Reducing eCommerce Marketing Costs by 50%

Jan. 20, 2014 - PRLog -- The standard marketing budget for online business is 8% of revenue, however enterprise companies such as Amazon.com only spend 4% of revenue on their marketing, why the difference. Some of this can be attributed to brand equity, however one key factor is the hosting architecture and platform that the ecommerce solutions are running on. Google looks at many factors known  to themselves to rank pages organically, however many larger enterprises such as Amazon and eBay have pages indexed almost immediately even though those pages often have no PR.

Working alongside consultants from Large Enterprise we designed a hosting architecture for smaller platforms such as Magento & WordPress to rank these next to the largest enterprises, an example was a new Magento CE fashion product store with 30,000 products, no marketing, off-the-shelf theme, limited code changes hosted on our architecture. The site had 15,000 pages indexed within 6weeks listing first page Google equal to or above Amazon, eBay, Net-A-Porter, Selfridges and often higher than the original manufacturer for the same product.

The site was running on $1,000/month hosting using our architecture on existing cloud providers, however hosting providers are not made equally. To provide the highest quality ranking and fastest indexing only the top providers were used, primarily due to the fact that search engines such as Google take in to account associations, if your site is hosted next to Saks then ranking is going to be a magnitude easier than if it is next to multiple $50,000/year revenue sites.

Which brings us back to marketing, by using our enterprise class architecture marketing budgets can be reduced by up to 50% as Google and other search engines will now organically rank sites reducing the need for pay per click advertising such as Google Adwords or Facebook ads. Taking a $1million revenue online store, marketing budget should be 8% of revenue and hosting 0.5-1% of revenue having marketing costs of $80,000/year and hosting costs of $5,000/year for $85,000/year. With enterprise class hosting marketing budgets can be reduced to $40,000 with hosting at 1% of revenue being $10,000/year totalling $50,000/yr. The end result is a saving of $35,000/year or 3.5% of revenue, which can be diverted to reduced online prices increasing market share or increased profits for the company, at the same time reducing resource requirements for more streamlined operations.

Normally these types of clustered environment cost upwards of $5-10,000/month, however working with Large Enterprise consultants we have scaled the architecture to a level that the same results can be achieved at 20% of the cost of standard hosting providers, and as it is based on cloud instead of fixed hardware provides instant scaling. The technology we employ is part of the overall enterprise architecture that large enterprise companies use increase their profits, lower their staff overheads, and keep their prices low constantly gaining market share. With the recent Q4 2013 results becoming available, large enterprises have had a record year in part due to their platform architecture.