Your Marketing Cash Machine

Bringing measurable revenue

A successful business, in terms of numbers, is one that makes more money than it spends. Imagine a machine that will give you money if you put some in. Depending on its settings, you could put $1 in and get 10 cents back, or $10 back. Marketing is all about optimizing your cash machine’s settings on a per-campaign basis to net the most profit. Here are a few ways to break down the cash machine concept.

The Lingo

Your goal is to make conversions – to get customers to make a purchase. To get conversions, you need leads – potential customers who do things like click your advertisements or access a product page. Leads come from impressions – eyeballs looking at ads or information about your product. In the cash machine model, you get impressions by running advertising. You can also run display ads, but this form of advertising plays more of a supporting role through retargeting. So, you spend money, to run ads, to get impressions and clicks, to get leads, to make conversions, to make money. 

Pay-per-Click with Google Search Ads

Google Search advertising is like an auction for keywords between advertisers, with the aim of driving traffic to your website. When someone runs a search relevant to your keywords, it triggers the auction, which Google uses to rank your ad in the results. You only pay when someone clicks through your ad to your landing page. How much you pay and where your ad is placed is based on metrics like your bid and quality score.

Customizing your bid allows you to control your advertising costs and stay within your budget. Google AdWords suggests a bid that will most likely place you on the first page of results. But you don’t need to be on the first page to get clicks! You can bid less and appear later in a search, but still get clicks and conversions. Your aim is to hit that sweet spot where you maximize CTR profitability without going over budget.

Improving your quality score can also help you get the most for your money. Quality score is a dynamic number based on past performance data. It’s calculated using three metrics: expected CTR, landing page experience, and ad relevance. During the auction, a more precise auction-time ad quality score is used to determine your ad rank using additional factors such as user context (time of day, location) and the query (search terms, other ads shown).

The Context

This system is designed to benefit both you and your customer. Say you’re selling athletic gear. You bid $2 on the keyword grouping “outdoor sports gear,” which has a suggested bid of $5. A nearby customer, Joe, searches “equipment for outdoor sports,” which makes your quality score pretty good. Your competitor bids $3, but their quality score is low for this search. That means your ad can appear earlier than your competitor's, even though you pay less. If Joe clicks on your ad and makes a purchase, you’ve earned a customer for $2 instead of $3, and Joe has easily found and purchased what he was looking for. Not every customer who clicks through your ad will make a purchase, of course, but if 50 customers click your ad ($2x50=$100) and half of them make purchases averaging $100 each ($100x25=$2,500), you’ve made a profit of $2,400. That’s pretty good!

Deciding how much to bid, what budget to set, or which advertisements are most effective is partly based on trial and error. AdWords also provides a free tool called Keyword Planner, which gives you estimates for things like CTR or keyword traffic. This can give you an idea of how well a keyword list might perform for a bid or budget and assists you with planning different ad campaigns. For example, you might not get many searches for outdoor sports gear during the winter in New England, so you’d want to run seasonal campaigns with different ads.

Pay per Impression through Display Advertising

Another way to run paid ads is by paying a set rate for ad impressions. Using an impression based pay model might be something you consider for retargeting display advertising, where your main aim is to keep your brand/product top of mind after someone has visited your website.

For example, you can add people to your list who have visited a page with the URL /contactform or /productname, but not visitors to /purchase_thankyou. This would include leads who filled out contact information or viewed a product and exclude those who have already made a purchase. If your CPM is $5 and you want to follow 1000 people with 5 ads per day for 5 days (1000 x 5 x 5 = 25,000), it would cost you $125 for that retargeting campaign to market to the whole list of 1000 people ($5 per thousand x 25,000 = $125). If even two of them then make purchases of $100 each, you’ve made a profit.

The cash machine is a useful concept for envisioning your marketing strategies and identifying where you need to optimize your efforts. When you consider your budget, your brand, and your customer pool, you can build an efficient cash machine and, by extension, a successful business.

 

Copywriting by Megan Lee

Marketing