It can be difficult for small businesses with limited amounts of money to determine which expenditures are the best use of your online marketing dollars.This is especially true for business owners who have little or no technical background and don't understand the way various internet marketing avenues work. Have no fear. We've got the lowdown for you.

Types of Online Marketing Outlets

Although marketing possibilities on the internet are myriad for those who have the time and budget to exploit them all, small businesses should focus mainly on organic search engine optimization (SEO), pay per click advertising, web site content creation (which is actually a subcategory of organic SEO), and social media marketing.

Social Media Marketing

Dollars Allocated: Zero. Only Elbow Grease Required.

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Although there are marketing firms that do nothing but manage social media marketing, this is something small business owners can easily do themselves. For the typical small business, this means creating a Facebook and a Twitter account and establishing relationships with other people.

Chances are, you already have these types of personal accounts set up, and you already know how to use them. They key to succeeding with social media in business is to treat your business accounts just like you would treat your personal account--focus on creating relationships and sharing relevant, interesting information.

Do not treat your accounts like an advertising billboard. If you do, you'll destroy goodwill and drive people away. This means you engage in conversations, help promote others, and share stuff you think people might genuinely be interested in. If you want to post a commercial for your business one in every ten posts, for example, that's okay. Just make sure your social media streams don't come off like a Billy Mays ad. Instead, think of your social media marketing efforts as an extension of your in-person relationship marketing. You wouldn't walk up to a total stranger and immediately say something like "Buy my internet service, it's 50% off," would you? No, of course not. First you'd say hi and make some polite chit chat. This is how it should work on Facebook and Twitter as well.

Organic Search Engine Optimization

Dollars Allocated: 50% in Year 1, 80% Thereafter

If a small business is to succeed in the 21st century, people must be able to find it on the web. Preferably, on the first page of Google results--and we mean the first page of organic results, not paid results.

Not sure what the difference is? Open up a page and do a Google search for "business internet." The first three results with a colored background are ads--someone paid Google for those positions. Likewise, the results on the far right side of the page are paid advertisements as well. Everything else is organic--meaning that the owners of these web sites didn't pay a dime to get there. (At least, not to Google.) Any traffic those sites get as a result of that search is considered "free" traffic.

The word "free" is in quotes because it takes a lot of time and effort (and/or marketing dollars invested with a reputable SEO firm) to get a site to appear at the top of the organic results. However, in the end it's worth it, because it's more cost-effective than buying a continuous stream of pay-per-click ads (which we'll cover in the section below).

Given that organic SEO is the single most cost-effective way for small businesses to be found on the web, you might wonder why we suggest allocating only 50% of your marketing budget to organic SEO in the first year. This is because organic SEO takes time. It involves the process of creating good quality content on your web site over time and persuading other people with other sites to link back to your own. It takes at least a year of investing and nurturing this process before you will begin to see results, especially if you're doing business in a very competitive niche.

During the course of this year, while you're waiting for your web site to magically float to the top of Google's organic results, you'll naturally want to generate traffic in other ways. The quickest and easiest way to do this is with pay-per-click advertising.

Pay Per Click Advertising

Dollars Allocated: 50% in Year 1, 20% Thereafter

Pay Per Click Advertising involves paying a content provider (like Google, Facebook, Bing, or others) to display an advertisement that links to your site whenever someone searches for keyphrases related to your product or service. For example, if you would like to do pay per click advertising through Google, you would set up an account with their AdWords service. Suppose your company sells blue widgets. You would set up your account so that whenever someone searched for blue widgets, an ad with a link to your web site would pop up.

Google doesn't charge you to display the ad--you are only charged if someone clicks on your link. Hence the term "pay-per-click" advertising.

Here's the catch: Google will only display your ad if you haven't exhausted your daily budget. For example, let's say that the search term "blue widget" costs 25 cents, and you have a budget of two dollars per day. That means Google will display your ad until you've received two dollars worth of clicks (8 clicks), but no more.

However, what if "blue widgets" is a really popular search term that normally gets 1,000 clicks a day? Your pay per click budget only allows you to capture eight of those, leaving you to miss out on a significantly larger market share.

This is why it's much more highly desirable to go after organic traffic. If you can nurture an organic SEO program long enough, your site will eventually turn up in the organic results and you'll be visible all the time and may capture all 1,000 clicks for "free."

Think of organic SEO as a long term strategy and pay-per-click as your bridge to get there. Once you are ranking organically for your top terms, scale back your pay-per-click budget to 20% of your overall dollars and use the money to buy supplemental keywords for which you may not ever organically rank.

Web Site Content Creation

Dollars Allocated: Included as Part of your Organic SEO Budget

An essential part of any long-term organic SEO budget must involve the continuous creation of relevant, categorized, interlinked web site page content. Search engines like content, and Google in particular has been placing a great deal of emphasis on the freshness of site content. It highly favors content that was published recently over content that is stale and old. The more content your site has on a particular theme, the more Google will come to see your site as an authority on your topic, which in turn raises your chances of organically appearing on the first page of Google's search results.

It's always a good idea to maintain a blog, but you also need a continuously growing main site that is constructed using a silo architecture. A silo architecture means that your site is organized into thematic groups of pages which are strategically interlinked. The methodology for creating a siloed web site is beyond the scope of this article, but one of the best articles we've seen on this subject is How to SEO Your Website

Good SEO begins with an intelligent, siloed site design. If your web designer has never heard of silo architecture, fire him or her. If your SEO consultant's strategy involves only link-building and not content creation, also fire him or her.

Bottom Line

You'll get the most bang for your buck out of dollars spent on organic SEO. But since it's not an overnight solution, you need to start out with a marketing mix that allows you to get traffic to your site short term while you wait for the big payoff later. This is why you'll want to start off with a sizable pay-per-click budget that will scale down over time. Finally, unless you're overflowing with money, you don't need to hire a marketing firm to manage your social media. Just use common sense. Treat your business Facebook and Twitter accounts just like you'd treat your personal ones, and try not to think of them as billboard substitutes (because they're not).

After these methods have paid off and you've made millions of dollars, that's when you can start investing in iPhone apps, promotional video-games, television ads, radio ads, and all the other fun stuff marketing money can buy!