Building a predictable marketing model 02.21.12


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Building a predictable marketing model 02.21.12

  1. 1. Stop Guessing & Start Growing:How To Build A Predictive MarketingModelPresented By: Danielle Walton, CEOAdept Marketing
  2. 2. About Adept Marketing•  One of the fastest-growing internet marketing companies in Ohio.•  1 of 9 companies in the state to achieve Google Adwords Certified Partner Status.•  Work with companies across all industries – traditionally online start-ups and small to mid-sized companies looking to achieve high growth
  3. 3. The Evolution of MarketingName Options•  Magazines/Newspapers•  Radio•  Television•  Direct Mail•  Phone Calls
  4. 4. Then, The Internet Is Born.Name Options•  The internet creates permission-based marketing•  Marketing shifts to helping people find what they need•  Everything is measurable So what does this mean when it comes to the way companies market their products and reach consumers?
  5. 5. Measure it !or forget it!!
  6. 6. Step 1:OptionsName Know The NumbersThe essential metrics: •  Average Transaction Value •  12 Month Customer Value •  Gross Margin
  7. 7. Step 2:OptionsName Apply The NumbersOnce the numbers are figured out, it is easy to understand how much can bespent to acquire a customer and still breakeven.Example metrics: –  Average Transaction Value: $500 How much can I spend to acquire a customer –  12 Month Customer Value: $1,000 and breakeven right away? –  Gross Margin: 50% Average Transaction Value -  (Avg Transaction Value * 50%) $250 How much can I spend to acquire a customer and still breakeven within 12 months? 12 Month Customer Value – (12 Month Customer Value * 50%) $500
  8. 8. Step 3: Know How The Company Site PerformsName Options•  Conversion rate is the percentage of all traffic that makes a purchase or completes a lead action while visiting the site•  A Typical Conversion Rate is 2%
  9. 9. Step 4:Options Marketing Performance ModelName Build a•  With all of this data assembled, a marketing performance model can be created•  Just need cost per visitor for each marketing opportunity to be evaluated•  Example, we can buy visitors from Google for $2.00 and make a $8.00 profit on every visitor! ($800 profit per 100 visitors) How To Calculate A Cost Per Visitor $2.00 You Enter (CPC) B Conversion Rate 2% You Enter C Cost Per 100 Visitors $200.00 100 * A D Conversions 2 100 * B E Cost Per Conversion $100.00 C/D F Average 12 Month Value $1,000.00 You Enter G Total Sales $2,000.00 F*D H Gross Margin 50% You Enter I Gross Profit (Sales - Gross Margin) $1,000.00 G - (G * H) J PROFIT $800.00 I-C
  10. 10. Find & OptionsName Evaluate Sources of Traffic•  Paid Search •  Social Advertising –  Google, Yahoo/Bing Search Networks –  Facebook –  Google Content Network –  Twitter –  LinkedIn•  Ad Networks –  Burst Media •  Strategic Partnerships•  Affiliate Programs •  SEO –  Pepperjam –  With historic data –  Commission Junction –  Share a Sale•  Direct Display Advertising –  Relevant websites
  11. 11. Step 5:Options UpName Scale It•  Once a marketing performance model is built and proves to be working, it can be considered “predictable” and ready to scale.•  We typically start with a small budget like $500-$1000/month to finalize the numbers on the previous slide. Once we reach profitability, then we scale.•  We spend as much money as we can while still generating a positive ROI.
  12. 12. The Goal is Very Simple Buy customers for less than they are worth.
  13. 13. Predictive Marketing ModelingCase Study: JackThreads
  14. 14. Step 1: Determine what success looks like.Determine conversionprofitability.We determined JackThreadscould pay $1.00 in marketingper member, and still makemoney.
  15. 15. Step 2: Identify channels to drive members.Identify all marketingmediums that can $.25deliver visitors at a $.25low enough cost andhigh enough $.25conversion to Example:achieve a $1.00 cost $.25 Pay $0.25 per visit for 4 visitors. 1 converts to a member costingper new member us $1
  16. 16. >>Marketing Channels Tested for JackThreads Goal Cost Per Member: $1.00 Goal Cost Per Member: $.50 Goal Cost Per Member: $0 Goal Cost Per Member: $1.50
  17. 17. Step 3: Develop creative that converts. Develop multiple landing pages and Develop ads continuously A/B test continuously to optimize testing for top performance
  18. 18. Step 4: Find what works and spend more.While each channel delivered members at the needed CPA, we determinedPay Per Click had the most potential to scale up with a profitable ROI.
  19. 19. Step 4: Find what works and spend more. Pay Per Click Predictability for JackThreads Month 1: $1,000 Budget Cost Per Member: $4.25 Sales: $3,529 Month 2: $2,000 Budget Cost Per Member: $3.50 Sales: $8,571 Month 3: $5,000 Budget Cost Per Member: $2.75 Sales: $27,000 --- continued momentum -- Month 7: $15,000 Budget Cost Per Member: $1.00 Sales: $112,500 ROI: 650%
  20. 20. Step 5: Enjoy Predictable Marketing JackThreads’ Model Share of New Members: 30% Share of New Members: 30% Share of New Members: 30% Share of New Members: 10%
  21. 21. JackThreads Predictive Modeling Results Growth Rate Before Adept: 3,000 new members per month Growth Rate With Adept: 20,000 new members per month and an average ROI of 500% on every dollar spent.
  22. 22. Questions?