How does online advertising help a local business grow?
Digital advertising increases awareness—it’s that simple. Digital advertising consists of a range of services, all of which work to promote a business online.
More and more businesses are increasing the amount that they spend on digital advertising, and experts like Jamie Turner suggest digital advertising on social platforms is well worth the spend.
“If I were to provide one tip to people who are using social media, it would be this — don’t be afraid of paying for social media reach and clicks.” – Jamie Turner, 60secondmarketer.com
The best part about digital advertising is that results can be easily monitored and ROI can be easily tracked. You probably don’t want to be spending lots of money without some proof of performance right?
With traditional media channels, there is sometimes no way of tracking the effectiveness of an advertisement in terms of advanced data analytics. With digital advertising, companies like Google and Facebook allow users to access advanced analytics. This way local businesses know that their money is being well spent and that the digital advertisements are positively impacting their storefront.
When determining the success of an ad, the important factors will differ case by case. For the most part, the success of an ad lies in the indicators listed below.
ROI indicators/measures of a successful campaign:
- Impressions: the actual # of views on an advertisement
- Clicks: the actual # of direct clicks on the advertisement
- Engagements: Social & landing page clicks
- Results: In most cases, results come in the form of a phone call or a store visit.
The Best Places to Advertise
Through our team’s extensive work in the digital advertising space, we have come to the same conclusion as pretty much every digital advertising company. The best places to spend money on digital advertising are Google & Facebook.
With digital advertising, not only is a local business visible online, but they are visible to the right people online. Platforms like Facebook and Google allow for advanced targeting, which puts a local business in front of consumers who are more likely to convert into a sale.
Plus, Google and Facebook accounted for roughly 60 percent of ad spend in 2017!
Why advertise on Google?
Reach: Google is the largest search network in the world, and consumers are using Google every single day to search for local businesses. Utilizing Google’s massive network capabilities, digital advertisers are able to find ideal prospects and get in front of users looking for their products/services.
In the age of digital, people are not looking at TV commercials or listening to radio ads to find a local business, they are searching for a service and then locating your business online.
With 3.5 Billion Google searches conducted every single day, customers are looking for local businesses and businesses should want to be on Google.
Flexibility: Google allows the local advertiser to spend whatever they want, whenever they want. With flexible options for ad spend, advertisers are able to test what works and what doesn’t work for a business. Spend a bit, wait to see how the campaign performs, and then reinvest in larger budgets for greater prospect reach.
Why advertise on Facebook?
Audience: The audience on Facebook includes 1.32 billion daily active users (DAUs) on average, at an increase of 17% year-over-year. As a local business, you simply cannot ignore the fact that Facebook is likely an intersection in which you can find prospective customers.
If the daily average users’ stat doesn’t have you convinced then let’s talk about how often social media is being used. The average person spends nearly 35 minutes every day JUST on Facebook, according to a recent study by Mediakix.
If there is one thing to take away it is that the audience on Facebook is MASSIVE, and they are on Facebook a LOT.
Targeting: Facebook Ad targeting is a marketer’s dream. Facebook allows the ability to focus on users so microscopically that you can basically become a bit of a digital stalker (in a good way?). Target users by their interests, behaviors, age, gender, location, and really anything that their Facebook profile may reveal about them including job title.
The Facebook algorithm has brought about changes to the local advertising landscape, but it remains one of the best environments for local businesses to get the word out about themselves!
Digital Advertising Metrics
Choosing the right digital advertising metrics to track and measure is crucial to your campaign’s success. If you aren’t tracking advertising efforts correctly, you’ll never know what’s working and what channels to focus your advertising dollars on.
Determining your core ROI goals means you’ll be able to measure data that tells the story of how your target audience interacted with your ads.
Here are a few of the key metrics to track that will help you measure success and determine ROI:
CPA – Cost Per Acquisition
How much does it cost you to acquire a new lead on any given channel?
Knowing the cost to acquire a client for your business is the basis of your marketing budget, so it’s crucial data to add to your ROI analysis. Combined with other ad data, this will determine whether your business will make a profit.
Ideally, you’ll want to get a sense for which mix of ad channels (Search, Facebook, Display) work best for your business. Then you’ll be able to better optimize your ad budget going forward.
Here’s the formula for CPA:
CPA is a simple but valuable formula. Knowing how much it costs to acquire a new lead is key to understanding your ad ROI.
However, we still don’t know the actual value of your client’s customers. The next thing we’ll discuss is LTV, which is essential for further ROI analysis.
LTV – Lifetime Value
Do you know the lifetime value of your customers? You should!
Why? Because this will give you a number that represents an approximation of the revenue a new customer brings in, with all associated costs factored in.
If you know your LTV, you’ll be able to compare it directly to the cost of acquiring a new client through your digital ad campaign.
Here’s the formula you can use to determine your LTV.
CR – Campaign Revenue
Now that we understand how to calculate and analyze the lifetime value of your customers, we’ll be able to track the revenue generated by your digital advertising campaign. As you can see below, you just need to multiply your campaign’s conversions by LTV and closing ratio (50% would be .5).
Why include closing ratio? Obviously, every new lead you generate isn’t going to become a customer, so you’ll need to factor in how often you are able to close new leads to estimate campaign revenue correctly.
ROAS – Return on Advertising Spend
ROAS is an illuminating metric to use for ad campaigns, and a lot of marketers use it interchangeably with ROI itself. However, there are significant differences between the two. What is the difference between ROI and ROAS?
Tim Mayer, CMO of Trueffect explains:
“ROI measures the profit generated by ads relative to the cost of those ads. It’s a business-centric metric that is most effective at measuring how ads contribute to an organization’s bottom line. In contrast, ROAS measures gross revenue generated for every dollar spent on advertising. It is an advertiser-centric metric that gauges the effectiveness of online advertising campaigns.”
So advertising ROAS is much more focused on the results from specific campaigns, while ROI incorporates the bigger picture relative to the business. This means that it’s much easier for you to be tracking and analyzing advertising efforts with ROAS! You know the cost and you can calculate the revenue.
Setting your own benchmarks and campaign goals based on past performance is the best way to proceed with your advertising efforts.
Want to skip all this confusing jargon and let the experts handle your digital advertising? Contact us today!
By leveraging these two platforms, every local business can easily take their advertising game to the next level, and begin to rake in new revenue—with the data to back their investment.