Q: How Much of My Budget Should I allocate toward keywords versus display ads versus contextual advertising on Google AdWords?
A: When allocating budget for an internet marketing campaign, there are a few factors to consider. Before discussing which ways to allocate budget, let's define these three different types of advertisements:
- Keyword Advertising – Bidding on keywords that searchers use when looking for results in the search engines. (I.E. Bidding on "Italian Restaurants in Charlotte North Carolina" to show on the results of the first page of Google.
- Display Advertising – Allows a business to place text, image, interactive, and video advertisements on commonly used and niche websites where potential customers may find a certain type of business.
- Contextual Advertising – Display advertisements that are targeted toward searchers who have already searched certain key phrases and websites that are relevant to your business.
If just starting an online marketing campaign, the best strategy is to be competitive in as many of these channels as possible. The best practices include testing different types of keywords, images, videos, etc. in each channel. By taking this approach, it will give you a greater understanding of how each channel differs in terms of how searchers use your website. If you cannot invest into all of these channels at once, the next best option is to start with one channel and make sure you are competitive in that specific area before branching out into additional avenues.
Once a business has some history in the different channels, they can then allocate budget based on converting factors.
Conversion rates will be different between the various channels so they can not be compared on a flat percentage basis. Instead, they should be looked at on a cost per conversion (CPC) basis as well as a quality of lead basis. These factors will allow a business owner to then narrow their efforts to the most cost effective channels possible.