"If it don't make dollars, it don't make sense" talks about the impact and value of online advertising for small business owners. Agenda: - My Story - Canadian Advertising Trends - The Advertising Layer Cake - How To: Calculate Your Online Advertising Budget Presentation given at Show 'n Tell with Blair de Jong hosted at the The Commons Calgary in Calgary, Alberta on November 30, 2016. Presenter: Blair de Jong, E-commerce & Digital Marketing Strategist at Bdot

1. If it don’t make dollars,
it don’t make sense

2. Agenda
• My Story
• Canada Advertising Trends
• The Advertising Layer Cake
• How To: Calculate Your Digital Advertising Budget
• Q&A

3. My Story

4. A-Town

11. We help people
sell stuff online

12. Canada
Advertising
Trends

13. Canada’s
Internet
Population Desktop
28m
Mobile
19.9m
Total
30.5m
Mobile
only 2.3m
Source: IAB Canada, 2015

14. Mobile User Demographics
41%
36%
23%
18-34 35-54 55+
Age
M
, 55
%
F, 45
%
Gender
EN
, 78
%
FR,
22%
Language
Source: comScore, 2015

15. Advertising Spend
• Digital advertising spend up
+21% from 2014 to 2015
• Digital spend +43% more
than TV spend
• Mobile spend +79% and
now 1 in 3 ad dollars spent
on mobile
Desktop
Mobile
$3.2
$4.6
TV Digital
$ billions
Source: IAB Canada, 2015

16. Where Does Ad Spend Go?
Google and Facebook account for 82%+ of ad spend in Canada
Source: comScore, 2015
CA
11%
US/ROW
89%
82%

17. What is Digital Marketing?
A. Promoting your product online
B. Ads that show on your desktop, mobile, tablet or internet
connected device
C. Paid, organic or earned online media
D. Quantitative, trackable activity where you can measure
actual return on investment
E. All of the above

18. The
Advertising
Layer Cake

21. Awareness
Consideration
Conversion
Loyalty
The
Advertising
Layer Cake

22. Awareness
Awareness
Interest / Behaviour / Demographics
Brand or Generic Keywords
Lookalike or Affinity Audiences
Audience

23. Lookalike Audience
Lookalike Audiences are a way to reach new people who are
likely to be interested in your business because they're similar
to customers you care about. You can base your Lookalike
Audience on a variety of sources (ex: people who like your
Page, or visited your website).
Source: Facebook

25. Lookalike

26. Awareness
Awareness
Interest / Behaviour / Demographics
Brand or Generic Keywords
Look-a-like affinity
Your Brand Story
Value Proposition
Email Subscriber
Visit Website
Lead Submission
Audience
Message
Goals

27. Awareness

28. Awareness

29. Awareness

30. Awareness
• Facebook Ad

31. Consideration
Interests / Behaviours / Demographics
Research Keywords
Website Visitors & Subscribers
Shopping Feature & Benefits
Social Proof
View Product
Add to Cart
Audience
Message
Goals
Consideration

32. Consideration
• Facebook Ad

33. Consideration

35. Cookie
Cookies are small files that a web server automatically sends
to your computer’s web browser (think Firefox, Safari,
Internet Explorer) when you browse certain websites. Cookies
are stored as text files on your hard drive, and servers access
them when you return to web sites you’ve visited before.
Source: AdRoll

36. Consideration

37. Conversion
Buy Keywords
Intent to Buy (View Product, Add
to Cart)
Prices
Recommend Product
Risk Free Experience
Customer
Audience
Message
Goals
Conversion

38. Conversion

39. Conversion

40. Loyalty
Current
Customers
Cross sell & Upsell
Replace product
Repeat
Purchases
Audience
Message
Goals
Loyalty

41. Loyalty

42. Loyalty

43. Awareness
Consideration
Conversion
Loyalty
Audience Message Goals
Broad targeting,
Interest/Behaviours,
Lookalike
Brand Story,
Value Proposition
Newsletter Sign Up,
Homepage,
Product Catalog
Email Subscribers,
Homepage,
Product Catalog
Shopping
Feature/Benefits,
Customer Reviews
View Product,
Add to Cart
Viewed Product,
Added to Cart
Dynamic Product Ads:
Product, Shopping
Cart Abandon
Customer
Current
Customers
Replacement,
Cross sell,
Upsell
Repeat
Purchases

44. How To:
Calculate Your
Advertising
Budget

45. Method 1:
Customer
Centric Model

46. Method 1
1. Revenue Target
2. Customers = Revenue Target / Customer Lifetime Value

47. Customer Lifetime Value (CLV)
Customer Lifetime Value is a prediction of all the value a
business will derive from their entire relationship with a
customer. Because we don't know how long each relationship
will be, we make a good estimate and state CLV as a periodic
value — that is, we usually say “this customer's 12-month (or
24-month, etc) CLV is $x”
Source: Custora

48. 𝐂𝐋𝐕 =
Total Revenue
Customers
=
$100,000
200
= $𝟓𝟎𝟎

49. Method 1
1. Revenue Target
2. Customers = Revenue Target / Lifetime Value
3. Budget = Customers x Customer Acquisition Cost

50. Customer Acquisition Cost (CAC)
• The cost of customer acquisition (CAC) means the price you
pay to acquire a new customer. In its simplest form, it can be
worked out by:
• Dividing the total costs associated with acquisition by total
new customers, within a specific time period

51. 𝐂𝐀𝐂 =
Total Ad Spend
Customers
=
$20,000
200
= $𝟏𝟎𝟎

52. Method 1
1. Revenue Target = $100,000
2. Customers = $100,000 / $500 = 200
3. Budget = 200 x $100 = $20,000

53. Method 2:
Traffic Centric
Model

54. Method 2
1. Revenue Target
2. Budget = Revenue x Gross Margin or % of Revenue

55. Gross Margin vs % of Revenue
Gross Margin
vs
% of Revenue

56. Method 2
1. Revenue Target
2. Budget = Revenue x Gross Margin (or % of Revenue)
3. Orders = Revenue / Average Order Value

57. 𝐀𝐎𝐕 =
Total Revenue
Orders
=
$100,000
400
= $𝟐𝟓𝟎

58. Method 2
1. Revenue Target
2. Budget = Revenue Target x Gross Margin
3. Orders = Revenue / Average Order Value
4. Visits = Orders / Conversion Rate

59. 𝐂𝐕𝐑 =
Orders
Visits
=
400
20,000
= 𝟐%

60. Method 2
1. Revenue Target
2. Budget = Revenue Target x Gross Margin
3. Orders = Revenue / Average Order Value
4. Visits = Orders / Conversion Rate
5. Cost per Visit = Budget / Visit
6. Cost per Order = Budget / Orders

61. Method 2
1. Revenue Target = $100,000
2. Budget = $100,000 x 20% = $20,000
3. Orders = $100,000 / $250 = 400
4. Visits = 400 / 2% = 20,000
5. Cost per Visit = $20,000 / 20,000 = $1.00
6. Cost per Order = $20,000 / 400 = $50.00

62. Key Take Aways
• Online advertising is GROWING in Canada
• Think layer cake, not a silver bullet
• You don’t have to break the bank
• Go Advertise!

63. We help you sell stuff online
Growth
Strategy
Ecommerce
Platforms
Online
Advertising
Conversion
Optimization

64. Blair de Jong
blair@bdot.io
www.bdot.io
@blairdejong