July 04, 2023

Your Advertising Budget

It's common to think of channels like paid search and paid social as ad channels. You spend money, you get customers, everybody claps their hands and moves on.

Have you looked at your ad budget for email marketing? It's comparatively tiny, and sales are disproportionately huge. It is common in my projects to see e-commerce brands generate 30% of annual variable profit solely from email marketing.

Have you ever taken your discounts/promotions, and allocated them as an "ad cost"? In other words, if you take 40% off of everything, do you have a line-item in your p&l for dollars "given away"? I assure you that if you've ever gone through this exercise you've been gobsmacked by what you learn.

For many of you reading this missive, the biggest line item expense in your p&l is all of the margin dollars you give away begging customers to purchase at 30% off or 40% off or 50% off. You'd think you'd spend more time on this topic if it was your biggest expense, amirite?

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