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Aug. 21, 2020

The Formula For Successful Advertising

The Formula For Successful Advertising
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In this episode, Andy takes a deep dive into the steps involved using Marketing ROI.

Marketing based on ROI (return on investment) breaks down into four actionable steps: track, measure, test and repeat.

Discover more about each step as well as what all businesses should do to ensure stability through their sales.


Andy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.

New episodes of the Make Each Click Count Podcast, are released each Friday and can be found on Apple Podcast, iHeart Radio, iTunes, Spotify, Stitcher, Amazon Music, Google Podcasts and


Andy Splichal  0:01  

Welcome, this is your host, Andy Splichal. And this is the Make Each Click Count Podcast. You know growing up, my goal was always to pursue a career in advertising for a living in the late 90s. While still in college, I spent two summers as an intern for an advertising agency located in the Miracle Mile of Los Angeles. And although I ultimately chose a different path, now running my own search agency, and I never met Amanda Woodward, aka Heather a lot clearer. The experience of working there is one that I will always remember, one of the first things you realize whether working for an ad agency or running a small business is that with advertising, there can be numerous goals. Brand awareness, for instance, is an advertising goal. You can be advertising with the main purpose to increase the brand awareness for your brand. Think Coca Cola running their Superbowl ads at $5.6 million, and 30 seconds, which is what it was for the 2020 Superbowl that is a whole lot of coke, they need to sell to break even. Of course, their goal is not to break even. But to increase brand awareness and to make their customers feel good about the choices that they have already made. The thinking of brand awareness goes that by making people more aware of your brand, especially those that are relevant to your business, it will increase your chance of generating conversions. Now to be frank, this type of advertising to me never really made too much sense although I do like a good car commercial. However, as a small business owner for myself, as well as my private clients, I have never been afforded this type of luxurious thinking. Instead, I have always been focused on marketing with a heavy focus on ROI. Some would call it the marketing ROI way of thinking. ROI stands for return on investment. And with marketing ROI, the philosophy is managing your marketing issue initiatives with a focus on profit and revenue. By using profit and revenue is the driving indicator. This type of marketing will only allocate future marketing budget to campaigns with proven positive returns. If you as a company are getting more money coming in from sales generated, generated through your advertising, than money spent on advertising, after the costs fulfill the product or service, then you will have a positive ROI. And if you are making more money than you are spending and you have the capacity to fulfill all the orders, then why would you not increase your advertising spend? Now that kind of marketing is what makes sense to me. And in fact, the marketing ROI philosophy is so engrained into my thought process, that I am sometimes confused when others don't abide by that way of thinking. And when I say abide that very well could be the wrong word. Because when you hear the statement about the fundamentals of marketing ROI, you need to have more money coming in than going out with your advertising. There are very few who would disagree with that statement. However, even though there are very few that disagree, there's a huge difference between a green with a statement and putting it into active practice. Now is the reason that many businesses fail to practice marketing ROI because they are too busy. Or more simply, is it because they don't know how. If it is because they don't know how I can help if it is because they're too busy that I cannot. However, if a marketing company is too busy to determine if their marketing is working, then they need to either immediately hire somebody capable to manage their marketing or soon they may find themselves out of business. Either way it is it is an issue that requires some immediate attention. So here are the four steps to manage your marketing ROI. Step one tracks. Step two, measure. Step three test Step four repeat. Step one of marketing ROI is to track in as much sense as needing to track results make many if not, most companies fail to properly track all of their marketing initiatives. And if you are not effectively tracking your results, none of the steps will work. Have you ever heard the saying garbage in garbage out? Well, this statement is particularly true with tracking and analyzing results. From my own advertising as well as my private clients, the vast majority of transactions are done online. Where tracking is fairly easy to implement. By using a web analytics program, such as Google Analytics, advertisers can see where their sales come from, and in what volume, the revenue and how exactly how they're being generated. If your sales are not done online, you may need to put a different system into place in order to effectively track. For instance, if you have quite a few sales taking place over the phone, then you might want to sign up for a call tracking service such as call rail, or phone wagon. Or if you have quite a bit of sales taking place through direct advertising, you may want to have a special code to redeem that allow you to track those sales. Regardless of which marketing channel is driving your sales, it is absolutely critical to track it. So you can continue to measure, test and improve. Step two of the marketing ROI is measured. By using the data generated with proper tracking, advertisers can quickly calculate their ROI return on investment, for advertising the ROI ROI formula is this revenue minus your advertising cost divided by your cost of goods sold. So here's an easy example. Assume your your marketing drove $10,000 In sales, and you spent 1000 on ads, and it cost you $2,000 to fill those orders. Your ROI would be calculated by 10 minus one divided by two, or it would be four and a half. Now one question I'm asked often is what is a good ROI? This always seems to be an odd question, and a difficult one to answer because when it comes to each one's own business, there really are no generalities. Just because somebody in a completely unrelated industry is generating X ROI. Why would that matter to your own business. Instead, focus on improving your ROI through the methods of marketing ROI, track, measure, test and repeat, remember what gets measured gets improved. Step three, a marketing ROI is test. Once you have the tracking and measuring in place comes the fun part of advertising. The testing, the elements of marketing campaign that can be tested are not in short supply. From testing the offer to testing different creatives, an advertiser can test and test and test until they find the most successful combination. Step four, a marketing ROI is repeat. In order to determine the most successful combination, a company needs to continue to test and measure their marketing. Just because you find profitability does not mean it is not the end all be all, or even that you should be satisfied. Instead, continue to repeat your testing by continuing to refine your testing. geared toward increasing your ROI advertisers will be able to generate higher profitability, therefore being able to dedicate more money to advertising and therefore being able to grow their business. Once you have tested and proven marketing channel in place for generating profitable advertising, it is time to expand into new marketing channels. The fact is that diversity in your marketing creates stability. The steps for marketing ROI work to increase profitability. However, only by having multiple marketing channels, can you fully create stability within your business. An analogy from the great marketer named Dan Kennedy does a real good job of explaining this point. Imagine a Greek Parthenon being held up by multiple pillars. If the Parthenon you are imagining has nine pillars, then removing one of those pillars most likely wouldn't make the building collapse, right. However, what would happen if a Parthenon only had two pillars in one was removed? Well, that building would most likely collapse. Now think of each pillar in terms of your marketing channels. If you were relying on just one or two channels to drive sales for your business, what would happen if one was taken away or stopped work? In a great example of this as an Ecommerce company that relies on selling their products exclusively on Amazon, I discussed the dangers of doing this in a past podcast episode Amazon, the call the sirens. However, as it relates to this analogy, what if Amazon was a company's only pillar of generating revenue? And suddenly they were removed from Amazon? Which, by the way I've seen happen. Well, if they only had one source generating strong revenue flow, and it was taken away, what do you think would happen? You probably guessed it right. They would be in a world of hurt and probably wouldn't be around for too much longer. For ecommerce companies, there are many different pillars that are available to work with to generate revenue. Some of these pillars include Google ads, Google Shopping courses marketing channel is close to my heart. With my new book Make Each Click Count Using Google Shopping. But there are other channels as well, such as email marketing, referrals, using a reward system for your current customers, Microsoft Bing ads, Facebook ads, listing products on Walmart and yes, listing your products on Amazon. Now, that's just seven pillars off the top of my head, and there's a few more I haven't listed. The question that you should ask is how many of those pillars are you using in your business? And are those marketing channels optimized for your business? Remember to account for stable growth a company should be striving to generate revenue from different marketing channels, and then working to improve the ROI through tracking, measuring and testing. Well, that's it for today. Remember, if you liked this episode, please go to Apple podcasts and leave a five star review. And if you're looking for better results from your online marketing requests to join, Make Each Click Count Facebook group. Remember to stay healthy, keep safe and happy marketing. And I will talk to you in the next episode.