Many small businesses outsource their online advertising to agencies to avoid the time and effort it would take to do it in house. Nevertheless, it is imperative for a small business owner to know exactly how their money is spent.

The purpose of this article is to provide a framework for the savvy business owner to ask the right questions to ensure accountability of how and where their advertising dollars are spent when trying to identify the best outsourcing agency for their company.

For example: you own a local small business and its monthly advertising budget is $1,000 and you are now in the process of finding an agency that will best suit your advertising needs. From a financial accountability perspective, here is the information you will need.

Find out if any campaign will use the search network, content network, or both. Using the content network is an easy way to deplete a budget with a lot of clicks but not enough leads to justify the spending. Internet yellow page advertising is geared towards search advertising, not the content network.

Ask if the advertising spend will be on both Microsoft AdCenter and on Google AdWords. Remember, Microsoft AdCenter is also running Yahoo. Any agency that just runs on one platform will reduce your reach and frequency, which will mean far fewer potential customers.

For the monthly spend, ask for the percentage markup per click. Business owners should always know the daily spend by ad network. This is critical. If you do not know the markup per click and distribution of spend by ad network, you will have no idea where your money is going. Beware that several of high profile agencies that specialize in small business advertising charge 100%-150% markup per click.

In doing due diligence, I called the top four agencies that specialize in small business advertising and there was only one that had full disclosure of how their customers’ monthly advertising spend was allocated. This company is AdHui (www.adhui.com).

Some sales reps were clearly caught off guard and didn’t know while others sounded like they had a canned script to evade and down play the importance of the questions. Furthermore, none of the stats was displayed on their dashboard. Again, AdHui was the only agency that displayed daily spend by network and was the only agency that gave complete disclosure of their markup per click.

This is they way it should be. Any fortune 500 company that advertises knows how their budget is spent. The same should go for small business.

Effective advertising relies heavily on market segmentation and the elusive window of opportunity. If you want to get a product or service advertised, you have to make sure you do it in an effective way because otherwise, you could spend thousands on advertising and not sell a single additional unit than you did before the campaign ran.

The first thing to consider is your target market. This is where the idea of market segmentation comes in. You want to get to know your audience well and determine what media vehicles will be effective in advertising to them. If you’re selling a toy, for example, showing commercials on ESPN is probably not the wisest marketing move. You want to target parents and especially, kids. So buy ad time on Nickelodeon or the Disney channel to get kids interested. They will do the rest of the work for you.

Another example especially relating to picking media vehicles, such as TV, internet, radio, or magazines, is trying to market a kayak. Someone who would buy a kayak probably likes the outdoors, which means they probably wouldn’t be sitting in front of their TV on a Saturday afternoon. So putting commercials for a kayak at that time might not be very effective. On the other hand, you should consider buying ad space in Outdoor Life magazine.

This all seems like common sense, but it is important to do research because some market trends are actually the opposite of what you would instinctively think. Consumers are very interesting creatures and it will benefit you if you thoroughly research the people you are trying to market to. You might also find information about what kinds of things get their attention or make them laugh to make your advertising even more effective.

Another important thing to consider is aperture, or the window of opportunity. You should always keep in mind that advertising is useless unless a customer is ready to buy a certain item. I love the Energizer bunny commercials but if I don’t need batteries, the commercial alone isn’t going to make me go out and buy some. You could set up a schedule of advertising that occurs on and off for some period of time. This is an example of what is called an awareness ad. If my computer breaks and I’ve been seeing commercials for the new Mac for months, I am more likely to look into that when I go out to buy a new computer. They make the consumer aware of the brand.

But for certain items, this kind of advertising is ineffective because they are seasonal or otherwise extremely reliant on when a customer is ready to buy. So you wouldn’t advertise for school supplies in the middle of the spring if the school year is almost over. Similarly, it is probably a good idea to increase advertising for video game systems around Christmastime because a lot of people are in the market for one.

If you keep these things in mind, you should be able to create effective an advertising and marketing campaign. Always remember to do thorough research. I cannot stress that point enough because it should be the basis for every other step you take in the advertising process.