There are times when you need to make your budget work harder. It’s hard not to focus too much on the negative, whether your ad spend is cut due to an internal issue or one affecting the entire industry. In 2020, it’s a reality that most companies are unexpectedly cutting ad budgets and marketers are expected to produce more outcomes with less budget.
But having your budget tight can be a disguised blessing. It can allow you to reassess your spending, tactics and objectives and ultimately serve as an efficiency catalyst.
Getting more from less requires some creative problem solving, but it’s possible. And it starts by getting back to basics.
Where digital advertising success is measured
Everybody has an opinion about KPIs when it comes to digital advertising success — signals that indicate that your business is moving in the right direction. Some pore over conversion rates, while others focus on acquiring, churning, or net promoter score.
But the fact is, a company can do well in all of these areas and still be underperforming overall. Ultimately, income and development are the only things that matter — and driving development comes from filling your funnel, cultivating your opportunities for sale, and holding those customers as long as possible.
That is to say, your success depends on conversion generation. You have to compel action at every stage of the buyer’s journey: converting prospects into leads leads leads to customers and customers into loyal advocates. You can dispute the value of other metrics but conversion should be the focus of every business.
Judging by an eMarketer report, not only are businesses focused but they are more willing than ever to spend on that focus. By 2022, companies are expected to be spending $427.26 billion worldwide to attract and retain online customers:
If that number represents a 53.9 percent share of all media ad spending, saying businesses rely on digital ads is not an overstatement. So, you’re left with a tough question if your budget to use them is limited.
Where should you cut spending?
You have less to spend, but the good news is there’s probably a lot of room for improvement. Most ad budgets are not invested properly. And, though the nature of their misuse depends on the business, there’s one common area where advertisers fall short.
Traffic. Nearly all advertisers could invest better in traffic. You don’t have to look hard for proof: The average Google Ads conversion rate across all industries is 4.4% on the search network and just 0.57% on the display network:
That means that 95.6% of search ad traffic does not convert, and 99.43% of display ad traffic does not convert. But targeting is only half the problem. Conversion takes place on the post-click landing page. So, if you want to drive more conversions, you need to improve two things.
Segmented ads and personalized post-click experiences
Tom Noyes, founder and CEO of Commerce Signals, says the results of 60 studies have proved to him that at least 40% of traffic is wasted. As it relates to search ads, Jacob Baadsgaard, founder and CEO of Disruptive Advertising, says that number is closer to 60% after auditing over 2,000 Google Ads accounts:
Why? Noyes says that advertisers haven’t been able to harness quality data for predictable insights they can use in real-time, and Baadsgaard blames the issue on bad keyword implementation. Both are saying the same thing: personalization isn’t up to par.
Advertisers are driving poorly targeted traffic to their post-click landing pages. They’re targeting broad or irrelevant groups in their ads, and they’re not personalizing the post-click experience.
This can be a costly mistake. There’s plenty of data to show that personalization is the way to maximize ad spend. Among the most convincing, 88% of U.S. marketers report seeing measurable improvements due to personalization, with more than half reporting a lift greater than 10%.
Yet, despite the availability of personalization tools in the pre-click stage, few advertisers can target meaningful segments that convert. Exacerbating that problem is the lack of tools to continue personalization in the post-click stage. On top of that, many advertisers still don’t recognize personalization as a tactic to be used on landing pages, too.
But the more a campaign is personalized, the more relevant it is. And relevance means revenue. That means if an ad is personalized, it must drive visitors to a personalized post-click experience. Ad to post-click landing page and beyond, personalization must remain consistent. Otherwise, you provide a mismatched experience from ad to page.
The good news
If you can personalize both the ad and the post-click experience, however, data shows you can generate more conversions with less spend. But most people don’t have the resources to do this. Fortunately, a new class of software makes it possible for businesses of many sizes.
Post-click automation is a class of software that allows advertisers to personalize from the pre-click stage to the post-click stage, and to optimize to continue improving. With its four pillars — ad mapping, scalable creation, optimization, and personalization — advertisers everywhere can create a personalized post-click experience for every ad. The result is a conversion rate nearly 4x higher than average on key landing pages:
When you consider the benefits for a business on a restricted budget, it’s easy to see why this is so meaningful. With a conversion rate of nearly 4x higher than average, you can generate the same number of conversions on key landing pages with less traffic. A few examples…
The examples below represent a hypothetical situation with 10,000 ad clicks.
Example 1: Finance
In the finance industry, the average CPC on the Google search network is $3.56:
That means it will cost $35,600 to generate 10,000 clicks to a post-click landing page. With an average conversion rate of 4.17% (shown earlier), that means out of those 10,000 clicks, only 417 will become conversions.
On the Google display network, the numbers are a little different. It costs an average of $0.81 to generate a single click. That means, to generate 10,000 clicks, you would have to spend $8,100. This seems like a better deal until you see how low conversion rates are on GDN. With an average conversion rate of 0.80%, that means, out of those 10,000 clicks, only 80 convert.
But if you take the average conversion rate of Instapage users and apply it here, you get a different outcome:
- On search: At a 16.2% conversion rate, you can generate 405 conversions with just 2,500 clicks to your post-click landing page, meaning you can earn nearly the same number of conversions for $8,900 worth of clicks — a difference of $26,700.
- On display: At a 16.2% conversion rate, you can generate 81 conversions with just 500 clicks. That means you can earn more conversions for $405 worth of clicks — a difference of $7,695.
A finance company achieving the average Instapage conversion rate could expect to save $34,395 across display and search in this scenario.
Example 2: Travel
In the travel industry, the average cost per click on the search network is $1.42. So, to generate 10,000 clicks to a post-click page would cost $14,200.
But the average conversion rate for the travel industry in search is only 3.95%. So, out of 10,000 clicks, only 395 would end in a conversion.
On the display network, it’s no better. The average CPC for travel businesses is $0.53. That means 10,000 clicks to a post-click landing page would cost a business $5,300, and with a conversion rate of just 0.39%, only 39 would end in conversion.
But with the average Instapage conversion rate, these numbers look very different:
- On search: At a 16.2% conversion rate, you can generate 405 conversions with just 2,500 clicks to your post-click landing page, meaning you can earn more conversions for $3,550 worth of clicks — a savings of $10,650.
- On display: At a 16.2% conversion rate, you can generate 48 conversions with just 300 clicks to your post-click landing page, which means you can earn more conversions for $159 worth of clicks — a difference of $5,141.
A travel company achieving the average Instapage conversion rate could expect to save $15,791 across display and search in this scenario.
Maximize ad spend with Instapage
If most advertisers’ campaigns underperform due to poorly targeted traffic, optimizing the budget comes down to identifying the right people for your offer. But maximizing the use of that budget means keeping your pages convert. With Instapage, you can do that with less. As the industry’s only PCA tool, it allows teams of any size to scale personalization across all your campaigns. Find out how with an Enterprise demo.