Intro to Online Paid Placements
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Transcript of Intro to Online Paid Placements
What we will be going over
• Intro to customer acquisition• Key Metrics• COCA• LTV• ROI
• Choosing the right Channel
Intro to customer acquisition
• Marketing: Customer Acquisition• Free (ish)
• Organic search• Inbound Referrals• Word of mouth• PR
• Paid• Online Ads• Offline Ads (newspaper, TV, Radio, magazines)• Direct Mail
• Sales- Turn leads into sales (only used for some products)
What are you trying to accomplish?
• Direct sales• Customers go online, see an ad, go to your site, buy a product• Customers sign up for a free trial with path to revenue later
• Indirect sales• Leads: Customers give phone #/email, then do a sales call• Trials: Customers sign up online to trial something in the real world• Email list signup: Customers sign up for emails• Customers become regular readers of your site, then buy something later
Match the goal to the product
• Tie of the month club- $25/month• Online SAT tutoring: $1K/3 months, unknown brand• Sell a Ferrari: $200K one time sale• Dropbox
What we will be going over
• Intro to customer acquisition• Key Metrics• COCA• LTV• ROI
• Choosing the right Channel
Cost of Customer Acquisition (COCA)Steps in the funnel:
• Impressions• Priced as CPM = “Cost per 1,000 impressions”• Determined by
• Who the audience is• Ad platform• Ad type (newsfeed vs sidebar, etc)
• Clicks• Click through rate x cost per impression = cost per click• Determined by:
• Quality of ad• Match of ad to audience
• Post click conversion• Cost per click x conversion rate = cost per acquisition• Determined by
• Quality of site• Type of action required (signup for email list vs buy a Ferrari online)• Match of audience to site
• Post conversion sales• Some products require post-conversions sales step
• COCA = (CPM/1000) x (1/click through rate) x (1/conversion rate) x (1/post conversion sales rate)
Impressions
Clicks
Convert once on site
CTR
Conversion Rate
How to minimize COCA
• Buy as few impressions as necessary• Only show ads to people with a high likelihood of buying
• Get a lot of clicks• High quality ads well matched to channel• Find the audience most likely to click
• Get post click conversion• Have great landing pages• Different audiences will have different conversion rates
• Have as few steps as necessary
Great Landing Pages
• Your home page is NOT a landing page• You may need a lot of different landing pages• Components of a great landing page:• Short description of what you are selling• VERY LARGE calls to action• Very few options that are not desired action• Very short # of clicks between landing & completing action
A great landing page
Exercise: COCA
CrossFit Gym• Path to sale
• Customers see a Facebook ad ($10 CPM)• They click, go to a landing page (2% CTR)• They give their email address/phone to get a free class (5% conversion)• Sales person calls them, schedules free class (70% never get in touch)• They go to free class (50% show up)• They sign up for a membership (50% sign up from free class)
• What is COCA• What changes could they make to decrease COCA?
Key trick: UTM Tags
• What they are:• Tags at the end of URLs that identify ad
• When to use them• Each ad should have its own UTM code• All ads should have a code
• How to use them• Lets you calculate CTR, conversion rate, COCA BY AD• https://support.google.com/analytics/answer/1033867?hl=en (google “UTM
builder”)
What we will be going over
• Intro to customer acquisition• Key Metrics• COCA• LTV• ROI
• Choosing the right Channel
Lifetime Value of Customer• Revenue per sale
• # of items per sale x revenue per item
• Gross margin• Profit per item / Revenue per item
• # of sales per customer• Over lifetime of customer, how many purchases do they make?• If it’s a subscription, how many months do they stay around?
• LTV = Revenue per sale x gross margin % x # of repeats• LTV = (# of items per sale) x (revenue per item) x ((item sales price – item
cost)/(item sales price)) x (# of sales per customer over lifetime)
LTV Exercise
• Selling Neckties Online:• $25/tie, $10 cost/tie, average 2 ties/checkout. • 2.5 repeats per customer• What is LTV?
• How can we increase this LTV?
Ways to maximize LTV
• Increase dollars per checkout• Sell higher cost items• Sell bundles of many items
• Increase Gross Margin
• Increase repeat rates• Actively market to your past customers to remind them• Sell subscriptions and auto-renewals!• Good products & customer service
What we will be going over
• Intro to customer acquisition• Key Metrics• COCA• LTV• ROI
• Choosing the right Channel
Marketing Return on Investment
• ROI = (LTV) / (COCA)
• ROI decision making:• <1: you are losing money on your ads.
• You need to increase LTV, or decrease COCA• =1: breakeven. • >1: You are making more money than you put in. Advertise more!
• Beware cash flow issues with long-period LTV
What we will be going over
• Intro to customer acquisition• Key Metrics• COCA• LTV• ROI
• Choosing the right Channel
Which channels to chooseChannel Subtype Demand Creation vs Fulfillment Audience Selection
Facebook Social • Demand Creation • Who is fan of what page, who is friends with who.
Facebook Targeted Paid
• Demand Creation• Demand fulfillment for
identity/interest based demand
• Who they are (demographics)
• What they are interested in
Google Adwords • Demand fulfillment • What they search for
Google Display • Demand creation• Demand fulfillment if well
matched to site
• What site they are on (interest)
Other Sites Display • Demand creation• Demand fulfillment if well
matched to site
• What site they are on (interest)
Which channels to choose (Part 2)Channel Subtype Pro Con
Facebook Social • Cheap to free • Very labor intensive• Less functional in “new
Facebook”Facebook Targeted
Paid• Insanely niche targeting
capabilities• Very effective when targeted
properly
• Technically challenging interface• Only works if well targeted
Google Adwords • Very effective for right product• Simple creative
• Clicks often expensive• Needs sufficient search volume
Google Display • Good for non time sensitive products
• Creative can be challenging
Other Sites Display • Great for very targeted niches • Negotiated individually, requires creative
Exercise: What Channels to use:
• Heating Oil Delivery• SAT Tutoring• Card that combines all your credit cards• Discount shopping browser plugin• Necktie of the Month