Direct Marketing - Online Advertising
This article is designed to help you get the most out of online advertising.
The examples I use are from Facebook’s advertising platform, however the principles remain the same across all online advertising platforms.
First, we’ll talk marketing strategy and customer lifetime value.
Then we’ll look at an “effective” Facebook ad campaign.
We’ll touch on targeting to ensure you’re reaching the right audience with your ads.
We’ll look at what to include in your ad.
And finally, how to structure the campaign in a strategic manner to deliver leads and new clients to your business.
- Strategy -
When creating advertising campaigns to acquire new business, it’s often short-sightedness that will get in the way of success and its very common across businesses. If you’re thinking just in the moment and thinking about immediate returns on your advertising campaign, you’re following a path that’s appropriate for someone who expects to be in business for only the short term. Otherwise, you’ll want to consider Customer Lifetime Value as a number to measure your marketing Return on Investment (ROI) against.
- What is Customer Lifetime Value? -
Customer Lifetime Value (CLV) is the total dollar amount of the transactions that a customer will make with your business, over the life of your business relationship with them.
Depending on your type of business and the types of clients you serve, you may need to do this calculation multiple times to determine the CLV for each client type.
Let’s take an example, let’s say you have only 1 type of client that you target in your business and let’s use a basic formula to calculate CLV.
- How do you calculate Customer Lifetime Value? -
First, what is the typical amount per transaction, that a customer spends with you? E.g. $1000.
Next, how often does the typical customer purchase from you in a year? E.g. 4 times. 4 x $1000 = $400.
Then finally, how many years will the typical customer purchase from you? E.g. 3 years. 3 x $4000 = $12000 (CLV).
- What’s does an effective Facebook Ad Campaign look like? -
So, taking into account the $12 000 customer lifetime value and making adjustments for other expenses – you can then properly measure your advertising spend against the CLV and you’re left with an amount that you can spend to acquire a new customer at the front-end and do so profitably.
An effective Facebook Ad campaign is relative to your CLV and your business, so it’s not helpful to compare with other businesses from other industries.
To gauge the effectiveness - as a general rule, you want to answer ‘yes’ to the following questions:
Is my Facebook Ad Campaign generating enquiries from the right type of people?
Is the cost to acquire a new client, less than the amount I’ve budgeted for (relative to CLV) ?
If you’ve answered ‘yes’ then these leads are likely going to be a valuable source of clientele, so investing in follow-up will be fruitful and very important.
- Not every business will benefit -
I’ve helped run Ads for a range of businesses and I typically don’t recommend Facebook Ads for:
Lower value or low margin products/services – you’ll likely find your cost to acquire a customer is outside your budget.
Little or no repeat purchases – e.g. tour guide or boat license education service. Once a customer has experience the product/service, the repeat purchase rate is low.
The exception to those rules, is if you have multiple sources of revenue and you’re implementing a range of strategies to provide even more value to your clients (outside of your core product/service).
For example, boat license educators could create a strategic alliance with a local boat dealer and send them leads for a fee or the tour guide can do the same with a local restaurant.
- Targeting -
So now if you’re interesting learning more, lets jump into the targeting your ideal types of clients through Facebook ads.
All that data you input to your Facebook profile, including your Age, location, relationship status, the pages you Like and follow, the posts you read – this all goes into Facebook’s massive database.
The benefit for advertisers is they can show Ads to people based on this data. E.g. a Restaurant operating in lower north shore Sydney, can advertise to people over the age of 18, who live within a 5km radius of their restaurant. That way you can ensure that you’re not wasting money putting ads in front of the wrong people.
- Ad Campaign Structure -
How do you structure an effective Facebook advertising campaign to deliver leads and ultimately new clients. The key here is to be strategic and like a game of chess, think about the steps ahead rather than just having a short term expectation of results.
I help my clients to optimise each component of their marketing and sales process, so I’ll show you how I’d use strategy to deconstruct the process of displaying an Ad to someone, the customer clicking on it, receiving the offer and then redeeming it – I’ll show you how this process can be optimised for maximum results.
- Use Strategy to optimise your campaign structure -
Let me show you show to optimise your campaign structure. Instead of thinking “well the I want my target customer to click the ad, see the offer then come to the shop and buy” understand that the focus should be on optimising what you do to create an ongoing business relationship, so you can leverage your Advertising investment as best as possible – and here’s how…
Let’s call anyone in your targeting pool, your ideal target client. The people in this pool will see your Ad displayed in their Facebook feed and to encourage them to click the Ad, you need an attractive offer. Attractive enough to immediately grab their attention and break the behaviour of scrolling through their Facebook Feed or browsing.
As an example of an offer, a restaurant can use “free dessert” to attract someone to click their Ad. Then instead of simply displaying the free offer coupon, you want to ask this prospective client to fill out a data capture form. The purpose of this is to capture their details (their name, email address and potentially phone number) so you can continue to communicate with them and push messages to them on an ongoing basis.
Email marketing is very simple and very cost-effective. In fact, a number of email service providers will allow you to send emails in bulk for free, rather than paying for Facebook Ads every time you want to market to the same person. You pay for their attention and their contact details once, and then you follow up cheaply and quickly anytime you want more business. This is the strategic way to use Facebook Advertising, it’s simple to do once you know how and it’s highly effective.
Facebook Ad > Data Capture Form > Email/Phone follow-up…
- Moving Forward -
So if you have any questions or want any help setting up your campaigns for success, just send me an email (nathan@nathantripolone.com) – I answer all questions sent to me, so send them through and I’ll help you out.