Gross Margins and AdvertisingHey guys,
I would like to hear your thoughts about the change in advertising and its effects on gross margin.
"Revenue of $3,488,902 (2015 - $4,568,276), a decline of 23.6% as compared to the year ended August 31, 2015. This decline in revenue is due to a change in business model, from pay-per-click advertising to growing organic traffic through search engine optimization. Due to this change in strategy, the annual spending on advertising during the period was substantially reduced to $203,423 from $466,379 in the prior period..."
By switching advertising methods we save $200k but lose out on $1M in gross profits. I am not sure how these advertising methods actually work but is it not possible to do both and wait for the search engine optimization to take over from pay per click rather than just shutting PPC off?
I appreciate any comments and good luck to all!