Despite many marketers complaining about the budget, business owners and departments aren’t really that stingy. As a business owner/marketer myself, my knowledge on marketing helps me know that very often, it’s not a case of “too little budget” but rather, “too much money available”.
When managing big budgets in the past, I often thought to myself, “How the hell am I to spend this when most of my marketing options are useless!?”
Likewise, how do you know your marketer is spending your money wisely? We generally look at 4 things:
Regardless of which industry you’re in, there will always be more and less effective methods. Every method comes with a limited “capacity”. Your targeting settings, if done correctly, will determine this.
Here’s what I mean by “capacity”:
If you run a furniture shop in Bedok and there are only 100 people searching for “Buy sofa bed in Bedok” every month on Google, you can pretty much only reach those 100 people. Even if you’re willing to spend more and reach 1,000 people looking for a sofa bed in Bedok, you can’t. Those people don’t exist. The capacity simply isn’t there.
Usually, the more effective the method is, the less the capacity will be. There are exceptions to this, but it’s a good guideline to follow.
Cost-effectiveness is pretty much your ROI. For every $100 you spend, how much do you make back? Do your profits even cover the advertising costs?
Remember that TV commercial you wanted to run? Or that agency that was making a video for you so you can market it online at a lower cost? Many marketing campaigns are based around “building brand awareness”.
Typically, “brand awareness” campaigns have the lowest cost-effectiveness of all. The highest will usually be ones that result in direct sales. This is a very important point to note. As startups and SMEs, we don’t have a $1,000,000 budget. Running a “brand awareness” campaign simply wastes too much cost-effectiveness.
Still very much decided on building “brand awareness”? Here’s a plan:
Start making as many sales as you can. Treat your customers well. Make them love you. Get referrals. Get even more customers. Repeat the cycle.
Your brand will naturally grow faster this way than by running an awareness campaign. And you also get more profits while doing it.
If we care about “cost-effectiveness” because we’re not Donald Trump, then we care about “efficiency” because we don’t have unlimited manpower. Sometimes, even if a method is cost-effective, the capacity doesn’t make it worthwhile to do.
A fine example is Yahoo/Bing search advertising for niche markets. Although you get the same users you would get on Google, you pay a much lower price. Essentially, you’re making more out of every dollar you spend.
But I still wouldn’t go onto Yahoo/Bing for niche markets. Why? Because you’d spend an identical amount of time optimizing Yahoo/Bing while getting 100 times fewer clicks. Imagine spending 20 hours a month in exchange for 10 website visitors! I’m sure there are better ways to spend time.
Always weigh the time/effort you have to spend with the rewards you can reap. It’s no point spending precious manhours on a cheap method that only brings you 10-100 clicks a month.
Here’s a golden tip:
It’s not about how many campaigns you have running. It’s about how well you do them.
Many bosses always demand more marketing campaigns more promos etc. “Are we on Yahoo?” “Can we do a CNY promo?” “Should we try video marketing on YouTube?” “Where is our Twitter and Instagram account?” “Why are we not SEO yet?”
The secret is I actually never run on more than 2-3 platforms for any business. I simply do those 2-3 VERY VERY well. That’s the secret to good marketing. If your marketer has to focus his/her attention between 5-10 different things every day, how can he/she focus on doing anything well?
To most effectively spend your budget, you should always:
- Use up the full capacity of the most cost-effective options before moving on to the next best option
- Ignore marketing methods that have too little capacity
- Focus on doing only 2-3 tactics but excel in them