Owning a business is not easy, and I think most would agree that one of the biggest challenges is knowing where to invest marketing dollars. The first step is to understand your market. This is something that every business owner or company executive should know; otherwise the business is being setup for failure. Keeping this in mind, businesses are currently spending billions of dollars on online advertising like Google Adwords, Facebook, etc. However, many small business owners are still resistant to change while they see their old offline marketing return on investment (ROI) quickly shrink. Why is this happening? Here are 5 answers to that question.
1. The Yellow Phone Book Is Dead
In a recent survey performed by Harris Interactive reports that “Nearly 70% of adults in the U.S. “rarely or never” use the phone book.” This survey was conducted on behalf of Whitepages.com to bring more attention to their website, Ban the Phone Book, designed to educate people about the 165,000 tons of waste phone books generate per year.
2. What About Email Marketing?
It’s no secret that email marketing has become a core component of many businesses’ marketing strategies; however, one must beg the question, which component is producing the best ROI?
It’s no doubt that email marketing is much less expensive than direct mail marketing. There are no printing or postage costs associated with it. While email marketing may be cheaper, does it get as high of a response rate? The data below is from a real case study on a business marketing to their customer loyalty program members. The case study was performed by the Harvard Business Review.
The campaign consisted of 105,000 customers in a database. They were distributed into three groups (35,000 for each group). One group combined Direct mail and email marketing; one was direct mail only; the last was Email only.
So, to figure out the actual ROI, we will first calculate the amount of revenue generated by each group.
We see that the response rate on direct mail is higher, thus generating more revenue; however, the cost for direct mail marketing is about 100 times more.
By doing a simple ROI calculation (ROI = total revenue / total spend), we find that the ROI is literally almost 100 times more than direct mail marketing.
3. Mobile Devices are Taking Over the World
We live in a mobile age. Typically, when someone is searching for a local business to meet whatever need they may have, Google geo-targets (finds where they’re located) their location by using GPS. For instance, if someone is driving around in Pearland, TX looking for Restaurants, they only need to type in the keyword “Restaurants” on their mobile devices. With GPS enabled, Google will show local business results. Notice under each location, there is a ‘Call’ link, ‘Directions’ link, and a ‘Website’ link. This is a significant factor to consider when driving online traffic to your business.
Quick Fact: 48 percent of U.S. mobile users used their devices to access local content in December 2012, up from 42 percent in December 2011.
According to Televox mobile traffic has surpassed desktop and laptop traffic in 2013 and is growing by about 3.5% each month.
4.Track All of Your Leads
You can track all of your online marketing efforts, which give much more transparency than traditional marketing. Knowing where your leads are coming from is a key component of understanding your most profitable marketing efforts.
Online marketing has even made traditional marketing more effective by using coupon codes on print ads that customers can claim on the website. Most business owners are also aware of mobile apps that allow people to scan QR codes to go directly to a page. These can be tracked as well.
Google Analytics is the first step to understanding how your website is performing online. With this tool you can track the amount of visitors that are coming to your site, how they are getting there, what type of devices they are using, and much more. This is an essential part of any type of online marketing campaign.
Taking a step further, one might want to install call tracking on their website. Software such as Marchex, allows one to track and record calls by using different phone numbers for different sources. Additionally, the phone number will automatically change for website visitors that come from paid advertising versus nonpaid search traffic.
Being able to track every lead makes it much easier for a business to figure out its return on investment (ROI) for each type of marketing and optimize their budget to reflect that. It’s important to know what is working and what is not to be successful, thus giving online marketing a competitive advantage when comparing it versus offline strategies.
5. Leveraging Social Media
If your business isn’t using social media, it should be. Today, a majority of online adults are using social media. In a study done by the Pew Research Center they found that 72% of online adults are using social networking sites. Interestingly, women were found to use social networking sites more than men.
Furthermore, the research study found that regardless of income the percentage of online adults using social networking sites is about the same across the board. While income factors stay consistent, the statistics that were found based on age are most likely what everyone expected. The older the individual, the less likely they are going to be using social networking sites.
So while the older population is much less likely to be using social media, it’s important to point out that almost half of senior citizens are using social media (43%). Keeping this in mind, it tells business owners that no matter how old their target market may be, social media should not be discounted as a means for effective marketing.
As of December 2012:
- 15% of online adults say they use Pinterest
- 13% of online adults say they use Instagram
- 6% of online adults say they use Tumblr
- 67% of online adults say they use Facebook
The truth is that the data doesn’t lie. Online marketing is now the dominant resource for expanding a businesses’ reach and achieving the best ROI. There is no one-size-fits-all strategy and every industry varies. Some businesses can solely depend on online marketing, while others may benefit more from a combination of offline and online. Whichever the case may be, every business should embrace the way the market is quickly evolving.