How much percentage of sales do you spend on advertising?

[JamesCroni]

Hi all,

We are trying to gauge whether we should go online for our retail store. How much do you spend on online advertising as a percentage of sales? It seems it needs to be about 25%. We're in the apparel business.

And what about the production budget? We have thousands of products that need pics and text.

 

[BrandonEdutt]

I don’t like to see it any higher than 20% of e-comm revenue. When Google switched to PMax campaigns, it’s been horrible, and they were creeping up close to 30%, and I’ve had to actively watch it to ensure it doesn’t take as much.

You can’t get the same return you could a couple of years ago, so I have lower revenue now than last year but the same profit %, which ultimately is the goal. Remember: revenue is vanity, and profit is your sanity.

 

[Jasondep]

I don’t like to see it any higher than 20% of e-comm revenue. When Google switched to PMax campaigns, it’s been horrible, and they were creeping up close to 30%, and I’ve had to actively watch it to ensure it doesn’t take as much.

You can’t get the same return you could a couple of years ago, so I have lower revenue now than last year but the same profit %, which ultimately is the goal. Remember: revenue is vanity, and profit is your sanity.

Yes, we noticed that when we first went to PMAX, google initially “recommended” decent ROAS targets (which we had with manual CPC). Still, over time, these recommendations have been to lower the target gradually than we usually noticed (not always). Google seems to achieve just below what you want them to accomplish regarding ROAS %.

 

[MilenaDok]

We need profit on the first sale, or we’re not interested. And how long is LTV value anyways - do we need to wait 5 years, 10 years, 85 years until we make a profit from said customer ??. Google is the one behind pushing LTV, and all the agencies follow suit, so it normalizes, causing a loss in initial sales - how Google wants it.