Getting started with any new advertising method always carries a little bit of trepidations. Your advertising budget could be exhausted easily if you made the wrong choice. Common questions that might cross your mind might be: Will it work? Will it not work? Will I reach my target audience? Will the audience I reach spend any money?
With offline advertising you have to rely on demographics and circulation statistics for each medium. With online advertising you can't rely on previously know statistics because it's all up to you to figure that out.
Most people believe that you only pay for online advertising when you sell stuff via e-commerce, but the truth is that you can use paid online advertising to achieve any business goal. When on online user achieves an online goal we then refer to them as a "conversion." For simplicity's sake, let me just assume that the word "conversion" represents whatever goal you want to achieve. Some example goals include getting someone to Like your Facebook Page, or sign up for your email, or buy something from your website.
Figuring out conversions from email advertising statistics is pretty hard, and they change depending on the subject line and what you put in the email. If you only send 1 email per month you will only have 1 chance per month to look at those email statistics. Fine tuning your email results could take months, or years.
On the other hand, you could learn a lot about Google AdWords and Facebook much faster, and with a lot more accurate statistics.
Let's say you only have $200 per month in your advertising budget for either Google AdWords or Facebook Ads. That's about $6.60 per day for paid ads, which really isn't a lot of money at all. A few clicks on any ad could easily exhaust that daily budget without convincing anyone to "convert". If you allocate only $200 per month it will take at least a month before you can have conversion statistics.
After the month is over you can review your results and change your online advertising strategy, use a different ad, or target a different audience.
You might be accustomed to waiting a month to find out if your offline ads worked. You won't know the results of your billboard overnight, and you won't know the results of your newspaper or radio ad for a while either. In actuality you don't have to wait a month to find out the results of your online advertising. You could find out your results in as little as 24 hours, but to do that you need a "test budget."
A test budget is money you allocate for testing of your ads, but without any expectation to make any money back. You need to spend that test budget as quickly as possible to figure out your results, sometimes within 24 hours. The idea of a test budget only applies to online advertising, and unless you spend a lot of time talking to Google AdWords Gurus you might not even know the phrase.
I recommend allocating at least $100 for a test budget for every online advertising campaign you want to try. Create your ads, build your landing pages, and give Facebook or Google a budget of $100 per day. Then sit back and watch.
At the end of 24 hours you can see how many people clicked the ad and how many converted. Here's how you would analyze your results:
Result A: If $100 was used and conversions were low then,
1. Your ad was misleading
2. Your landing page was poor
3. You targeted the wrong people
Result B: If less than $100 was used and conversions were low then,
1. Your ad probably wasn't interesting enough
2. Your landing page was poor
Result C: If no one clicked an ad then,
1. Your ads are horrible, or
2. You targeted the wrong people
Any of those results mean you need to send your advertising back to the drawing board. Instead of waiting a month to figure that out, you only waited 1 day.
Ideally you want to find the "Goldilocks zone" for your online ads. This is achieved when you have your full test budget spent and you also had enough conversions to make you happy or at least satisfy your needs. Once you find the best performing ads you can run your daily budget knowing you will have many conversions over the next 30 days instead of waiting for slow results.