Helping businesses generate revenue online, there is a number of questions that we get asked often and some that we don’t get asked enough. With this article we are trying to help businesses understand the value of Digital Marketing better and learn how to make decisions about your investment especially as you open your business.
We’ve put together a list of frequently asked questions, hoping this would help business owners and marketers understand different aspects of Digital Marketing and investment in the campaigns.
How to Promote Business Online & Measure Success?
When doing Digital Marketing it is important to measure if it helps achieve your KPIs– more traffic, greater conversion rates or greater conversion value. These are the main pillars of success in Digital Marketing. Depending on your objectives, you as an advertiser choose channels and tactics needed to achieve these KPIs:
- If you invest in SEO, Paid Search or Social Media advertising, these are channels that can help you get relevant traffic to your website.
- If you invest in website design, Conversion Optimization or Email marketing, these channels can help you maximize Leads from existing traffic to your website and help increase Conversion Rates.
- Conversion Value is a KPI really popular in eCommerce, B2B and longer-term B2C Sales, there is a whole mix of tactics in the channels mentioned above that help companies achieve Conversion Value goals.
All of these pillars are incredibly important and will apply to almost anything you do in Digital Marketing.
When doing Digital Marketing, most companies are looking to find repeatable and scalable growth. This means that an initial success can be repeated in the next month or the next quarter and scaled to deliver more revenue.
This is one of the objectives enterprise-size clients seek – greater efficiency and higher return on investment, even though for the most part their budgets remain the same.
While for Small and Medium-Sized businesses, success often means adding breadth to their Digital Marketing. Small and Medium-sized businesses often start with one channel and a local market. Maximizing their returns through through that channel locally, gives them resources to expand further into more marketing channels or more locations.
How to Allocate Budget & Measure Effectiveness of Digital Marketing?
There are plenty of metrics in Digital marketing that help evaluate results from different angles. However, to get started, here is a couple of the most important ones you should always track to measure effectiveness of your Digital Marketing.
Cost per Lead and Customer Lifetime Value – as the business owner the most important metric for you is what a Lead is worth to you and how often a Lead converts into a sale. This leads to the next questions – how long does an average customer stay with your business? This represents the Lifetime Value of a customer.
Let’s say, there is a 50% probability that a person who comes to your website and submits a Lead form will convert into a paying customer. And this customer will stay with you for a year and generate $10,000 Revenue. This makes and average Lead form submission on your website worth $5,000.
This is a really important number to know because it helps you put things into perspective evaluating your digital marketing channels and will help answer a question of how much did we spend and why did we spend so much.
Another important metric is Return on Investment (ROI). It helps you understand how much you invest in different marketing channels and how much value you get out of those channels. Many businesses of all sizes invest into Paid Search and Social Media advertising to get a certain amount of Phone Calls and Leads. And if you calculate how much money you invest into these channels, how many leads you get out of them and an average Lifetime Value of a Customer this will give you a lot more context for your marketing decisions.
You will know what channels are profitable and you can spend more money there to grow your business.
How Companies Use Digital Marketing & What Channels Should you Use?
Channels that are right for you will depend on the kind of business you are in, the market you are in and the size of your business.
But some of the biggest channels right now are:
Search Engine Optimization (SEO) – one of the major channels. This is a channel that targets people who come to your website from Search Engines, such as Google, Bing and others. It involves a lot of technical work on your website, optimization of your content and creation of new content and link building to add authority to your website. This is a channel that you need to build a foundation for and it’s a slow, long-term channel. So if you never invested in SEO, likely you are behind the competition. SEO takes a while to start getting results, but once you do, this channel will quickly become the highest ROI channel.
Paid Search (PPC) and Social Media advertising – can get you results much sooner compared to SEO. And knowing your investment, you can also calculate the ROI and Lifetime Value of a customer for those channels to make decisions based on data. The beauty here is that you can get results soon and scale the results fast. With Paid Search and Social Media advertising, if at some point you decide to invest 20% more, chances are that you will get 20% higher returns from these channels.
Email Marketing – is one of the essential channels. It’s almost free to start. What if you captured more emails or even used emails from the past customers and sent out a campaign trying to upsell or re-engage the customers?
And finally, there is a Conversion Optimization (CRO) services that apply to your website. This channel helps maximize returns from you existing traffic through improving User Experience on your website and helping people find what they need faster and converting them into Leads more effectively. The beauty of Conversion Optimization is that it impact all website traffic, no matter where visitors come from. Imagine finding a small tweak that would improve the number of leads you get by 10%.
This channel is really important for enterprises and eCommerce businesses that have a large volume of website Visits. They can analyze behaviour patterns and make informed decisions on Conversion Rate Optimization.
All of these channel work in parallel and if you are not investing in any of the channels, you really need to get started.
When Should you Start with Digital Marketing?
Many businesses are in a situation, where they build a website and hope that it will just work. But the vast majority of websites get almost no traffic and make almost no money online.
If you work in B2C market, this means that you should start investing in Digital Marketing as soon as you open your business.
While for B2B marketing the situation is different. Many businesses start with referrals. Many consultants get business primarily through referrals and even some large advertising agencies like Publicis, don’t invest in media themselves, they rely on traditional business development and referrals. A rule o thumb is that if you are in B2B and you drive over $500,000 in Revenue, you should definitely invest in digital marketing. Depending on your growth targets your investment should be around 5%-15% of your Revenue.
Should I Hire Digital Marketing Employees in House?
Small Businesses tend to hire Junior Marketers in-house. And these entry-level specialists are somehow responsible for 5 Digital Marketing channels all at once. Some of our clients tried and failed with this approach.
The truth is, as a Small Business your best bet is to hire an advertising agency or a consultant, someone who is really good at one channel. Give them some time to start generating repeatable revenue for your business, that’s the point when you start hiring in-house. You can check an internet marketing agency in Houston, to see how the leading agencies get their business. This will give you some context.
The first hire should be a Marketing Coordinator who has some experience already and can work across multiple channels, helping the highly-qualified Sales people, Marketing consultants etc. implement recommendations making their work even more effective and learning from them, that’s a win-win situation and will get you the best ROI, and a happy learning employee.
Written by Sasha Matviienko, Director of Digital at growth360 – performance marketing agency located in Toronto and specialized in analytics & revenue-driving digital marketing services.
Website: growth-360.com
Facebook: facebook.com/ItsGrowth360
LinkedIn: linkedin.com/company/itsgrowth360
