Digital Marketing, Do You Have What It Takes?

Digital marketing only works if you’re ready for it. We get a lot of calls and emails from startups to non-profits to established organizations looking to take advantage of all of digital marketing’s benefits versus traditional channels.

Can we deliver bottom-line results? Absolutely, just check some examples here and here. Would we like to work with every organization that contacts us? Well, that depends. Do they actually have what it takes to work with us? Maybe.

So how do you know if your organization has what it takes to truly drive a results-oriented digital strategy? As we’ll explain below, that all depends on several elements of your strategy and digital foundation. Just to make it easy, we here at Circle Social actually build out every element as well, though it certainly adds to overall costs.

You Don’t Know What You Don’t Know

The reality is that most organizations don’t understand how marketing in general works, much less digital. By this we mean, what are the costs, what are the expected results, how does it integrate into their overall strategy?

Many organizations simply view marketing as some kind of magic black box. They know they need to do it, so they throw money at it and hope they’re doing it right.

If they start getting more customers, they jump for joy, knowing that the marketing is working, but couldn’t tell you what part or why.

So they continue to spend money on marketing without ever really understanding what’s effective and what’s not. It’s no surprise then that many organizations are wasting most of their marketing budget.

The Most Important Basic Element: Your Budget

We cannot tell you how many organizations come to us without a clear budget. If you do not have money strictly allocated for marketing, there is no way you can create any kind of strategy.

The US Small Business Administration recommends a budget of 7-8% of gross revenue be allocated to marketing. If you are not at least allocating that, then your business will most likely fail. Lack of marketing is one of the most common reasons we see for businesses not making it or not being able to grow.

If you’re a startup, part of your investment funding must be allocated to marketing.

Before going further, we’ll address the organic issue right here. Countless companies tell us that they want “organic growth”, which is supposedly cheaper. The thinking goes that it doesn’t require an ad spend, so must be cheap, right?

Wrong. Organic growth is tremendously expensive. To gain just one follower on Facebook organically can take weeks. Then, there’s the problem that less than 4% of your fans ever actually see your organic posts.

So after a year of “organic growth”, you’ve still got less than 100 fans and an average of 4 people see your posts each day. Not so smart, even if you’re only paying someone $500 a month to manage the page. You just paid $6,000 in the year for 100 fans and maybe a handful of clicks.

Your budget will determine what you can do and how quickly. If you want to run a full digital marketing strategy with website optimization, content development, SEO, and social media ad campaigns, you’re looking at a minimum of a $5,000 spend, not including ads.

If this doesn’t fit your budget, then you need to determine what the best channels to start with are and what are the most important pieces to build first (we’ll help you figure that out below).

The Rest of the Basics

Before worrying about digital at all, you have to have a basic marketing strategy in place. You need to understand what your goals are, who you’re targeting, and what content is needed, in that order.

Setting goals let’s us know what we’re working towards, obviously. It’s the first step as it will determine who we’re trying to reach. When we know the goal is to drive enrollments for a school, we now know we need to target parents with children of a certain age in a certain geographic area.

If our goal was to upsell current customers, then we know we’d be uploading current client lists into Facebook campaigns as well as retargeting website visitors that got to your checkout page with Adwords.

The goal gives us direction in both techniques to be used as well as targeting.

So now we know we’re targeting parents of children ages 5-10 for our private primary school in the 46241 zip code of Indianapolis. This knowledge enables us to understand our customer and create content that speaks to them, thereby encouraging them to take action related to our goal.

To sum up: Goals, Targeting, Content

Now that the basics are out of the way, what do we need to do with digital?

First Things First, The Website

Your website is quite often the linchpin to your entire digital marketing strategy. If it’s not working to drive leads or sales, then there is no point wasting money on digital marketing.

Having a poorly designed site, or one not optimized for growth and lead capture, is like trying to sell a great product in store with rude sales agents. It’s not going to work.

This is also why we hate programs like Click Funnels and Lead Pages. They direct traffic away from your website and provide you with no permanent infrastructure for long-term growth.

If your website isn’t working to drive leads and sales, then why would you spend money and time building assets elsewhere when you should be optimizing your site?

A standard landing page may convert at between 1-5%. A highly targeted and well-designed landing page can convert visitors at 20%. This means that, if you have 1,000 visitors per month, 200 of them should be taking some kind of action based on their visit to your site. That could be joining your email list, giving you a call, or making a purchase.

This doesn’t always apply to home pages as they tend to be fairly broad in scope and visitors find your site from sometimes irrelevant places, but any landing pages you have for specific campaigns are ideally converting at at least 4% (although there is sometimes wide variance across industries).

So Landing Page Optimization is the first step. You need to be split testing your landing pages to figure out which ones actually spur visitors to take action. Now keep in mind you need at least 100 visits to a web page to have enough statistical data to make a judgement. This will be important later.

Understanding CPM & Conversions – Facebook & Adwords

CPM is a marketing acronym that refers to cost per thousand impressions. It’s how much you pay to get your ad/message in front of 1,000 people. The average CPM for direct mail, for example is $57. So if you want to reach 10,000 people, you’ll be paying $570. If you’re interested, TV is about $18, newspaper $16, and radio $10.

Digital marketing can range widely depending on platform and audience. Take Facebook for example, we’ve seen CPMs as low as $5 in 2017 and as high as $67. The average Facebook CPM is around $15 when marketing to a cold (new) audience that doesn’t know you yet.

Also, when marketing to a cold audience, you can expect a click-through rate of 1%. So, doing the math, this means that, when I pay $15 to Facebook, I will reach 1,000 people and get 10 clicks.

Now, going back to my website split testing, I need 100 clicks (which means they’ve clicked on the link in my ad that takes them to one of the two landing pages we’re testing).

Since these are new landing pages that we just created, we can assume there is no organic traffic and so all traffic will come from digital campaigns.

So, to get 100 clicks, I need to reach 10,000 people.

How much will that cost me? $570.

But remember, we need to test both pages, so to determine which ones better, so we actually need 200 clicks. So the real cost to split test 2 landing pages is $1,140 just in ad spend, not counting the labor to actually build the pages and run the campaigns.

It may take me 5 iterations of landing page tests to figure out the best ones, so that’s more than $5,500 to finally get that optimized just for one particular funnel.

Looking at this from the Adwords end, industries vary, but we can go with an average of $4 per click. So for Adwords, we’d be looking at a spend of $800 to drive enough traffic to make a decision on which page is converting better. However, the challenge with Adwords is that your dependent on search volume. If there are only 800 searches a month for your keyword, and you get a solid click-through rate of 1-2%, it would literally take months to get enough clicks to make a determination.

Of course, even without your landing pages optimized, they should still be converting, assuming you have good content and a good follow-up process to close the deal, so money will be coming in. But these are your total costs over time.

And, if you’re a new startup, you probably have not figured out what works at all yet, so you may have no revenue coming in until you get at least a few pieces working.

My Website Converts, So Now What?

OK, unless you’re e-commerce, nobody is going to buy directly from your page, right? The entire goal of the website is usually to get them into your lead nurturing or sales funnel through email drip campaigns, webinars, or good old fashioned phone outreach.

Let’s say we want to run a webinar funnel. We’re going to offer free webinars to potential clients. For the average free webinar, the show up rate is 30%.

And maybe you’re running an amazing webinar that actually converts viewers into paying clients at, say, 10%.

Finally, Math Class Is Paying Off

How does this all play out? Here’s where the math gets fun. Stay with us, we’ll try to make it easy.

Our goal is to have 100 people sign up for our webinar.

We’ve got our landing pages optimized, so let’s say we’ve got  a rockstar conversion of 20%. For every 100 people that visit the page, 20 sign up for the webinar. We want 100 people signed up, so we need 500 people to visit the site.

To get 500 people to visit the site at a 1% click-through rate (CTR), we need to reach 50,000 people. With our $15 CPM, this costs us $750.

Great, we pay the $750, get the 100 people to sign up and the usual 30% attend. So out of the 100 sign-ups, 30 people attend.

Now we get a 10% conversion rate, so 3 new customers! It basically comes down to $250 per customer as Return on Ad Spend (RoAS).

Wow, all that for 3 new customers? That’s a lot of work, right? Yes, digital marketing isn’t easy, but that’s how it all plays out. Of course, we’re talking about optimal averages here. Especially for organizations new to digital marketing, they won’t have funnels in place, so won’t be converting at near those numbers. That will take a lot of time to split test each piece and figure out what works best.

Or, maybe you’ve got an established business that’s already converting well, but just need someone to take off the daily management of digital and better optimize campaigns. That’s the best place to be in.

Of course, there are different funnels for different industries. We’ve gotten leads for as low as $5, but it all depends on your offer, creative, and how warm the audience is.

Is it worth it? That depends on your business model. If you’re selling widgets for $100 a pop, no, spending $750 in ad spend for 3 customers  plus all the labor that goes into creating content, running campaigns, servicing customers. It doesn’t work.

This is why apps usually fail. The cost to market them is far more than the revenue they generate. Successful apps need the app download as really just entry into the funnel and need to make money through advertising and upsells. Subscription models can also work well.

Now, a school enrolling students at $10,000 a year? That’s a great deal!

Content Is Still King

The above is a very simple funnel, but most companies, especially B2B, do not have such simplistic funnels. This is where content comes in.

Content is ultimately what converts prospects for the majority of larger organizations. No amount of digital wizardry or insane marketing spend will make up for bad content. Just like your web pages need to work as part of your funnel, so does any content on your site.

To have content that converts, you first need to understand if you’re creating content for SEO or for lead nurturing along the customer journey.

You also need to understand what pieces of content are working for you and what aren’t. Twitter, for example, is a phenomenal place to split test headlines. It’s cheaper than Facebook, too.

CPM on Twitter is about $10, but CTR is only 1% again. We’ll probably want to test out at least 5 different headlines to see which one gets me a CTR of 1%, so that’s $50.

But split testing on Twitter just tells you what headlines work to get clicks, not if your actual content is any good. That takes digging into your website analytics.

We know that a solid 1,000-2,000 word blog post will have average times on site between 2 and 4 minutes. If you’re not seeing read times that long, then either you’re targeting the wrong audience, the wrong people are finding the article (your SEO and keywords are off), or the content just isn’t good.

To figure out which problem it is, you’ll have to do more testing and analysis. Just like with your webpage, ideally you have 100 visits to a post before looking at time on site to determine if it’s working.

Which, again means you need to pay to get people to the page and that’s going to cost you money. It may take you writing 10 articles before you find one that really clicks with your intended prospects.

10 articles at a couple hundreds dollars per post. Then $150 in Facebook ad spend just to get people to the posts. That’s $1,500 solely in ad spend again.

All that simply to determine what kind of content your audience likes.

Building Your Infrastructure Is the Biggest Cost

You need to optimize each piece of that funnel, your website, your content, then your audience targeting for the ad campaigns, then your webinar or emails or sales pitch. Each piece takes a lot of time and money to figure out. This is what we specialize in, so that you end up with an optimized lead and sales funnel that brings in revenue while minimizing cost.

All in, you’re looking at thousands of dollars to build a working funnel. Remember, when you’re asking your digital marketing team or agency to run successful campaigns, you’re asking them to basically build your entire business online. No small task, but absolutely worth it to drive that bottom-line and scale the business.

Looking to figure out your own cost? Download our FREE Digital Return-on-Ad-Spend (RoAS) Calculator.

Digital RoAS Calculator

About the Author

Nick Jaworski is the Chief Digital Community Builder of Circle Social Inc. Sick of all the noise and utter lack of relationships being built by companies in the online space, he launched Circle Social to help organizations capitalize on the power of building real relationships that benefit both customers and businesses. He is also the proud father of the most beautiful girl in the world. You can most often find him sharing thoughts on digital marketing and cracking jokes on Twitter or Snapchat as @NBJaworski.

Leave a Reply 2 comments

Erin - June 9, 2017 Reply

This was such a great article! Thank you for sharing. I have been doing tons of research in an attempt to start doing social media management and I got a ton of value out of this.

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