It's a "simple" matter of doing the math.
Like so many questions, the short answer is "It depends" but more importantly, it is not THE most important question to be asking. The big question is "Does it make sense for my business because it will make me money (dollars AND cents)?"
Marketing has ONE ULTIMATE PURPOSE. It is to MAKE YOU MONEY!!
So it does NOT matter much how much it costs. What matters is your Return-On-Investment (ROI). Marketing also is also NEVER FREE. There is an investment of your time, money and often both. So you have to place a value on your resources in doing the math. If you invest $200 and make $200 profit, you just broke even. However, you are NOT marketing to break even (in the long-term*). Long-term results that you can measure will determine your ROI. You then have to determine if that return is indeed worth your investment. By making adjustments, you can even improve those numbers.
*Marketing is an ON-GOING PROCESS.
Advertising is your medium (print ads, on-line ads, flyers, street signage, internet, radio, etc.). Marketing is your long-term strategy. You cannot expect to get good results by running an ad once. Consumers require 7 impressions before they will take action. And this number was before the age of "information overload" and "attention deficit". I'm sure that number has increased. So the secret is to determine what medium has the attention of your target market** (the Internet has an actively growing audience) and what they are looking for. If they are not actively looking for your product or you have a lot of competition, you have have to factor that into your formula.
**Are consumers looking for MY products and services on-line?
Good question! I had someone approach me about being number one in Google for his dry-cleaning business. We didn't find a reasonable amount of queries for his services. We knew before we started that his ROI would not look good. What's so great about the internet is we have RECORDS of exactly what keywords people are typing into Google and how many queries per month there are. Armed with that information and knowing your geographic target, there is no better medium to track, adjust and finetune a marketing campaign than on the WWW. There are no crystall balls here, but we can start with a pretty good educated guess and go from there.
So what's the formula for success in Internet Marketing?
As in all things business, you have to know YOUR numbers.
#1 = How many queries in my geographic target are there on average per month?
#2 = What percentage can I expect to click through to my landing page or website? This is your click-thru rate (CTR).
#3 = What percentage of those that visit my website can I convert into a call, an email, a walk-in? This is your conversion ratio.
#4 = Of those queries, what percent turned into customers? This is your CLOSE rate. You don't sell to 100% of people who walk through your door or call about your services, so what is you percentage? If you don't know, you need to determine (guestimate) this number to do the math right!
#5 = Of those that converted into a customer (immediately and over time), how much money did you make? What is the LIFE-TIME value of a average customer? This is because that one-time sale can lead to more sales, referrals, etc. If you don't know, you need to determine (guestimate) this number to do the math right, too!
It's ALL about the NUMBERS!
If there are 1000 queries per month, and 5% of those click-through (5% is a GREAT number), then 50 people visited your website (or landing page - the importance of this will be addressed in an upcoming article). If 10% convert to a call or come in, what percent of the 5 do you close? If your close ratio is 2 out of 5 and you just got two new customers, what is the average value of each customer (this is based on your profit margins).
If the average value of a customer is $500 profit (over their life-time as your customer) and you just made $1000 profit, backtracking, how much are you willing to spend to get those results? In these times of economic challenge, investing to get a 2-to-1 ROI may not be a bad idea. MOST IMPORTANTLY, this is YOUR decision!
So back to the original question of "How much does it cost and can I afford it?" The answer remains "It depends. It depends on YOU!" Simply, do the math!