaller, that's a meaningful number to them probably, but they probably don't have the expertise to really make that $1,000 do as much as it can. And so you probably have to bring an expert in, and that costs money as well, because most people in the digital marketing world are not working for free. And so you have to figure in an expert generally, and I'll probably come back to that point, but for most businesses, I would say that you have to look at it through a lens of time and money.

Jon:
Okay.

Ryan:
Anybody can learn how to do digital marketing. You have to be able to study, you have to be able to go in and make some mistakes and learn it, but anybody can figure it out. It's definitely not the most complex thing you could be learning. But if you have more time, then you should be doing some of that work yourself and learning it and getting it to it like, "Can I get some basic things done?" If you have more money, than you need to hire people and your budget should probably be a little bit higher to be able to invest and push traffic.

Jon:
So we should be saying, when we say budget for today's conversation, should I be thinking about it as budget including the expert or budget just in what you would spend to drive traffic in these channels?

Ryan:
I think businesses should be looking at it together, but I think most business owners are thinking about, "Okay, I can spend $1,000 to drive traffic. Let's go put that on Google and make it work." I do believe though, the Googles in particular and I'll focus on Google for right now, but Google in particular has done some pretty cool things helping small e-commerce businesses get going. If you've got a feed and you're on a smaller platform, like if you're on Shopify, it's very, very simple to get up and running on Shopify and get your products going to Google. And then there's what Google is calling smart shopping campaigns that allow a business really to say, "Google, here's how much I'm willing to spend per day, and here's the goal I need to get out of it." It does not take an expert to get that up and running.
And in fact, I tell companies, do not pay an agency to manage smart shopping campaigns because there's nothing to do. It can be a small piece of an overall structure, in fact, we at Logical Position do use smart campaigns in a small piece of a campaign occasionally, but we have to do a lot more work in the reporting and strategy on that type of client, to be able to justify charging management fees on smart campaigns.

Jon:
Okay. That makes sense.

Ryan:
Small budgets use more automation, I think, is the name of the game. Use things that are set up to make sure you don't just waste a bunch of money, and I think that's where a lot of small businesses, what keeps them from starting often is that fear of, "Oh my gosh, I'm going to go waste money trying to drive traffic because I don't know how to do it right." Doing some research, I think, can help keep that option to a minimum, that is just going to go out there and be a big waste.

Jon:
Let's say a company hasn't driven traffic on Google. How do they decide what that starting budget should be?

Ryan:
This generally comes down to, what's the business doing as a whole? If you're doing $100,000 a month on your website and you haven't been spending money, you probably have a larger amount you could start with then if I'm only doing $1,000 a month in sales. It's a threshold there of starting to look at it, but I generally say, in e-commerce, at least $1,000 to start with on Google. And then start thinking about it through a lens of, "I know I'm not going to be starting out at the gate if I'm doing it myself in a perfect world scenario." So there's going to be some learnings. I look at it through the lens of what's my light money on fire threshold, to let me get things going, and I've done this with new platforms on some of my brands.
Nobody knew what they were doing yet, across the entire platform. Pinterest is being one of them. A couple years ago, it was just wide open. Nobody knew what it was going to do. I think they're getting some more structure in place and it's driving better traffic, but I went onto it saying, "Look, I don't know what it's going to do." My light money threshold at that point was, I think about 2,500 bucks, so I talked to Pinterest like, "Look, we can go a thousand a day for two and a half days if you want, or we can go $100 a day for about a month. I'm okay with either, whichever one you think is going to work better for me." And that was my light money on fire threshold, that I wasn't going to be mad, I was just like, "Yeah, that did suck, but I got some learnings." Pinterest didn't work for us at that point in time on that business, we'll continue to be revisiting it.
But all that to come back around to it can't be a budget that if it doesn't work, it's going to...