BLOGS

Online Marketing Brisbane

Thursday, April 15, 2010

There's the old marketing adage that half of your marketing dollars are wasted - if only you knew which half.

I was wondering why enquiries and visits to my websites were at an all time high this week. Then a business associate reminded me that Yellow Pages advertising deadlines for Brisbane are this week. It's around this time that, business owners seem to be wondering whether to keep investing in advertising in the paper Yellow Pages.

The answer lies in three simple questions. Does it bring in customers? Does it deliver a positive return on the money you spend? Does it deliver the best return compared to other ways of spending that money?

If the answer to any of these is no, don't do it any more.

Here's a simple way to compare the return on differerent marketing activities. Use the simple formula:
(Profit - Investment) ÷ Investment. The answer is your Return on Investment (ROI).

So if your Yellow Pages ad costs you $10,000 per year and brings you $28,000 profit (not income, actual profit!) ($28000-$10000) ÷ 10000 = 180% ROI

Great, you're getting a positive result. Should you keep doing it? Well that depends on whether you could spend that same $10,000 and get a better return.

If for example, you wanted to put that $10,000 to work by doing a long running Google Adwords campaign, you'd be able to afford a budget of at least $26 per day. With Google Adwords you pay only when someone clicks on your ad. Say for example you need to bid $4.00 per click to get a first page position (Note: the cost per click will vary widely by industry). At this price you'd get up to 6 clicks per day within your budget or 42 clicks per week. Say 2% of your clicks converts into real business each week, providing $1000 in profit per customer. I could make $43,680 per year in profit from this campaign.

In ROI terms : ($43,680-$10,000)÷10,000 = 336% ROI.

So if this were a real scenario, should I continue my Yellow Pages ad next year? Probably not. Adwords delivers a better result for the same money.

But before you'd make the decision to scrap Yellow Pages for a whole year, you should test Google Adwords for a couple of months to get some real hard facts about what you can achieve. The advantage is that you can test different ads, keywords and landing pages to see which gets the best result. You can turn it off and on, change your daily budget and maximum bid amount. Try doing that with a Yellow Pages ad. Try and test - then if it works, keep it going and scale back your other lesser performing activities.

This isn't intended to be an article about the virtues of Google Adwords. The lesson is about spending your money where it gets the best return.

You may be wondering where the majority of Cat and Moose's marketing budget goes.

Google Adwords!

Jane Davies
Director

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