Adspend: Why It Matters & How It Can Be Justified
In the modern age, advertising your business through digital means has become more and more important. Some even say that your company will not be able to achieve the desired results unless you plan your ad spend wisely.
Multiple case studies and research papers are being done each day to confirm these theories. They all show a substantial return on investment (ROI) to people who plan their ad spend carefully and relate to their target audience.
In this article, we are going to review two closely related case studies, via Method Metrix, and help you learn more about the numerous benefits of a wisely planned ad spending program.
Planning the Initial Investment
First off, you should always consider your budget and your immediate needs when planning to spend money on advertisements. You should never invest more money than you can use in that area, and endanger your revenues.
Also, think about how fast do you need the results. If for some reason, you need the results as quick as possible, you should plan a shorter marketing campaign. However, longer digital advertising campaigns have proven to be more efficient. 90 days has proven to be the ideal length for various industries.
In our case, we have analyzed 45 days of ad spending and invested $16,000 for the first study. The second study also covers a period of 45 days, but the investment was $20,000.
Depending on the type of your business, you might be more or less interested in different returns of a marketing campaign, not just straight revenue. We have analyzed such examples, including lead generation, reach, membership conversion, and, of course, total profit.
Case Study #1
The first case study was focused mainly on earning revenue from paid membership plans and getting leads. However, promos were also being sold, and they managed to generate a substantial amount of money, compared to the investment that was made into that part of the campaign.
Leads & Reach
Leads are one of the several significant aspects of online marketing. Through this investment, there were 4,098 link clicks, which in turn generated 599 leads. Meaning customers voluntarily gave their email address or other information for the company to contact them. This tells us that the click into lead conversion was 14.62%, which is an excellent result for all online marketing plans. The total cost per lead was $26.74.
The ads reached 236,610 people and succeeded to make 867,914 impressions. This result also falls into a category of prosperous marketing moves, since there is always a secondary goal of spreading your business name and not just making sales.
67 six-month membership plans were purchased, and they each cost $1,170. This has generated the most revenue in this advertising campaign, earning the company $78,390.
Promos were being sold in both case studies. However, this one has managed to sell more of them, despite the smaller investment. This shows how nuances in marketing decisions can bring more profits. 159 promos at the cost of $100 earned the company $15,900.
Total revenue was $94,290, and the expenses covered $16,000 on ads and an additional $8,500 on management costs. This got the company a net profit of $69,790 and some extra leads for further advertising.
Case Study #2
In this example, the marketing campaign targeted both selling a product package and getting the audience to purchase a membership plan. However, the focus was more on turning casual customers into long-lasting members.
The promotion value of the first part of the marketing program was only $100, including the initial 50% off first-month deal. There were 150 sales made, which made the company $15,000 of revenue. Almost enough to cover the whole marketing expenses.
Compared to the 150 one-time purchases made, there were a total of 65 customers who signed up for a membership program. The 6-month contract costs $1,170, which means this relatively small number of people has earned our business a grand total of $76,050.
The brute profit of this advertising campaign was $91,050. There were $15,000 that were earned through one-time purchases and an astounding $76,050 that the company gained through membership contracts. The total amount of profit was $71,050 and this amount of money was earned only through launching a reasonably simple promotion plan.
As you can see from the two case studies we analyzed, you can make 5 times return on investment. This is accomplished by launching an optimized advertisement campaign.
If you decide to generate more leads, you might end up earning a little less money, but this will greatly improve your future profits from similar marketing campaigns. Ad spending needs to be planned carefully, and good decisions are bound to lead to great results, especially in the era of digital marketing.