Question: 1. Calculate the advertising budget for a start-up using benchmark-based approach. Start-up expects to reach annual $300,000 revenue They compete in the industry that dedicates

1. Calculate the advertising budget for a start-up using benchmark-based approach.

Start-up expects to reach annual $300,000 revenue

They compete in the industry that dedicates on average 6% of the revenues to promotion

. 2. Given that all sales come through their website, how many websites visits they need to achieve the revenue goal?

Average sale price of their devices is $600

Projected conversion rate (% site visitors who makes a purchase) is 8%

Sales Volume (#items) = Revenue / Price Website Visits = Sales volume /Conversion

3. Start-up advertises online on Google and Facebook. Use objective-based approach to calculate advertising budget required to attract desired number of website visits.

The company expects to get 60% of website visits from Google ads and 40% from Facebook.

Average cost per click (CPC) of an online ad is $1.75 on Facebook and $2.50 on Google Ads Cost per channel= Website visits * CPC

Compare your results 1 and 3. Which approach would serve the company better and why?

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