What percentage of gross sales do you spend on advertising?

If you're willing to share: What percentage of gross sales do you spend on advertising for your e-commerce business? This could include Adwords/Overture/Other PPC/Links/Shopping.com etc.

Zero for me. But I'm fortunate to be on page 1 for all the SEs for my most important search phrase. If I were down around p.4, I'd have to start buying PPC, I guess.

We thought the same because we are in the top 5 slots of the SERPs, but around a month ago we decided to just try Adwords.

Last month we increased our revenue by 50% with a cost of around $10/day to Adwords. The Adword ads are VERY focused with keyword rich landing pages; which are much better than the index page of the SERPs.

Try PPC... you might like it.

It varies enormously from market to market and business to business. My wife has a handbag store that spend almost nothingon advertizing. We do very well in natural search and frankly had a horrible ROI on PPC. After trying Adwards, Overture, Shopping.com and Pricegrabber for months, tweeking bids, tweeking ads, tweeking landing pages, etc., it just didn't pay for us. If I had more time to spend on it, we would be spending 5% - 10% of gross sales on other types of marketing though. Most of the things I would like to do will take more time and thought than I have to spare right now, though, so we spend nothing.

I have clients that spend as much as 22% on advertizing. It really depends on your margins and advertizing ROI. OCntrary to popular belief, choosing to spend on PPC based on your natural results is not a good idea. As SEO_AM points out, you can have great natural results AND you should still advertize via PPC if it has a positive ROI.

Yes. I suppose that you could go that far if your gross margin was really good. We aim for 10% for all advertising and it works out ok. Past that and we cleave it off.
I usually work the other way - advertise in Adwords to determine how many visitors it takes to convert a lead. Then I have good information to decide what to optimize for (even if the ROI doesn't make it worth continuing to pay into).[/QUOTE]
Total market visibility is important. We definitely try to dominate both the organic and PPC markets in our best money kw.

That's interesting. You put adwords on the same pages as your organic listings? Or exclude those and put your adwords on other sites?
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Sure... if for no other reason to gain experience on 'what works' in PPC [when times are good] rather than waiting for the time you can't afford to experiment, play around, as every penny lost is one penny closer to not being in business.

Seriously the same people that click on organic listings will not normally click on PPC listings... but the reverse is also true - so sales are getting by you - to your competitors that are not on page 1...

They must really like you giving them so much! ;)

BTW expat - is that your own jewelry or do you resell for others?

We definitely do duplicate PPC and organic listings and it definitely works in the RIGHT markets. One virtue of PPC is that you can decide EXACTLY what url to send visitors to - so if you have VERY specific kw that your products are HIGHLY competitive for - you can send them exactly to the page where that product can be purchased. This is an advantage vs. organic search engines listings that probably list our homepage or a main level 2 page. Our conversion rate is better with these PPC listing.

Fathom is also right - some people (especially in shopping kw) usually click on PPC listings. This gives your competitors an advantage is you aren't displayed there.

If you're already #1 organic try this - take out a PPC and price yourself to be #3. This will prevent you from paying the cost of being #1 PPC but still give you top position visibility (when Google lists 3 PPC above the organic SERPs). I think you will find that you make much more money (but it depends on the market).

The other thing is this - most businesses have a certain level of fixed costs to pay for every day. If your organic marketing yields enough sales to pay for your fixed costs then you can afford to run PPC even if it cost far more/conversion. Overall it is easy to make money in marketing once you are over your fixed costs and PPC is probably the most targeted and controllable form of advertising available.

Actually recommend doing alot of research on existing ads and be "the best advert" on the page - aim for position #5-7.

If you can create the "desire to click" at a better rate than those above you Google will bump you up [they only get paid if clicks occur so ad placement is bias to the best selling ad... at a lower cost.

when Google bumps you up - dial down your CPC a bit to put you in back at #5-7 again and if you still get better CTR than those above they will bump you back up.

If a "usual" CPC for #5 is a $1.00 you can easily get yourself down to $0.50 and continue to move up in placement while those below are paying more...

It takes lost of practices but you can half your expense and seriously increase your conversion rate [and Google will track what is working for you to a 100% certainty.

My wife retails a branded line of jewelry designed in Denmark and manufactured in Thailand; I'm the webmaster et al. Check out my signature for more info.
Aghh, my sig didn't show -- its www.PandoraUSA.com
Pat

Yeah, I'm familiar with the concept of marginal cost. I ran a $25M business making and selling special-purpose IC chips and our fixed costs (equipment and facility) there were horrendous. But our online business has low fixed costs, thanks to very reasonable domain-registration and hosting costs -- it's almost all variable cost.

But then I see the tales of woe from the guys who are using PPC (http://forums.seochat.com/pay-per-click-37/i-am-so-sick-of-these-damn-ppc-s-80733.html#post336301)
and wonder.....