CUSTOMatrix™ Insights Newsletter

Balancing your Marketing

By Michael Sick, CMO, Principal and Marketing Services, CUSTOMatrix, Inc.

In this Web 2.0, new media, viral marketing, YouTube environment, companies are finding it a challenge to keeping their marketing and media mix in the optimal balance.  Direct mail and other traditional media don’t get the press and cachet that all the new media receives and some marketers get swept up in trying to leverage the internet to unleash spectacular results for their companies.

Truly the internet has changed how customers use media and the fact that the online share of ad dollars will cross 20% in 2007 is a sign of how far Google, Yahoo and other online media companies have come.  The fact is that virtually every company must have an online strategy.  At the same time, management must be strategic as to how much of its budget is spent in online media and how those resources are deployed.

PPC has become a catchword for online spending in recent years as the search engines pioneer Pay Per Click programs in which advertisers didn’t pay anything until someone clicked on the advertisers ads.  The ability to bid on keywords relevant to the product or service being sold, geographic targeting and tools to track conversions have been a windfall for both local advertisers and CFO’s who are looking for greater correlation between spending and sales.  A staggering cross section of firms, both large and small, are spending an increasing amount of dollars on PPC advertising as evidence by Google’s most recent quarter which was greater than their sales for an entire year as recently as 2004.  A large portion of Google’s $14 billion in revenues is driven by PPC.

Just about every company should allocate a portion of its marketing to PPC as it is an incredible opportunity to identify leads.  Much discussion takes place related to CTR – Click through Rates and conversion rates.  Both ratios average about 1-3% although each brand and category has an almost unlimited variation of results depending on keywords select, ad copy and bids.  What these averages indicate is that if Google shows your ad 100 times, you will get between 1-3 clicks.  For every 100 clicks, you will get between 1-3 sales.

It’s a Brave New World in which companies can sell their wares far beyond a short driving radius of their locations.  It’s also a world in which companies can fall into a couple of serious traps which could affect their long term success.  PPC is a great tool which some companies are overusing by putting a disproportionate amount of their advertising into PPC which is largely a ‘harvest” strategy at the expense of building their brand, which could be described as a “sowing” strategy.  The reality is that only a certain portion of your potential target audience is reachable via the internet.  It may be hard to believe for most people who manage companies or marketing departments, but less than 50% of US households subscribe to a broadband service.  Even among persons with broadband service at home or work, they are not all actively typing in search words related to your product or service.  For buyers who are actively searching and who are ready to buy, it’s hard to beat PPC. 

Balancing the marketing budget to create a situation in which prospects are motivated to search for a product or service is the challenge as the age old dilemma of marketing and advertising for the 80% of the hasn’t changed quite as much and metrics are less readily available than for PPC.  In order to craft a successful marketing program, management must balance their online and offline activities and refrain from over investing in a program that may provide short term results but will provide diminishing yields over a longer term.

Best practices:

• Do a segmentation analysis.  Determine who your target customer is and what they are buying.
• Analyze your results.  Use quantitative metrics to track your results over time.
• Continually Optimize.  Test changes in your mix or strategy to improve some aspect of your program.  Don’t make massive changes in activities that are working unless you are confident that the new approach will enhance results.  Many changes will actually result in weaker performance.
• Sow the seeds for tomorrow’s success.  Building awareness and credibility in your product or service often takes times and multiple exposures.  Recognize that you will need to devote a portion of your marketing resources to nurturing and educating prospects so that they will become buyers at some point.  There is only so much low hanging fruit.

Written by Michael Sick, a nationally recognized, innovative management consultant specializing in strategic marketing, advertising and business development. He spent 25 years in corporate marketing and was a Marketing Vice President for Jack In The Box, Pearle Vision, Arby’s and others. Currently he serves as the part time Chief Marketing Officer (CMO) for a number of clients around the US.

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