When analysing your company’s results for last year (whether quarterly or monthly) you might find out that you have not reaching your planned revenue numbers. You need to come out with an action plan to change this situation. One of the first things that come to mind is “let’s aggressively pump up our advertising budget, as this way we’ll reach more people and therefore there will be more sales”.
Well, while in some situations this might be warranted and very helpful, increasing your advertising budget and ‘dumping’ a lot of cash into the ads is far from being the magic pill that makes the problem go away.
Let’s see together, what our issue with this approach is and what you can do instead.
This is a very common scenario. You’ve created a marketing and sales plan for your company, launched advertising campaigns on Google, Facebook, Instagram, and all the platforms that are relevant to your business, and prepared to hit that magical sales/ revenue number that you have in mind for some time now.
After all, with all those campaigns running there is no way you’ll miss your target, right?
Well, if your plan was really thought through and based on the objective reality of your business and niche, and not some unicorn-inhabited world you have created in your head, most likely you have succeeded. If that is your case, congratulations! You may safely close this article and go have a well-deserved rest.
But assuming you are still reading, let us imagine that the worst has happened – your KPIs are way off, even with all your advertising efforts.
What we frequently see happening, in this case, is that the business owner comes to the marketing department or agency and says something like this “We need to increase the sales volume, we need to win a bigger market share, and we need to do it quickly. So, I have decided to increase our advertising budget by **some impressive number here** (please feel free to fill in yours!)”.
Don’t get us wrong, which marketing team or agency doesn´t like the sound of ‘let’s increase the budget’?!
Nonetheless, we at CLARITY, being true to our company’s core values (transparency and honesty over everything else), frequently find ourselves rejecting this idea or advising against its ‘immediate’ application. Why?
First of all, we are strongly opposed to making big decisions based on emotions and on some number that just came to head at the time.
Secondly, there are things you can improve before thinking about an advertising budget, and most of them you can tackle without any additional budget at all. Before investing large sums of money in the ads, we need to make sure that everything that happens from the moment a user sees the ads to the moment he is happily using your product/ service is optimised and running smoothly, otherwise, you will keep on investing more and still not reaching your goals. You’ll end up losing money and being sure that “these online ads do not work and are a complete waste of time”.
So, here is a small checklist for you to go through before deciding to increase the budget:
1. Check your current campaigns – are all of them performing the same way?
– Which channel is bringing you most of the conversions? Is it Google? Is it email? Is it Instagram? Anything else?
– And in that channel, are all the ads performing similarly? Is there a communication line to which your target responds better? Do video ads outperform your text ads? Are positive-themed ads (the ones based on the target’s dreams, for instance) more efficient than the negative-themed ones (based on their fears)?
– If you are not quite sure how to answer these questions, make a list of things you can test to give you more insight (different text for the ads, different types of ads, etc). Then test them all, but not at the same time – choose one aspect you want to test, test it, get results, and then choose another one. This way you will be sure what exactly caused the difference in the results.
– Ideally, calculate your ROAS (return on ad spend) for each channel – we have explained how to do it in our article on the yearly digital marketing analysis. You need to know exactly which channel/ campaign/ ad is driving most of the revenue for you.
If you are going to increase the budget, you need to know exactly how to distribute it most efficiently. Give more budget to what works best and you will see a rather quick difference.
2. Analyse your landing pages
– Are all the landing pages on your website performing the same way, or there is one that drives much more conversions that the others? If this is the case, analyse the structure of that page and try to replicate this success case onto the other pages.
– Test your landing pages yourself – open the website as if you had never seen it and try to search for what you need and make a purchase. From the beginning to the very end. Sometimes, you may find some annoying steps on the way that you were not thinking about but are definitely costing you conversions.
– Ask some of your clients for feedback on their experience.
– Analyse the behaviour of users on your website. You can start by using the Microsoft Clarity solution. It is free and allows you to see recordings of your users’ sessions. So, you may discover what stops them from ordering/ contacting you.
– Improve your pages, make the copy clear and enticing, and make the process of converting easy and fast. Please, do not hide your call-to-actions into huge amounts of text on your page! A text link for ‘contact us’ inside a big piece of context copy, with the same colour/ font as the rest of the text, that has a ‘mailto’ link, is NOT what we call ‘a user-friendly and efficient place to convert on the page’.
This point is hugely important. Normally, users spend several seconds seeing your ad, but the ad is basically a scroll-stopper or a way to find you. It is on your website that they spend more time, check the information, and effectively decide to purchase or contact you, and thus become a lead.
So, without optimising your landing pages for conversions, there is no point in increasing the budget. You might get more leads but, on a cost-per-lead basis, the results will not be good.
3. Analyse your sales approach/ scripts
– After you receive a lead from your website, what happens next? Who contacts the lead? How quickly does it happen? Today, you cannot afford to make your leads sit on the ‘to-do list’ for a week or two, you need to be getting back to them within the same day.
– Review your scripts and if you have none yet, it is time to work on it. How do you approach the lead? What exactly do you say? And if they just request a price, do you just provide it, or do you explain which unique benefits are included in the offer? And if the lead thinks it is too expensive, what do you answer? And what if they want something that you do not provide, how do you approach it? And if a person is upset? Preparing scripts beforehand makes sure you are prepared for any situation, even the most uncomfortable ones.
After you have worked on your page conversion rate, you need to also improve your lead-to-sale conversion. Analyse your sales process and the main reasons why sales do not happen. If you see a common theme, approach it and resolve it.
4. Analyse your product/ service
– Ask for feedback from your clients. What do they value in your offer most of all? Was there something missing, would they like to add some additional services or guarantees? Sometimes, just taking 2 minutes to talk to your clients might give you the most valuable insight.
– Analyse your competition. Check what they are offering, and how they are marketing it (the same way you analysed your business from the ad to the sales process). What is their pricing? What are the conditions they provide? Is there something you are missing out on?
As a variant, you might want to dive deeper into this point and maybe even hire a marketing/ market analysis of your product or service. Before you start analysing your campaigns and sales, the most important question is: are you selling what your target audience wants to buy?
Believe us, once you have made this kind of analysis to your business, you will inevitably end up with an impressive list of things to test and improve. And none of them includes the advertising budget! There is no point in pouring more and more money into traffic to your website if the website doesn’t sell, or if your sales team doesn’t know not only to justify your price, but to make the client feel that it is a bargain for all the value you provide. And definitely, there is no point in any of this if your product/ service is way behind the competition’s offers.
And only after all this work is done, and everything is optimised to the best of your abilities, only then you may calculate an advertising budget increase that would make financial sense, and distribute it across the campaigns according to their ROAS (see the first point on this checklist).
Only this way, will your results improve over time, bringing you more leads, sales, revenue, happiness, and peace of mind.