What’s the right marketing budget?

As 2016 marketing planning shifts into high gear, one of the top questions marketers and stakeholders ask is, “What should we spend on marketing? What’s the right marketing budget?” The answer is a bit like Goldilocks: not too much, not too little — spend just the right amount. Marketing and advertising tools can help us find the right answer for us.

Let’s assume you haven’t taken my data-driven digital marketing planning course (though you should). Why do we care about how much to spend? After all, typically we marketers ask for a budget and get a fraction of what we asked for. Shouldn’t we ask for the moon and accept the inevitable outcome which leads us to exclaim, “That’s no moon!”

No. Why? Most marketing channels experience diminishing returns. Every channel has its Goldilocks moment.

We can spend an insufficient amount and not achieve the performance we need to meet our goals.
We can spend the right amount to maximize our ROI, our Goldilocks moment.
We can spend too much and hit diminishing returns.

Our challenge as marketers is to identify the Goldilocks moment for every channel in our marketing mix.

Let’s look at an example using Google’s AdWords advertising software. I’ve got a new book coming out soon about innovation. What’s the right amount I should spend on AdWords? Given my keyword list, here’s what AdWords says is the range I could spend – from nothing to $300,000 a year:

adwords_uncharted.jpg

I find their lack of specificity disturbing. If we look more closely, we see two major zones in the chart above.

On the left, where the line climbs steeply, we are not spending enough. Our ads will not run in ideal position, at ideal times.

On the right, where the line becomes flat, we are spending too much. We will not gain significant new traffic, new customers by spending as much as possible.

Where the line turns from steep climb to flattening out is our sweet spot, where our return on ad spend will be highest:

adwords_charted_out_for_DR.jpg

What if our marketing method of choice doesn’t have a convenient ROI calculator built in? We build one! All we need is a spreadsheet and careful tracking of our data. What we’ll do is spend incrementally larger amounts on each marketing channel and measure the result we get.

Here’s a very barebones example.

roi_example.jpg

In the first column, we list what we spent on any given marketing method at various levels of spending.

In the second column, we list what we earned from our spend at that level.

In the third column, we calculate our ROI. Remember, ROI is a simple math formula: (Earned – Spent) / Spent.

In the fourth column, we calculate our change in ROI, which is the same formula: (New Value – Old Value) / Old Value.

Where we see the big number changes in ROI is our sweet spot. Everything before the change is spending too little. Everything after the change is spending too much.

If you chart out your ROI, as I have in the example above, we see where our ROI jumps and then levels off.

Not every marketing channel will look this clean, this obvious, when we do our analysis. However, we are better off for doing it than simply throwing darts at a budgetary board. Blindly guessing at a marketing budget and getting it right would be one shot in a million at best.

How much should you spend on marketing? Ignore what other companies do, what “the top companies in X industry” spend. Instead, do your own work to find your marketing Goldilocks budget, the amount you need to spend to get it just right.

For a more in-depth marketing budgeting method, take my data-driven digital marketing planning course.


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Evaluate a website feature with Google Analytics

Ever wonder how many people think about clicking a button on your website? With Google Analytics, you can stop wondering and start learning.

I often wonder, how many people think about clicking a button on my website, such as the “hire me to speak” button. I especially wonder how many people think about clicking it but never do. Google Analytics gives us the ability to determine how many people are thinking about it but never do it.

To set this test up, you’ll need a free Google Analytics account.

Step 1: Set up a Google Analytics goal.

You’ll start by going to goals in your Google Analytics Admin control panel:

goals_setup_1.jpg

Start a new goal:

goals_setup_2.jpg

In Goal Setup, choose a custom goal:

goals_setup_3.jpg

Name your goal something logical and intuitive, and choose event:

goals_setup_4.jpg

Next, configure the event parameters. This is fancy talk for categorizing what your visitor is doing. I named mine navigation for the category (since the visitor is navigating around my site), hover for the action, and speaking-button for the label, or what they’re hovering their mouse over:

goals_setup_5.jpg

Note above I also set an arbitrary amount of $1 for the goal value. Value the event by what it’s worth, but if you have no idea, you can default to $1. Remember, it will alter your eCommerce reporting, so if you’re not sure what the event is worth, leave it blank instead if you don’t want to mess up your eCommerce reports.

Hit save.

Next, you’ll need to make an edit to your website to add the event we’ve just configured. If you’re using the modern version of Google Analytics’ Universal Analytics, you’ll add this Javascript to your button/page element:

ga('send', 'event', [eventCategory], [eventAction], [eventLabel], [eventValue], [fieldsObject]);

To use my settings above, I’d rewrite this as:

ga('send', 'event', 'navigation', 'hover', 'speaking-button');

Next, we add this event in jQuery to our page’s HTML:

$(document).ready(function() {
    $('#speakingitem').hover(
    setTimeout(function() {
      ga('send', 'event', 'navigation', 'hover', 'speaking-button');
    }, 1000);
    );
});

What the above code says is, for the item named speakingitem on our page (which in my website’s case is the sidebar item), if a user’s mouse pointer hovers over that button for more than a second (1000 ms in the script above), send the event to Google Analytics. We avoid just the random mouseovers that way. On most websites, you’ll paste this into your site’s code in the head section.

If you’re not using Universal Analytics, upgrade first (it’s free), and then use the above. There’s no reason to use the legacy version of Google Analytics. How do you know which version you’re using? On any page on your website, use Google’s free Tag Assistant extension for Chrome:

ga setup 1.png

Click on Google Analytics and it’ll tell you which version you’re on:

ga setup 2.jpg

Give this a try if you’ve got something on your site which requires insight into user intent!


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Top Marketing Trends of 2016: Traditional Digital Marketing Methods

In this multi-part series, we’ll look at upcoming trends in marketing in 2016 you should be prepared to address. Today, we’re looking at our stalwart marketing methods and how they’re faring.

Some digital marketing methods are as old as the Internet itself. Search engine optimization, or SEO, has been around since the first search engine in the late 1990s. Email marketing is arguably older than that. How will these traditional methods fare in the upcoming year? Let’s look at the chart!

2016_traditional_marketing.jpg

Our traditional methods aren’t going anywhere. Above, I’ve charted out 5 topics using Google Trends.

  • The blue line represents email marketing. Email is the ultimate reliable trend – steady since 2005.
  • The red dotted line represents the topic of SEO. SEO commands the highest share of attention.
  • The yellow dotted line represents the topic of affiliate marketing. After a decline in the late 2000s, affiliate marketing has remained a stable field of interest.
  • The green line represents display advertising, or visual ads. Very few people search for it.
  • The purple dotted line represents Google’s AdWords product. AdWords peaked in 2012/2013 but still remains a huge interest of marketers.

Why do Google Trends matter? Trends charts out searches over time. The more people search for something, the more interested people are in that topic. For example, our fellow marketers are likely the ones doing most of these searches. If our profession has started to search less about affiliate marketing, we might have started to give up on the field. We might also call it something different.

What do the above trends mean? Search as a whole, when you combine AdWords and SEO, is the dominant channel marketers are curious about. We want to be found. We know our audiences are looking for us.

The greater point is, when you read an article proclaiming any of these marketing methods dead, take that article with a very large grain of salt. These methods are still relevant, still useful. The details of what SEO is or how SEO works change daily, but the desire to be found is constant. Affiliate marketing has far more regulation today than it did 10 years ago, but affiliate marketing still works.

It’s interesting to note how SEO and AdWords march in lockstep together. As each rises or falls, so does the other. We can conclude that marketers are likely trying to do both.

I do want to point out the rock solid steadiness of email marketing, the blue line above. Email has been proclaimed dead every year, yet email marketing still works. In fact, it works better today than it has in years past; some analysts believe the spammers have switched gears to social media marketing instead, cleaning up email marketing as an industry. Whether that’s true remains to be seen, but we can safely ignore any claims about email being dead. What’s changed over the last 10 years is how we consume email: on our smartphones.

Text_Messaging__Voice_Video_Calls__Internet__Email_Rank_Among_Most_Popular_Smartphone_Features___Pew_Research_Center.jpg

What else do we do on our smartphones? We search the web. We use social media. We text. Is it any wonder our stalwart marketing methods still generate results, when our usage of the Internet on our phones still intersects with these methods?

For traditional digital marketing methods, where should you be planning your 2016 focus?

  • SEO requires your attention. Learn what’s changed and what you must do to keep up.
  • AdWords should be a key part of your overall mix.
  • Email marketing isn’t going anywhere. Become expert in its use.
  • Affiliate marketing may make sense for your business. If it does, master it.
  • If you have the budget and skills, display advertising should be part of the mix, but not a huge portion.

You now have a clear idea of what’s important in 2016. You’ve read about traditional methods that still generate results. You know which new methods to bet on and which to be cautious. You’ve learned about Accelerated Mobile Pages, Virtual Reality, and machine learning. Go make some marketing magic in 2016!

Top Marketing Trends of 2016 posts:


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