You spent weeks planning and thousands executing what you hoped would be a kick-ass content marketing campaign. You captured hundreds of clicks and thousands of impressions, but at the end of the campaign, you have little revenue to show for it. How can you ensure better results next time and improve ROI instead of just hoping those clicks will one day turn into revenue?
Performance marketing is innovative digital advertising aimed at a specific conversion goal, such as a sale, lead, or sign-up, implemented through highly-targeted campaigns. This approach, when executed correctly, achieves greater efficiency in ad spend and real-time measurement of ROI. How’s that for a win-win?
Customer acquisition is a crucial component to business growth, and yet many still don’t understand how to efficiently attain new customers in the digital commerce environment. US e-commerce revenue totaled $450 billion last year. That accounts for 13% of all US retail sales and growing fast, outpacing the growth rate for in-person transactions. Many big-ticket items purchased in stores are also first researched online, making e-commerce and digital advertising essential to the success of nearly any retailer today. Clamoring for their piece of the pie, digital advertisers spent $88 billion on ads last year, half of that on Facebook and Google. But how many of those dollars were spent efficiently?
Setting a Budget
Rather than selecting a dollar amount you’re willing to part with for a given traditional marketing campaign, in performance marketing you set a budget by multiplying the optimal cost per acquisition (CPA) by the targeted number of results (outcomes). For example, if you are content paying 2 dollars per email sign-up and you want to grow your email list by 10,000, then 20,000 dollars would be a reasonable budget to set.
$2 (CPA) x 10,000 (email sign-ups) = $20,000 (budget)
The “growth at any cost” mentality is no more, and neither is the idea that it’s acceptable not knowing which of your ads is performing best. Traditional advertising is not optimized for conversion behavior. All it can guarantee is eyeballs, and that’s an easy way to overspend. The highly trackable nature of direct response advertising is what allows for real-time measurement of ROI. The quick, iterative cycles enable marketers to test rapidly and edit their messaging, content, and audiences for higher conversions and lower CPA. Then you can proceed with opening the floodgates, ensuring you’re never overpaying for a customer.
Continue to Optimize, Continue to Grow
Spend your ad budget more efficiently, and you can scale faster. Simple, right? But it's not so easy to implement.
What the wise do in the beginning, fools do in the end. -- Warren Buffett
You cannot work hard to construct a high-performance campaign and then get complacent and keep it on autopilot for weeks and expect the results to continue. The digital space is fiercely competitive, and content has a short shelf life, especially on social. If you’re running successful ads, you will soon have copycats replicating what you are doing. Direct response marketing is all about testing, measuring and optimizing for conversion. There’s a constant feedback loop that, when appropriately managed, allows retailers the freedom to try new things and stay ahead of the competition. As Warren Buffett said, “What the wise do in the beginning, fools do in the end.”
Knowing Which Channels
The goal is to always deliver the right message to the right audience on the right channel.
Now you might be able to test messaging, creative and even audiences with sufficient accuracy on your own with some practice, but what works on one platform may not work on another.
The digital advertising landscape is ever evolving and so should your marketing mix. There’s increasing segmentation occurring with the proliferation of advertising platforms.
You might finally feel like you’ve cracked the Facebook code and achieved some success, but you’re still struggling on Google and Instagram and haven’t even attempted YouTube, Bing, Amazon or Snapchat. Many of these advertising platforms are still cumbersome to use, and their feature sets (i.e., audience targeting) are continually evolving. But testing multiple copy and creative combinations across several platforms is a painstaking task for even the most expert marketers.
Stop engaging at the individual channel level. Focusing on only one or two channels means you’re missing a tremendous opportunity to capture the attention of the right audience or maximize emerging or growing platforms. Facebook and Google are significant, but not very cost effective. Testing a new platform to uncover new audiences and potential customers may allow you to reach a hyper-focused customer segment at a much lower cost.
Leverage marketing automation software using AI-driven technology to optimize your marketing spend.
Leverage marketing automation software using AI-driven technology to optimize your marketing spend across all digital channels. Utilize copious amounts of data to make informed decisions about the best creative, performing keywords, audience segments, and when to refresh. With marketing automation, you can continuously test thousands of variables to acquire the best possible customers at the lowest cost. This frees you up to focus on the highest value activities of your day rather than endlessly analyzing spreadsheets.
See how an organic clothing company grew their revenue 12X with refined audience testing successfully used marketing automation by New Engen.
So how can you outpace the competition and wisely spend your marketing budget in this rapidly evolving and uber-competitive digital advertising space? Implement performance marketing technology and win by being everywhere possible that works!