Most non-marketers think Marketing is colourful images and a bit of Social Media; how wrong can they be?
Starting out my career 8 years ago, it was pretty much that! But I soon learnt in fact, it’s all about investment, conversions, metrics, revenue and profit.
If you understand business, you pretty much understand the way marketing works! Unfortunately, that doesn’t mean you understand how marketing is done, to make that marketing work.
Firstly, a lot of research needs to be done to understand exactly how much investment is required for Marketing, this typically depends on your industry, your products and services, your audience and of course, your budget. With paid advertising, such as Social Ads or Google Ads, the budget is set using industry benchmarks, so, if your competitors are paying more per click than you are, you’ve got some work to do.
Investment differs between platforms, if you have analytical conversion data for your business, you can easily work out what investment is required. Events may be a great way to generate leads, whereas, your target demographics may not understand the word Snapchat, let alone use it.
As with most marketing strategies, investment will need to be adjusted throughout your campaigns, based on measurements.
“If you’re spending £100, but getting 30 customers from that £100, with an average order value of £200, that £100 has generated £6000 worth of revenue. Therefore, to generate a revenue of £10,000, your investment can increase by 40%.
Conversions are why we all do marketing. Those conversions can be different depending on your goal, a new customer, a download of your latest white paper, a newsletter subscriber, an attendee on your webinars, whatever the conversion, it’s the conversion that matters.
At the start of any marketing campaign, setting up conversations using Google Tag Manager is key. You can measure every single click on your website, the journey the customer took to get there and how much the conversion cost your business.
With conversion metrics, you are then able to analyse your investment/conversions = average cost per acquisition, revenue and profit for your business.
Metrics and KPI’s are measurable values which should be used from start to finish across all marketing campaigns. Understanding your traffic %, your CTR all the way to CVR and CPA/CPC – every metric counts.
Metrics differ across each channel, but at the beginning of each campaign, it is important to set metrics so that you can measure, analyse, report and re-evaluate these metrics.
Return on Investment is the most important metric for any marketing campaign, but ROI doesn’t always mean money. ROI demonstrates how your marketing time, effort and investment is contributing to your company growth.
Revenue & Profit
Revenue is the amount generated through Marketing activity. All the above metrics can be re-evaluated to increase revenue. Take your website as an example, if your CTR (click-through-rate) is 60%, but your CVR (conversion rate) is only 3%, the journey your customer took from landing on your website to clicking your CTA (call-to-action) or in this case, not clicking the CTA, needs to be improved.
Profit is the amount generated in sales, minus your total marketing spend.
Below is a basic report example to show metrics.
So, in a nutshell, that’s how ‘marketing works.’ How to do marketing, to make marketing work, is a blog for another day… 😉