Seven Steps to Understanding Online Advertising

Seven Steps to Understanding Online Advertising
Story by AmandaDailyWorth on
Published on February 3, 2010

This guest post is by Amanda Steinberg, founder of DailyWorth is a daily email about money for women — delivering practical tips, empowering ideas and the occasional kick in the pants.

You’ve started your business. You’re selling the cutest organically sourced, hand-crafted baby teethers on earth. Your shop is launched, your blog has a few comments, the teethers are good to go and the supplies are stocked. So where are the sales?

Here’s a gruesome reality to business that’s learned only through experience: Nothing sells without a lot of pavement pounding. To really sell, you have to master all aspects of marketing — and that could include some form of paid advertising.

Fortunately, in today’s world of websites, blogs and e-newsletters, you have plenty of inexpensive advertising options to test. For example, you can post an ad banner on for as little as $1 a month! Online advertising is, in many ways, brilliant. Unlike print ads, you can measure an immediate response to your efforts. Equally useful, you can target your exact and ideal niche of customers; assuming you know who your ideal customers are, you can likely find blogs and email newsletters that already communicate with them.

I sell an electronic product: a daily newsletter about finance for women called DailyWorth. I’m currently spending upward of $1,000 a month to market it. It makes sense to me because I can earn four-times that through various revenue streams, and far more down the road (I pray!). Having paid for and evaluated the returns on more than fifteen advertising spots in the past year, here’s my advice to you:

Step 1: Establish a budget. Not sure what to spend? It’s not uncommon for businesses to spend 10% of revenue on marketing and advertising. So, if your business is earning $2,000 a month, begin by allocating $200 to online advertising. Keep in mind that you may not see a return on this investment. Ad spending is risky. You may have to buy multiple ads before you find a venue that works for your product. If your product doesn’t have the market appeal you think it does, you may never see a return. Ad spending does not equal sales.

Step 2: Define your best customer. This is the Internet. Many of the websites we visit regularly and subscribe to already have a general sense of who we are (thanks to polls and surveys, and an emerging field called “behavioral targeting.” BT is not creepy — it just means that city dwellers will likely be served ads for Murphy beds, instead of, say, tractors). You, as an ad buyer, need to use this data and only spend money buying ads on websites that reach people you know will want to buy your product. So who is your ideal customer? Perhaps she’s between 28-36 years old, married, living outside of a major metropolitan area and likes chocolate. Or, maybe she’s 50-plus, has grown children, loves yoga and has lots of disposable income. We like buyers with disposable income.

Step 3: Make a list of 10 websites that cater to your ideal customer. Contact the owners of these websites. First, pitch a “guest blog post” (you give them content for free, and in return they link to your Etsy shop or blog). If they say no, consider buying an ad and ask for their “media kit.” This is generally a PDF or link to a list of advertising options and associated rates. Not sure where to begin? and are popular advertising venues for Etsy sellers.

Step 4: Collect and evaluate your options. Here are the two things to understand when buying ads:

* Text or banner, or both? Some websites/blogs/e-newsletters offer banner or graphic ads. You need to be Photoshop-savvy and have the ability to create compelling Photoshop ads to make use of them. They’ll ask you for specific dimensions in pixels (like 125×125), and you’ll need to know what they’re talking about. Other websites/blogs/e-newsletters offer text ads. Text ads are great because they’re easy to produce, can be read on a BlackBerry, and look like editorial. Don’t dismiss text ads even if you’re selling something visual — with the right ad copy, text ads could work for you.
* CPM: CPM means “cost per thousand.” Some advertisers set rates based on the number (in thousands) of impressions their website gets every month; in the case of e-newsletters, it’s based on the number of email addresses they send emails to regularly. How does that translate to your potential cost(s)? A website that gets 8,000 impressions per month might charge you $40 x 8 CPM (where that 8 CPM = 8,000 impressions), or $320 per month. Websites with dozens of banner spots will charge a much lower CPM or flat rate, but remember that you’re also competing with the 10 other banners so you’re vying for a limited pool of click-throughs.

Step 5: Design entertaining ads. Research what makes banner and text ads successful and why people click. If your ad under-performs, it could very well be because it’s boring. I sell advertising on DailyWorth, and I watch closely which ads attract clicks and which don’t. Your banner creative and copy have an enormous impact on performance. In a recent discussion I had with a business owner who buys ads from me, Nellie Akalp, CEO of (online incorporation services), she said that, “In today’s crowded marketplace, sometimes launching an ad banner isn’t enough. Think about forming relationships with an ad venue’s readers over time and find ways to engage them.” Experiment with contests, giveaways, and sales. Collect fans on Facebook and followers on Twitter. In other words, use ads not only to drive sales, but also to build a platform of new virtual acquaintances that you can engage in the future.

Step 6: Deploy your ads. Popular websites can be “sold out of ad space” for months, so don’t procrastinate. It may take a few weeks or even months to see your ads roll out.

Step 7: Measure, refine, and repeat. For the ambitious, mogul-inspired sellers among us, here’s an advanced tip: After you’ve bought multiple ads, monitored performance, and acquired new sales — formulate your “cost per new customer.”

Cost per new customer = how much you spent ÷ number of new customers you acquired

So, if you spent $100 on ads and got two new customers, that’s $50 to acquire a new customer. I hope you’re developing practices to sell new products to existing customers (have a newsletter sign up page on your blog, for example), as it’s much easier to sell to an existing customer than to a new one. Your cost to acquire a new customer is a critical financial element in understanding how your business grows and reaches profitability, as you develop your advertising budget (or “ad spend” as some call it) and understand what it will really take to reach your sales goals. Renew ads with venues that perform. Consider tweaking your ad creative or don’t return to venues that don’t perform.

Now this is a great start for your advertising of your products or services. If you haven’t visited, you should as it has lots of great info even if you aren’t selling a product. Just remember it is geared to the artist. Check this link out as well for more articles and information. Etsy-Advertising-Seller-Handbook.