What is the secret to profitability in ADS advertising?
When we talk about ADS we find an extremely attractive and overwhelming scenario at the same time. Attractive because we can locate anyone in the world, but overwhelming for exactly the same reason. We can both ensure the sale and squander our entire budget at a stroke without generating a single customer.
For this reason, the way of working in ADS requires, on the one hand, extreme control of the possibilities that payment tools of Google, Facebook, Instagram and Linkedin offer us, and for another, detailed knowledge and study of the characteristics that define our target audiences.
With this knowledge, we can start generating campaigns with a high probability of profitability, however, this is only the beginning. With the scenario presented by the ADS, we must understand a very simple mantra: there is always a segmentation with better results than we are having right now.
Therefore, the work in ADS, in practice, will require two complementary methodologies: the constant programming of multiple campaigns with low budget and results measurement at a high level of detail.
In this way, we will periodically create new low-cost campaigns based on coherent hypotheses to find new channels through which to reach potential customers more predisposed to buy, and it is thanks to the measurement of high-level results that we will be able to determine the success of each new segmentation.
It is not enough for us to experience an increase in sales that we do not know how to identify where it comes from, it is about knowing perfectly the journey of each client and identifying the channels that have generated the greatest number of real clients for the lowest budget invested.
Some of the metrics we work on:
Return of investment. It is the calculation of the profitability of the investment in marketing. It is done by knowing the product or service to be sold and its profit margin, to which a percentage of money invested in marketing is added to generate the sale and from there the return on investment is calculated. With this metric we will validate each campaign in ADS before starting to invest a considerable budget in it.
Cost per click, an intermediate metric that allows us to know how much it costs us to find a person who interacts with our ad and travels to our website. The cost per click will only be indicative, since it is not a sign of a safe sale, only a sign of interest. That CPC will have to be compared with the actual sale of each channel. There may be higher but more profitable CPCs because each click converts more into sales.
Cost per thousand, is the cost of showing our ad 1,000 times. We will use it in segmentations already validated as profitable and in corporate campaigns.
Cost per Lead, in business models that go through the capture of leads, that is, people who leave their email on our website to download content or to receive more information about our product or service. We understand that there are two types of leads: Marketing Qualified Leads and Sales Qualified Leads. MQLs are just registered clients, we know they have an interest, but we don’t know if it is still profitable to invest commercial effort in them. The SQL, however, are clients who have registered and due to the number of interactions with our website, emails and other actions such as requested meetings, we understand that they are ready to be contacted by the commercial team as they have a greater probability of generating a sale.
This set of methodologies are what allow any company to maximize its sales and business profitability.
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