You know what's interesting about having an advertising agency?
It's that you talk to companies of all sizes and find out what makes them grow.
And I know what you think … "Neil, should not you tell companies how to grow"?
Technically, yes. And I do.
But at the same time, I need to analyze what a company has done up to here to come up with the best marketing strategy for it.
And the sad reality is that most marketers and businesses focus on the wrong things. (I'll come back to how to fix it later in this post.)
In the last seven months, I've talked to 208 companies to find out where they were spending their marketing efforts and what works. And best of all, I have received the approval to share their data with you. ?
I spoke to companies that generated annual revenues of $ 1 million to $ 291 million.
I avoided talking to companies with less than a million revenues because most of them did not do a lot of marketing. And I've avoided talking to companies generating more than one billion in revenue because you would not be able to replicate what they do.
As for the industry, I talked to B2B space companies and B2C space. From ecommerce to lead generation to software as a service and everything in between.
The first question I asked each of these companies was:
Where do you spend your marketing dollars?
Essentially, I got a breakdown of marketing expenses per channel.
It was obvious that most businesses spend their money on Google and Facebook ads.
Even though they did not share this data with me, you can see it by simply looking at the market capitalization of Google and Facebook. They are valued at $ 790 billion and $ 554 billion respectively because of paid advertising.
Now, break down the data by company size.
Does marketing go by channel depending on the size of the business?
When I spoke to these companies, I divided them into three groups.
The first being less than 5 million annual revenues (with a minimum of $ 1 million a year). The second group was $ 5 to $ 100 million and the third largest $ 100 million.
Do you see a trend? Regardless of the size of a company, most of its marketing budget is devoted to paying ads.
When I asked why the most common answers were: it is easy to scale and you can see a direct ROI.
Now let's see the conversion rate per channel …
Conversion rate per channel
Before sharing with you the conversion data, out of the 208 companies I interviewed, only 73 of them had the right tracking system in place so I could get accurate numbers.
If you want to succeed as a distributor, you must set up your tracking correctly.
You do not have to pay for an analytics solution, you can just use Google Analytics and set up goal tracking and conversions. It's better than nothing.
Here is the average conversion rate per channel:
Looking at the conversion data per channel, you'll notice that I've combined SEO and content marketing because they go together.
The more you do content marketing, the better SEO you will be.
The chart clearly shows that paid ads are better converted. And they usually do it because you can control the landing page to which the traffic goes. That's why I like paid advertising!
Look at these 2 pages below. They are both on page 1 of Google for the term "auto insurance".
This takes first place through paid advertisements:
And this one is at the top of the organic ranking:
It is obvious that the payer is getting better. The design puts the emphasis on converting a user into an auto insurance client. The organic list (the second one) has tons of text because, without the content, it would not be ranked high on Google.
But looking at pure conversion rates does not tell the whole story because some marketing channels are more expensive than others.
To get an idea of the effectiveness of a marketing channel, you have to look at the return on marketing spend.
The return on marketing expenses does not necessarily mean the profitability of a chain.
All he does is show performance based on marketing expenses.
For example, although Facebook Ads do not convert as well as Google Ads, they are much cheaper. On average, all companies surveyed generated $ 3.04 in revenue for every dollar spent on Facebook advertising.
Again, that does not mean profit. But generally, companies will not continue to spend money unless it is profitable.
What's interesting about these data is that they show 2 things:
- Facebook Ads Produces Better Return on Ad Spend on Google Ads – That makes sense because it's a lot cheaper to advertise on Facebook and it does not have been as long as Google. Facebook ads are growing rapidly in terms of cost, and over time, the return on ad spend will likely be equal with Google AdWords.
- SEO Produces the Best Returns – Assuming you have correctly configured conversion tracking, SEO is very effective because you can focus on increasing the traffic generated by the right words key. The only problem with SEO is that it's a long-term game and you will not see the results instantly.
So what's wrong Neil?
Well, nothing yet, because you do not have all the data yet. ?
Let's look at some other trends and data points …
The first is that paid ads only increase the price, which means you can expect to pay more for them each year.
Google generated $ 50 billion in 2012 and $ 109 billion in 2017. Yes, Google generates revenue outside ads, but ads still account for 90% of their revenue.
Second, most users do not click on ads. However, companies are focusing their marketing budgets on ads. Did you know that only 2.6% of searches result from a click on a paid ad?
It's crazy !!!
Now, I'm not saying that the remaining searches cause clicks on organic listings.
34% of searches do not get clicks because Google solves a large number of search queries via their knowledge graph, which means that a user will not have to click. Plus, people click on pictures, new stories, card lists, and everything Google decides to show.
But still, the majority of the remaining clicks go to organic listings.
So, why do you focus all your efforts on paid advertising?
Just think about that. You know that advertising costs will continue to increase because they have increased over time. And users prefer to click organic listings, but you still spend most of your budget on paid ads.
No, I'm not saying you should not take advantage of paid advertising. Heck, I always think you should spend most of your marketing budget on paid advertisements because they are easier to resize, they convert better, and you will see an instant return assuming you do what you do .
But what you should do is maximize your SEO expenses because this produces the best return.
Here are three lessons for you regarding your marketing efforts and where you should invest your time and money.
Lesson 1: Improve Your SEO
You do not have a choice!
You are going to have a hard time keeping your business profitable because the cost of acquiring a customer will increase continuously.
If you do not believe me, look at the Google earnings chart that I shared above.
And learning on the SEO page and building links is not enough. To do well these days, you will need to integrate social media marketing and content marketing.
But here's the beauty: if you succeed, your SEO cost will decrease continuously over time compared to the amount of traffic and sales that it generates.
Let's look at NeilPatel.com.
I have been doing SEO on my own site for many years now. And when I talk about SEO, I mean social media marketing, content marketing (including podcasts and videos) and crazy experiences.
Here is my total traffic, excluding any type of click advertising for 2015.
868,821 unique visitors. During this year, I spent $ 320,301 on SEO efforts, excluding CPC ads.
And in 2016, I generated 3,448,929 unique visitors and spent $ 1,430,133 on SEO efforts, excluding CPC ads.
Last but not least, I generated 7,442,647 unique visitors in 2017 for a total of $ 581,495 on SEO efforts, excluding CPC ads.
2018 is not over yet, but my costs will even be lower than 2017 and my traffic is higher.
Technically, if you include how much money I spend on building the Ubersuggest tool, it will be higher … but that 's not really considered an SEO.
Here is a recap …
In 2015, SEO was really expensive for me when it was viewed from the point of view of cost per visitor.
It got worse in 2016 because I really wanted to grow faster, and then in 2017, I started running out of places to spend my money and of course, my growth rate slowed down.
If you go forward to today, my cost per visitor is considerably lower than that of 2017. But still … I am able to generate a B2B visitor for less than 8 cents.
This is ridiculously cheap considering that some of the terms for which I would rank would cost me $ 11 per click.
In other words, SEO is very expensive at first, but it generates one of the highest returns on investment because you do not need to spend money on it. money at the same rate to generate the best results.
With paid advertising, if you stop spending money, your traffic and sales will stop. And if you want to evolve quickly, it tends to cost more per visitor instead of less per visitor, like SEO.
If you want to maximize your SEO efforts as I recommend, make sure you know what is causing a return on investment, otherwise you will lose time and money to acquire traffic that will never convert for sales. ]
Lesson # 2: Ugly is the new sexy
I asked a simple question to each of the 208 companies … which marketing strategy gave you the biggest return on investment?
Can you guess what was the answer?
No, it was not referencing.
This was CRO (optimization of the conversion rate)!
The second finalist was SEO.
That makes sense though.
If you already have traffic, conversion optimization is one of the simplest ways to grow … assuming you can offer better tests than your control.
But here's what's interesting … less than 1.7% of marketing spend was allocated to CRO when you look at all the companies as a whole.
I understand why companies that generate less than $ 5 million a year do not spend a lot on CROs because they do not have as much traffic.
But if your business generates more than $ 5 million a year, you should consider allocating more of your budget to CRO.
Yes, it's not as sexy as SEO or social media marketing, but it works.
Lesson 3: Do not Forget Lesson Number 2
Most traders and businesses want to be cool and cool. In other words, they want to spend more time and money on cool marketing channels.
When I asked each company, "which marketing channel do you think has the most potential," here are the answers I got:
What is shocking in the graph above, is that B2B and B2C companies have almost all agreed that Instagram and YouTube have the most potential.
Although Instagram is cool, ads are very expensive and it's hard to generate a positive return on investment on Instagram.
Regarding the organic development of your Instagram reach, it's certainly feasible, but it's hard to drive Instagram traffic to your site unless you're rocking the posts. people.
As for YouTube, there is a huge potential as long as marketers are ready to create videos. YouTube SEO is not competitive and ads are always affordable.
But here's the thing, you can see from the data above that most of these big companies were built off traditional channels like paid ads and SEO.
Yes, these newer channels are sexy, but the old ones still work very well .
And here is the kicker … you have not even seen the maximum potential of paid ads and SEO because most have not developed them.
So, why would you attack unknown strings that are not so proven then that you have not made the most of the channels that work for your competition?
Yes, I devote a lot of my time and money to podcasting and videos, as well as taking advantage of all the good channels like Facebook Watch, but I really do the basics.
If you want to increase your traffic, prospects, and sales, here's how you need to prioritize your marketing budget:
- Spend more time on SEO – Whether you're a small business or a large company, SEO will offer you a better return on investment than long-term paid ads. With all the companies I talked to, less than 3% dominated the organic listings. But before you go on SEO, you need to configure the tracking properly so you do not waste your time generating traffic that does not convert .
- Keep Your SEO Budget Reasonable – I'm a little crazy, but most companies should never spend more than a million on SEO. Yes, very large companies are going … but when you maximize your SEO budget, it is far from being as expensive as the paid ads. As for the amount, it depends a lot on the industry, its competitiveness and how quickly you want to grow. Unfortunately, I can not give you an answer on the amount, but it should decrease over time.
- Invest More in CRO – If your business generates at least $ 5 million, you should consider spending more money for the CRO. I know that many of you do not care about the data above (plus my CRO blog posts are not as popular as my SEOs), but it will help a lot. This will allow you to spend more on paid ads as costs increase and this will increase your overall profit margin.
- Avoid sexy marketing channels – you should not consider copying or copying others on Facebook, YouTube, etc. if you have not yet understood the basics. Spend more time and energy on what has been proven.
- When you are little, test : many of you have incomes that generate less than a million dollars a year. If it is you, do not follow the formula above. When you start, it is best to test 4 or 5 marketing strategies at the same time. Spend very little money on each of them … the one that produces the best returns, is what you should focus on in the short term .
And if you are one of the few marketers in which you have mastered all the above strategies and have already implemented them, the next step for you is to think outside the box and to be a little more creative.
Just as I do by creating marketing tools.
So, where do you spend your marketing dollars?