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Marketing Allocation Conundrums Revisited

  |  December 3, 2010   |  Comments

How to assess marketing options based on risk and unexpected benefits.

In the column, "Evaluating Your Marketing Mix: An Exercise," I encouraged marketers to evaluate their marketing mix on a more varied and flexible set of parameters than pure return on investment.

As marketers, we often forget there are other factors involved in marketing allocation decision-making. This week, let's drill down and examine two factors: risk and signaling bonus as they apply to social media campaigns, PPC, SEO, vanity URLs, and conversion improvement. ("Signaling bonus" is my term for a form of marketing serendipity where a tactic has unexpected additional benefits.)

Note: clients may not buy a service from a contractor because the service itself is a bad idea. It's just that some services are more typical and productive to outsource than others. The more integral a part of your marketing is to your company's entire culture, the tougher it is to "buy" it from an external vendor. That surely doesn't make it a bad idea!

The table, "Marketing Allocation Playbook: Evaluating Options," is a partial overview of the marketing universe. It covers PPC, SEO, display advertising, social media presence/identity, website development, conversion improvement, work culture, trade show exhibits/sponsorship, and vanity URLs. That's 9x7, or 63 boxes. You could easily triple that by adding other options.

Marketing Allocation Playbook: Evaluating Options
 ReachROIAttributionStrategicOutsourceRiskSignaling
PPC ↑↑ Normal Lite/
Tactical
Normal Low Medium
SEO ↑↑ Long cycle Strategic/
Lite
Medium Med Medium
Display advertising ↑↑ Uncertain Strategic/
Lite
Normal Med Med-high
Social media presence ↑↑ Infra Uncertain Stratetgic In-house High High
Website ↑↑ Infra Uncertain Strategic Medium Med High
Conversion improvement Varies ↑↑ Normal Lite Medium Low Low
Work/
corporate culture
Varies Infra Uncertain Strategic In-house Med-high High
Trade show exhibits/
sponsorships
Varies Normal/
Uncertain/
Long
Lite Medium Med High
Vanity URL ↑↑ Uncertain/
Long
Strategic In-house Med High
Note: ↑ = good; ↑↑ = excellent; ↓=low; Infra=infrastructure
Source: Andrew Goodman

The table is designed to aid you to keep an open mind about the merits of competing marketing ideas. They all have highly distinct fingerprints.

ROI Isn't Everything. Really!

Since we posted the table two weeks ago, I was reminded of an online marketing investment that definitely belongs on this list: the acquisition of a vanity domain name. It's a perfect example for this assessment. Such a recognizable scenario: one minute, a colleague is watching every line of every marketing report like a hawk, seeking to maximize each penny. The next, they're pondering a quick $200,000 journey into the red. What gives?

Judged in strict ROI terms, making a six or seven-figure investment for a domain name makes no sense in many cases! The payout on the distinctive name brand just takes too long.

But for some businesses, the "signaling bonus" of a vanity URL may make it pay off in ways that are difficult to immediately see on a spreadsheet. The usual claim is that a "radio-friendly URL" can help you in offline advertising and brand recall. Consider other intangibles, too: do reporters subtly take a company more seriously and report on it if it has the cash to acquire such a high-profile asset? Does that additional coverage help the company gain free exposure?

Let's dig a bit more into the chart.

In terms of reach, most tactics under study score high, so it makes sense that they're so popular with marketers. Key exceptions include improving conversions (restricted only to post-click website visitors who are likely to convert) and creating a unique workplace culture (an internal positioning and morale tactic that has wide reach indirectly through remarkability, and in addition to that, can send huge signals about your value as well as your values).

Conversion Improvement: Walks Softly, Carries a Big Stick

Going down the columns on each attribute, you can immediately grasp why certain tactics have gained so much notoriety. Conversion improvement, along with PPC, has the rare distinction of being a testing-heavy medium that has low "fallout risk" and yet typically high ROI. Its strength is definitely not its cool factor or signaling effect; rather, it wears the crown of the most quietly effective tactic in all of marketing-land.

SEO Is Great, But…

Search engine optimization gets a lot of attention because the ROI is usually high. But it's distinct from PPC in that typically it's harder to attribute revenues in short order. There is also the counterfactual question: if you did things right in-house, wouldn't good organic rankings just fall into place? Not entirely, say SEOs. But certainly SEO is distinct from PPC and display advertising in that you still have a shot at significant organic referrals if you stop all SEO initiatives today. You would get zero paid search or display advertising referral traffic if you stopped spending on those channels.

Website Development "ROI" Is Anyone's Guess

Among the non-advertising expenses that compete for your marketing budget is redeveloping your website. Should you redesign your website, pay more attention to its functionality, design, or freshness? How much is that worth? It's nearly impossible to say. But for some companies, it really is as simple as: work weekends and borrow money to finish the new website because without it, your presence won't be up to the standard your particular marketplace requires. It's basic infrastructure.

Social Media Wild Card: Risk

Pay attention to the "risk" attribute. Low risk tactics are popular for a reason! Corporate America has often overindulged in risk, but honestly, many companies still hate it. Social media presence, like cold calling, can be one of the few tactics on the list that carries a very high shoot-yourself-in-the-foot-permanently risk. And yet we're supposed to love it the most?

Of all the tactics to assess, social media presence and flashy social media "campaigns" seem to be the shiny object du jour. Yet they have several distinct disadvantages. If done poorly, social media represents a huge fallout risk. Granted, there can be risk inherent in doing nothing and conveying a sense that you're asocial or clueless, but the risk is less immediate and less acute than with a major social media blunder.

No one will dispute the huge potential win for social media in areas like loyalty and admiration for your company's authenticity. Along with that, the act of just "getting it" can create a huge signaling effect.

Attempts to attribute direct ROI to social media campaigns, though, have been tortuous to date. Too often, positive ROI on heavy social media identity spending can be arrived at only by subtracting most of the costs associated with related advertising and internal staff time.

One variant of social media usage - social media advertising - typically behaves more like other forms of online advertising. Social media advertising should be considered a hybrid between display advertising and classic keyword PPC.

PPC Plugs Right In. Here's Why

Theoretically, reach is very high (yet granular) and ROI can be high. The revenue attribution loop is "normal" and usually tight. While it's desirable to fit it into a "lite" integrated strategy, it's relatively convenient to adopt it as a standalone tactic. The granularity of the ads, and their quickly adjustable delivery patterns, means that fallout risk is low. You don't signal your brand positioning heavily with these ads, but being visible in search with just the right offer conveys a helpful "metanarrative" to searchers: "you get it." So signaling power is in the mid range. Taken as a whole across all seven attributes, this is the distinct fingerprint of paid search; this is precisely why it is a $30 billion industry today. If you like to attribute ROI, then paid search is for you.

What Next?

Now it's easier to see why we so often feel nagged at by so many competing priorities. It's as if there were many voices inside our heads that won't let up long enough to help us decide our next move. These voices represent channels and tactics with quite distinct capabilities and attributes. Asking social media why it isn't as attributable as PPC, or asking website architecture and copywriting whether it can help you reach as many people as SEO or display advertising, would be like asking you "why you can't be more like your brother" if your brother was an aardvark.

Prioritization isn't easy. My suggestion: start by crossing the most unrealistic tactics off your list. Test high ROI, high reach, highly attributable, low risk channels first. Then move on to asking other tactics only what they are capable of accomplishing.

Generally speaking, if a complex strategy makes sense on its own terms, it's going to tick other boxes - secondary "side effect" benefits. It will also help create remarkability, word of mouth, and other forms of marketing nirvana.

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ABOUT THE AUTHOR

Andrew Goodman

Goodman is founder and President of Toronto-based Page Zero Media, a full-service marketing agency founded in 2000. Page Zero focuses on paid search campaigns as well as a variety of custom digital marketing programs. Clients include Direct Energy, Canon, MIT, BLR, and a host of others. He is also co-founder of Traffick.com, an award-winning industry commentary site; author of Winning Results with Google AdWords (McGraw-Hill, 2nd ed., 2008); and frequently quoted in the business press. In recent years he has acted as program chair for the SES Toronto conference and all told, has spoken or moderated at countless SES events since 2002. His spare time eccentricities include rollerblading without kneepads and naming his Japanese maples. Also in his spare time, he co-founded HomeStars, a consumer review site with aspirations to become "the TripAdvisor for home improvement." He lives in Toronto with his wife Carolyn.

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