Why Failed Marketing Can Be A Good Thing

by | Sep 30, 2018 | Customer Growth

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

— John Wanamaker, American Merchant and Marketing Pioneer

I’m sure this will come as no surprise to you, but a lot of your marketing is going to fail.   

This isn’t a bad thing as long as you’re measuring and tracking *all* of the details.  Unfortunately, Too many businesses simply throw marketing ideas at the wall spending thousands (or tens of thousands or hundreds of thousands or more), yet they never have a clue whether any of it is working.  

The solution?

A proven 6-step process:

Research. Implement. Track. Analyze. Adjust. Repeat.

Many businesses will only use two of these six steps: implement and then repeat.  Doing this is a great way to flush your money down the toilet.

Related Post: The Enticing Trap Of “Frankenstein Marketing”

Today, we’re going to take a closer look at the middle two steps which are focused on testing and understanding your results—measure and analyze.

 

Step #3: Track

Analytics
Although this is listed as step #3, you’ll really be configuring your tracking details before you implement an ad.

The first thing you need to think about is what exactly is the goal of your ad.  Once you know this, then you’ll be able to define a conversion.

A conversion could be clicking on your ad and then…

  • buying a product on your website
  • downloading an eBook on your website
  • registering for a webinar
  • filling out a contact form

Next, you get into some of the technical details where you’ll configure your analytics tools to track your selected conversion—along with many other important metrics.

Let’s now talk about a few of the important metrics you should be tracking.


Click-Through Rate

This is a ratio between the number of people who click on your add versus the total number of people who see your ad.

If you have 1,000 impressions (i.e. people who see your ad), and 100 of them click on your ad, this would be a (100 / 1,000 = 10) 10% click-through rate.


Conversion Rate

This is a ratio between the number of visitors that complete the desired conversion action (i.e.download eBook, etc.) versus the total number of visitors.    

So, if you have 1,000 visitors who click on your ad, and 100 of them download your eBook, this would be a (100 / 1,000) 10% conversion rate.


Cost Per Acquisition

This is the cost to acquire a new customer.  

In order to measure this, you’ll need to define what a customer is.  Generally, a lead would become a customer when they spend money with you through a product or service.


Cost Per Lead

This is the cost to acquire a new lead.


Average Lifetime Value (LTV) of a Customer

This one is pretty self-explanatory, and it’s really only used to help you understand how much you can spend to acquire a customer.  LTV can also be used for financial projections. 

 

Step #4: Analyze


Once you have all of your metrics from a campaign being tracked, you or someone in your office (or your marketing agency) will need to continually analyze everything—and make adjustments to your campaign accordingly.

Let’s look at an example:

MeasureYou’re interested in selling painting services to your local market.  So, you decide that Facebook would be a great place to advertise.

You define your target audience (based upon your thorough research before you started), you create your ad, you set up all of your tracking, and then you click start.


After a few days, here are your results from this campaign…
  • 5,000 impressions (i.e. the total people who saw your ad)
  • 500 people clicked on your ad and went to your website contact form
  • 3 people filled out your contact form
  • 1 person became a customer
  • $450 was spent in total

Your metrics would be…
  • Click-Through Rate: 500 / 5,000 = 10%
  • Conversion Rate: 30 / 500 = 6%
  • Cost Per Lead : $450 / 30 = $15
  • Cost Per Acquisition: $450 / 1 = $450

A few things to notice with these metrics:
  • To increase your click-through rate, you’ll need to either improve your Facebook ad or improve your target audience.
  • To increase your conversion rate, you’ll want to improve your web page where the conversion takes place—in our example, this would be the contact form page.
  • Just because you only converted 1 of 30 leads doesn’t mean those other 29 leads won’t turn into customers at some point in the future.  You must continue to stay in touch with them.
  • As long as you keep your cost to acquire a new customer below your average lifetime value of a customer, you will have a positive ROI on your ad spend.
Moving on:

This should give you a good idea of why it’s so important to track your ads.  These metrics can truly paint a picture of what’s happening with your campaigns.

We went pretty deep into some details above, so don’t hesitate to let me know if you have any questions by commenting below.  

Ryan has been heavily involved in the world of Information Technology and entrepreneurship since the early 2000s. From small business consulting to Fortune 500 IT leadership, Ryan has a wide array of industry knowledge. He earned his BBA from the University of Iowa in 2004 majoring in Management Information Systems and later earned his MBA from the University of Iowa in 2009 with a focus on Management and Marketing. When he's not spending time with his wife and three young children, you'll find Ryan pounding away at his keyboard, spinning on his Peloton, or listening to a good audiobook or podcast.

Connect with Ryan on Twitter or Instagram.

Ryan Glick

Co-Founder, Pixelayn Innovations

Ryan has been heavily involved in the world of Information Technology and entrepreneurship since the early 2000s. From small business consulting to Fortune 500 IT leadership, Ryan has a wide array of industry knowledge. He earned his BBA from the University of Iowa in 2004 majoring in Management Information Systems and later earned his MBA from the University of Iowa in 2009 with a focus on Management and Marketing. When he's not spending time with his wife and three young children, you'll find Ryan pounding away at his keyboard, spinning on his Peloton, or listening to a good audiobook or podcast.

Connect with Ryan on Twitter or Instagram.

Ryan Glick

Co-Founder, Pixelayn Innovations