- Your Numbers (1:18)
- Your Strategy & The Customer Journey (6:22)
- Traffic Intent & Maximising High Performing Traffic First (11:45)
- Addressable Audiences (13:45)
- Prospecting and Retargeting (18:45)
- Your Adjustment Capability (24:20)
Hi, everyone. I’m Chris.
And I’m Scott.
And we’re here to help you do better digital marketing by sharing experience and lessons from 10 years plus each agency side. So this week, our topic here, just going to share screen really quickly. Hopefully you can see that, Scott.
Yeah, just loading. There we go.
Cool. So I’ve got a media budget, but I’m not sure how best to allocate it. This is a really big question. You will have to spend a lot of time answering this. But because we don’t have all of that time in this video, we’re going to try and break it down into three key parts, that if you think about all of these parts, will get you to the right answer. So the first part is your key numbers. These are things like your goals and your business’s most important metrics. Scott’s going to talk about that in just a second.
Next is your strategy, which is understanding the approach for how you can get people from here all the way over to there in your business. And third is your adjustment capabilities. So when it comes to media planning, some people like to just set a static amount all through the year, but I think there’s a really good argument for making that a bit more flexible so that you can accommodate peak periods and so on. So Scott, I’ll just scroll down a little bit here. Please, mate, would you mind, could you talk us through number one, your key numbers?
Yeah, sure. So everything starts with the goal, right? You can’t get into where to allocate, spend and what to do, without knowing what you’re trying to get out of it and what the goal is. Now, there might be several, I guess, metrics or goals, KPIs, whatever you want to call them, that are important to you, but one of them is going to be the most important one. And we like to call that the critical number. It’s the one metric that’s above all else, this is the one that we’ve got to move, basically. So start with this.
The first thing to do, need to take a benchmark as to where it is now currently. And then what does success look like? Where are we trying to get to with this? Now, instead of just choosing one figure, we like to work to what we call MTO, which is minimum, target and optimal; minimum being this sort of, you’ve only just done it, but it’s still a result; target being ideal; and optimal being you’ve absolutely smashed it basically.
So with that identified, what’s the gap between where you are and where you’re trying to get to? And when you kind of know what the gap is, you can start thinking about where the budget needs to go in order to close the gap in the most efficient way possible. In addition to the critical number, there’s probably some other key results that you need to think about at different stages of the customer journey as well, because these will be leading indicators to indicate whether or not you’re probably on track for moving the critical number. But just on the customer journey, that kind of leads us onto when you’ve got your goals in place and you know what it is that you’re trying to improve and what the gap is, probably the customer journey might be the next place to go, eh, Chris?
It absolutely is. And do you know what? Before we get there, because there’s so much to talk about, can I just clarify your critical number is the single most important metric that you absolutely have to meet? And so you’re saying let’s focus on that and then sort of surrounding that there’s the other KPIs, which are also going to be optimized for. And basically, if you’re hitting those other KPIs, then the critical numbers should also be achieved.
Yeah. There’s going to be support in metrics that you think, okay, if we’re improving metrics A, B, C and D, then there’s a very strong chance that we’re going to improve the critical number because these things sort of support the performance of the critical number.
A hundred percent. And the second thing you said which I think is just so valid is that everything comes down to your goals at the end of the day. If you have really ambitious goals, then the media budget’s got to be ambitious too, assuming it’s a very competitive space. But if you don’t have ambitious goals, well, then it doesn’t necessarily need to. It’s a little bit like fitness. How much fitter do you need to be and by when is going to determine how often you’re working out and what you’re eating and all of that other stuff. So very kind of similar line here. Do you mind, can we drill in just a little bit more on the financial metrics? Because one of the items that will determine how much you can spend to acquire a customer profitably is how much that customer is going to be worth to your business.
And so that’s this little middle section here about the average gross profit per client, or per customer, which is the idea that essentially your customer should have a value to you approximately on average. There’s that full revenue value that they have. And then there’s also kind of the gross profit value, which is that revenue minus what it costs to deliver your service, or the cost of goods sold and the delivery of that. And so you can use your total customer value, or you might like to use your gross, but understanding what a customer is worth to your business is very valuable, of course, to then deciding how much you’re willing to spend to bring one of those customers on. If a customer is worth a whole lot to your business and they’re also worth a whole lot to your competitors, then chances are you’re going to see your competitors spending aggressively.
They might spend 100, 200, 300, they might spend a 1,000 or more trying to get that customer if it’s in their best interest. Whereas if the customer isn’t worth very much, then all of a sudden you can’t spend profitably to acquire, at least unless you’ve got a big plan on how you’re going to get more out longer from that customer, make them worth more, but you can’t spend a whole lot. And so what that does is it completely changes your media plan by taking certain options off the table. But Scott, I digress here because you said let’s talk about the journey and where that fits in, is your strategy. So you’ve got a media budget. Okay. You can allocate that media budget to so many different channels, right? What will determine that is who are your key audience and what channels are they using when they’re discovering or learning or comparing or discussing your solution?
What are the touch points? What is their journey from not knowing really anything about how you can help them, through to inquiring and becoming your customer? I imagine that if you have a high consideration product or service, there’s going to be lots and lots of touch points. So one of the tools which you probably have heard of is the buyer’s journey. The traditional buyer’s journey is awareness, consideration, decision. It’s that classic funnel. Now, that’s great, that works a hundred percent, at least for somebody making their first decision to transact, but it doesn’t show the whole picture quite as clearly as you may like. And so we’d like to take you through a bit of a different way of modelling the buying journey that we use here at Reef with our clients. And it’s super helpful for dividing that awareness, consideration, decision into more precise steps and pulling out some important components that determine when you are going to get return on investment.
So in particular, rather than just having awareness, consideration, decision, this customer conversion journey model has many, many stages. It essentially talks about somebody going from discovering your brand for the first time through to showing some interest, potentially joining your newsletter list or following you on social, to then all of a sudden saying, you know what? This is interesting. This is beyond interesting. I think I want this. I’m going to invest some of my time and see, is this right for me? Which could lead to an inquiry, or if no inquiry is part of the buying cycle, such as e-commerce, could go straight to purchase. And so this whole area here of the buying journey, this is kind of like awareness, consideration, decision, but expanded out in more detail.
After that, you see this these second… Well, these one, two, three additional steps, and they are so important for understanding that once somebody becomes a customer for the first time, that is not where marketing stops. In many ways, that’s where marketing should begin because this person has already transacted with you. If you deliver well for them, you will be able to offer them other things, and that’s where you’re going to get your customer lifetime value. And so the additional steps, this is the backend marketing piece, or our loyalty, where essentially the person understands that you do deliver. Ascension, “Hey, what more can you do for me?” And then finally becoming an advocate, which is like telling their story for other people to see.
And so this entire journey is a nice and more accurate way to model the thinking patterns of the customer journey. And in particular, where it’s a little bit different, again, from awareness, consideration, decision is in these two pathways. So we call it an in-market path and a not yet in market path. Let me please give you an example. Let’s say real estate, let’s say somebody has just gotten approved for a mortgage and they need to find a place to live within the next 60 to 90 days and they would like to buy. That person is motivated. They are in market for a property now. So if they were, for example, receiving advertising messages from real estate agents or so on, they’d probably be very receptive to take that next step and actually talk to those people. They are in market now. However, not everybody who’s interested in real estate is going to be in a position to buy something in the next couple of months.
They might be looking for a year or even two years away. And they might be the ideal candidate for a realtor, for example, to be showing their messages to. So we need to understand that they are not yet in market, but they might be one day. And so when it comes to branding or marketing, let’s say you’re SaaS, let’s say you’re eCommerce, there has to be that distinction that some of the people who see and click through will be ready to do something soon and others will not be, but that doesn’t mean that it was necessarily a wasted click. It just means that additional efforts in nurturing and retargeting and so on need to occur in order to get the value later down the track.
Just in relation to the media spend, which the topic of the video, you mentioned about the people. So there’s going to be people that are ready, that are in market to convert right now, and your direct response and high intent channels are going to capture that. And assuming that you’ve got some activity going there at the moment, I think the majority do, one of the first questions to ask is, well, can I simply buy more of… Is there more of this traffic available? And I’m not currently investing the maximum I can, based on the traffic that’s coming through to that part of the funnel. If there is, then that could be a quick win; just buy more of the closest point to purchase, highest intent traffic source before we look at other areas to invest the remaining budget.
Yeah, absolutely. Let’s say, for example, that you sold accounting software, and if you were doing a search campaign and there was lots of search volume for accounting software for lawyers, or something like that, something with lots of intent that was very, very relevant to what you do, then it absolutely makes sense to put media budget towards those types of channels if you are looking for maximum impact in the shortest period of time. The thing is, there’s also going to be, beyond that small sliver of, say, search volume, a whole lot of other people that are potentially interested in your product or service that need to be thought about as part of maximizing the potential. And so understanding who’s in market and who’s not and then having a strategy for reaching those two different audiences, that’s how you get the best results now, but also prepare for good results in the future.
So if you like, I might just come down a little bit. So let’s you’ve thought about your customer conversion journey, you’ve thought about the high intent in-market now sort of options within the channel mix, as well as the not yet in market people and how you’re going to accommodate them. The next step would be to start thinking about channels. These are the channels that you think are going to be influential, or based on your research, are going to be influential to that person discovering or essentially moving towards you as they’re learning, comparing and so on. So for example, many of the channels that come up with us are things like paid search and paid social, especially for B2B; LinkedIn, where you can target by people’s job titles, their company size, whether or not that company is growing or not, and how much they’re growing year on year.
In addition, you’ve got display options. You can display through the Google ads network. You know, Google puts their little banners and various multimedia all over the internet, on newspaper sites, on blogs, on forums. So all of that is available for you to access in addition to specific media buys, like if you wanted to put your ad on the financial newspaper in the space of you’re choosing, for example, and sometimes you’ll have to go direct to do that. So when it comes to planning channels, you want to be thinking about those journeys and what makes the most sense, but crucially, also thinking about the idea of addressable audiences. The best way to describe an addressable audience is somebody who you can target with confidence using the either direct or indirect platform targeting settings available.
So, for example, let’s say that you wanted to target financial advisors. You can address that audience very specifically on channels like LinkedIn, because LinkedIn gives you the ability to target by job title. But now let’s say that you wanted to target financial advisors who had just inherited $10 million worth of money. Now, there’s no way that any ad network would ever know that somebody had just received an inheritance, for example. So you would never be able to segment out for just that particular audience. And so when it comes to planning your media, you want to make sure that you are putting your dollars into neatly defined addressable audience segments. And if you’re trying to go for a subsegment that isn’t clearly addressable, you have to prepare yourself to have spend that just isn’t going to reach the right people, because there’s no way for those ad networks to know that. Does that make sense, Scott?
Yeah, it does. Yeah, for sure.
Another point here just with addressable audiences, once you’ve kind of identified the little segments that you want to go for, is the question, well, how many people are in this segment, approximately? So when we’re doing B2B, traditionally, we’ll have a look at how many people have of this job title, let’s say in Australia, or in Australia and New Zealand, to get a sense of what the total addressable size market would be if you wanted to target people with that job title. Another way you could look at it is what are some of the search volumes for relevant keywords? So essentially, how much distribution power do you have for your message? Is it small, as in not that much, there’s not that many people you can really reach? Or is it really large?
And that is going to dictate essentially how aggressive you can be and how much of the market you can choose to reach. If you have ambitious targets and a large addressable audience and there’s a bit of a race in your industry to capture market share, then I think, okay, that means that there’s a good argument to be more aggressive with budgets. But if you have a very small addressable audience and different conditions, well then that sort of changes things quite a bit. So beyond that… And gee, there’s quite a bit to this section, isn’t there? Indicative channel costs. Not all channels cost the same amount, and even within channels, not all components cost the same amount. And an example could be that some keywords are really expensive because they’re very competitive and very high intent.
There’s a lot of people who are vying for the attention of that searcher. Other keywords, not expensive really at all in comparison. So as you’re planning your budget, it’s always good to get an estimate, either using some of the, for example, LinkedIn tools or Facebook ad campaign planning tools, or keyword research with Google to understand what the likely range is for either cost per click or cost per 1,000 are likely to be. And okay, to wrap this all up, finally, just a little bit more practically here. Once you’ve been through all of this, it comes time to actually putting pen to paper. If you’re running sophisticated campaigns, there’s going to be a few components, like which channels you’re going to use, and also how you are planning to use those channels.
One way of allocating how you are planning to use those channels, answering that question, is to divide the channel into two different buckets. The first bucket could be how we’re going to use the channel for prospecting. The second bucket will be how we’re going to use the channel for retargeting. Prospecting is about reaching the right person for the first time, with the goal being to get them from wherever you’re showing your ad onto your website, for example. Once they’ve clicked through to your website, hopefully they will complete a conversion action right there. Yay. You get a return on investment immediately. But let’s say that they’re not yet in market, or even if they’re in market, they’re not yet ready to act at that specific time.
Once they depart, the retargeting component of your campaigns kicks into gear. And retargeting is all about showing that person additional educational messages and essentially encouraging them to return and complete that conversion action. The way we like to run retargeting at Reef is assuming that we’re sending the right traffic in our prospecting campaigns, we will retarget with a variety of different ad messages to educate and entice back for the primary conversion, which is generally, talk to us, talk to us, talk to sales, request a demo, get SaaS, something like that, to get into the sales pipeline. But if we notice that those messages are falling flat with the audience, there’s a good chance that audience member is not yet in market.
They’re not ready to talk to anybody at this time. So that’s where you want to switch your retargeting from going for the qualified lead to instead saying, “Hey, opt into our email database, download this free report, get this PDF, get this guide, this check, this something.” And then through email a relationship can be built over the longer term. And then when that person does go in market, could be six months from now, it could be 12 months from now, the relationship already has such a big head start and you can get return on investment there. Scott, I’m going to hand it over to you, mate. I think I’ve got to cough for a second, buddy.
Yeah, no problem. Yeah. So we say, because I think people always like sort of benchmarks as like a starter for 10. Not saying that this is what it is for every single situation, but as a starter for 10, somebody looking for perhaps ratios for each of these parts of the funnel, would you say a good guide is maybe 70% on the prospecting side, perhaps, media spend if you’ve not really got a lot of brand awareness in the market, let’s say, people, you’ve not got a huge sort of dominance in your space and you need to bring people into your customer journey in order to move them through to eventually becoming a customer. And then perhaps 30% throughout the rest of it.
100%, mate. Yes. I shouldn’t use 100% when we’re talking about ratios. 70% for prospecting sounds fair and reasonable, 30% for retargeting sounds fair and reasonable, re-engagement. Where we have kind of tripped up in our budgets in the past, we don’t make this mistake anymore, but we have in the past, is also forgetting about how we want to defend the brand. And so often it’s good to have prospecting, retargeting and then just a little extra brand-only, to make sure that specifically for search, to make sure that no sneaky competitors are trying to weasel their way up to the top of search results when people are actually looking for your brand, which we don’t like, we don’t like it when they try and siphon off our clients’ traffic, so we always want to make sure that our clients are there. Now, some clients don’t want to spend anything on brand. Okay. We just want to give them the choice, if necessary, to be able to defend that if they’d like to. So I’ll just keep zipping along here, mate.
Yeah, sure. I think we’ve talked quite a bit about where to allocate budget based on goals and throughout the customer journey. But I think for me, I can see you put some seasonality peak periods and things like that on there. But what I was going to say as well, and we can get to that in a sec, is I quite like to try and get sign off for a small percentage of the overall budget for more experimental stuff, perhaps. If you know it’s boxed off, like a small amount for stuff that you probably wouldn’t usually try, or it’s a bit more high risk, or it’s something new and unproven compared to your more traditional channels, whatever it is.
If you’ve got a little bit of budget boxed off for experiments and testing, you can sometimes make some really good learnings through doing that. But everybody also knows the context that it is being spent, it is yes, it’s strategic, yes, there’s a goal and you’ve got a hypothesis that you’re trying to prove, but it is an experiment, it’s new, it’s not some of your proven tactics that you’ve done in the past.
I love it. Really smart. And so the final section here, three of three, is your adjustment capability. You mentioned there peak periods and seasonality. I do recall we were involved in a pitch not so long ago where one of the issues that we were asked to address was this idea of, should we be spending our budget the same amount every month? Or would we get better results if we had more flexibility in that? And the answer kind leaps out to most people, I think, because of course there’s going to be those times of year, generally speaking, where industries are booming. And that is when it makes the most sense to use that budget.
And then there’s going to be some quiet times too, for example, in B2B, oftentimes people don’t do too much over Christmas, but once they get back, end of Jan, Feb, that’s when people are kicking into the year, they’re doing their planning for the rest of the year. So I love the idea of pacing budgets based on seasonality, of course, but also giving yourself the flexibility to revisit this plan as often as you can, to be able to reallocate either quarter by quarter or month to month, turn things up, turn things down, based on the feedback that you’re getting from the results the campaigns are generating.
Cool. And quite often you review this quarterly anyway. Yeah. There might be something for the year, might be an overall budget that’s sort of signed off for the year, but you want to be reviewing at least quarterly anyway, and sort of reassessing your goals and reassessing the gap and reassessing the strategy, really, and making sure that you’re on course for the one-year goals by checking in at every sort of 90 days.
So, thank you. If you’re still with us at this point in the video, we tried to tackle a very complex topic in a short and manageable way. Please know your key numbers, have a strategy for understanding where your audience are, who they are, are they in market? Are they not yet in market? And are they addressable? And how are you going to use prospecting? How are you going to use reengagement? Are you going to have a little experimental budget? Are you going to be defending your brand as well? Please include that in. And then give yourself the flexibility to be able to adjust up or down as you go. Plan for your peak periods and your seasonality. All right. Well, have a great day, everybody. I do hope you found this useful and look forward to seeing you in a future video.