Which Digital Marketing Channel Should You Lead With?

It may be painfully obvious but you will surely want to go with the channel that gets the [...]]]> In a recent post I discussed the difficulty in picking a digital marketing strategy without having first looked at your analytics.  But once you know the numbers, what do you do?

Which Digital Marketing Channel Should You Lead With?

It may be painfully obvious but you will surely want to go with the channel that gets the most conversions, right? This would seem the logical choice on the surface but let’s dig deeper. Let’s look at the data below and see if we can make some clear choice as to direction.

• PPC – Say your PPC campaign is closing sales at 1.5%,  with an acquisition cost of $6, and your average sale is $150. That gives you a pretty good ROI.
• Affiliate – Your affiliate program is closing sales at a rate of 2% of visits and is costing  you 6% of your cart, with an average order size of $135.
• SEO – You’ve spent on average $2,000 a month on content and SEO efforts and you’re getting about 500 customers from your organic results each month, and growing, with an average order size of $155.

There are of course many more numbers you could look at, but you’ve got some basic details in the above numbers. However the numbers don’t tell you the entire story. In fact, all of these channels, depending on your cost structure are performing pretty well.

Where would you put your money?

Where you put your money would depend on looking at the bigger picture. Here are some questions you’d want to ask about each channel:

PPC

• How much further can you optimize your acquisition cost?
• How much can you increase sales with better landing pages?
• Are there additional keywords you can expand into?
• Do you have the funds to experiment considering that some of the new keywords may not pan out?
• What would your competitors do if you increased your budget to garner the #1 PPC position?

Affiliate

• Are  you putting as much effort into your affiliate channel as you can to maximize exposure withyour top affiliates?
• What woud your competition do if you increased  your comission structure?
• Are you out of affiliates that can effectively sell your product?

SEO

• How well are you holding up for older keywords  you ranked highly for last year?
• How much budget do you have for additional research to determine what new content to create?
• Have you identified new areas of increasing  your SEO position through Social marketing?

In addition to these questions you need to consider the following pros and cons of each:

Pros

• PPC is easy to budget and measure results
• Affiliate channels only cost you money when you make a sale
• SEO results can give you sales for months or years even after stopping all efforts

Cons

• PPC campaings will stop producing revenue the minute you stop spending money.
• Affiliate channels are built on a other peoples sites continuing to rank where they are today. If their rank drops so does their traffic and likely your sales.
• SEO can be a roller coaster ride going from 14th to 4th in a matter of hours.

Risk and Reward

The point is you need to consider all apparent and external forces when considering which channel to increase investment in. All of the 3 channels mentioned can produce great results, depending on your resources, competitors and market position. All have up and down sides that need to be considered. I only scratched the surface on the questions for each channel, you could easily come up with 5-10 more levers to look at in you decision making process for which one to pull.

The Best First Step

Building a comprehensive digital [...]]]> This is the question I get on consulting and job interviews for digital marketing or ecommerce. “What is the first thing you’ll do” to fix my problems. In 90% of the cases, until you sign and NDA or they offer you the job, there is only ONE honest answer.

The Best First Step

Building a comprehensive digital strategy is difficult.  Unless someone tells  you what their most pressing problem is, it’s pretty darn tough to tell them what the first step should be in to solve it. But one thing remains true, when you’re trying to increase traffic, conversions, social media conversations, a PPC campaign’s click through or start and affiliate program that works, looking at a companies analytics is always the best first step. Even then you don’t have the full picture.

Understanding the Analytics

It’s said that numbers don’t lie, and looking at the numbers is always the best first step. There are two types of problems a company faces when it comes to analytics; the problem they think they have and the problem they actually have.

1. The problem they think they have
   Many companies either half igonre their analytics or don’t look at them at all. When they do look at them, they too often look at just a few metrics without considering how other metrics and off-line activities are doing that are giving them these results.
2. The problem they actually have
   Here is where you actually have to have enough of real world experience to not only look at the analytics, but to ask the right questions on what the company is doing to cause the numbers they are getting.

Numbers + Actions = Insights

Once you do have a chance to look at the analytics you can see “WHAT” is happening.  The problem is without going further into all the activities that have happened to date, it is still very difficult to tell “WHY” they are happening.  Understanding why is critical to building your plan, and your first step.

Which Lever to Pull

Deciding on which lever to pull when building and adjusting an Internet strategy is not difficult, but it does require a holistic approach to understanding all available data. It also helps if you have previous knowledge of what might and might not work. Once you know your insights as to how a business got to where they are, discovering “what you would do first” becomes a whole lot easier.

If you’d like to know “what to do first”. email me at nickv[at] nickvalente[dot]com

This is the first in a series of CEO Guides designed to give simple, clear explanations of Digital Marketing and Commerce to the CEO.

Are you frustrated trying to get straight answers from your e-Commerce folks as to why sales numbers are not going up. Or do you want to know why they are [...]]]> High Level Metrics

This is the first in a series of CEO Guides designed to give simple, clear explanations of Digital Marketing and Commerce to the CEO.

Are you frustrated trying to get straight answers from your e-Commerce folks as to why sales numbers are not going up. Or do you want to know why they are going up so you can invest further in it? You are not alone. Here is a simple formula to base your strategy on.

The Formula

Traffic X Conversions X AOS=R with R being Revenue

There are three things that drive e-Commerce success:

1. Traffic
2. Conversions
3. Average Order Size

Moving the needle

Any of the above metrics can move your e-Commerce business forward. Let’s look at each in a little detail.

1. Driving more traffic – Easy The easiest of the three metrics to move is traffic. Either you increase your efforts in Search Engine Optimization or you use Pay Per Click advertising. Either way will get more traffic but you will need to be sure the cost of the customer does not exceed the sales.
2. Increasing Conversions – Difficult Every website can stand a close look at their page flow and shopping cart to see how they can improve conversions. The conversion that matters is hitting the “complete order button” but also look to see what your shopping cart abandonment rate is.  Increasing conversions will be a discussion for a future post.
3. Average Order Size – Difficult Increasing your Average Order Size is easier said than done. However if you have a product line that enables you to cross-sell or up-sell, this could be a very good option for increasing your e-Commerce bottom line at a low cost.

Take a look at the table below showing a baseline of online sales vs. 3 ways to increase revenue.

At first glance it appears that increasing traffic is the best option. This would be true if the cost of the PPC program to increase traffic, the efforts to increase Average Order Size and the site changes to increase conversion where all of equal cost. Knowing your Cost Per Conversion is key.

Which Site Metric Should You Look to Increase?

In general, I prefer the following. First, increase conversions by working on your site usability, then work on AOS, then work on increasing traffic. As discussed increasing traffic is relatively easy but can be costly. Plus increasing traffic before you have made at least several rounds of increasing your conversion rate and AOS, you’ll be leaving money on the table. Next work on increasing your AOS. Show complementary products in the cart with an add-to-cart button along with other options to increase your Average Order Size. Now that you’re running on all cylinders it’s time to pump up the traffic.

Know Your Metrics

Make sure to have a weekly review with your e-Commerce team to discuss which of the metrics they are working on to increase revenue. Once you understand the cost behind each, as well as the potential growth, you can help them find the best mix for your company.

Related articles

• 5 Strategies for Maximizing Your Website’s Conversion Rate (mashable.com)
• E-Commerce Product Videos Convert Visitors Into Buyers: A Case Study (reelseo.com)

What does Google Instant Search Do? (from the Google Analytics Blog)