October 3, 2017
To Defeat Amazon Competition, Obsess Over Customer Experience
Just two days ago, dozens of advertisers spent nearly $5 million for a 30-second Super Bowl ad spot. To digital marketers, accustomed to evaluating performance and calculating ROI in real time, that $5 million can seem like an almost reckless investment. How do those companies even know if they’re getting a positive return on that money? A close review of the sales funnel, however, will demonstrate that high-funnel investments like TV ads typically have value far beyond positive tweets or increased brand awareness.
Every employee at Metric Theory studies the marketing funnel on the first day of training. It’s a great tool to help visual learners (like me) understand how searchers move down the funnel to become converters. Even with intimate knowledge of the sales funnel, it’s easy to forget how much top-of-funnel advertising can drive performance in lower-funnel channels. Occasionally an advertiser will adjust spend on top-of-funnel advertising channels, allowing us to evaluate the impact of reduced high-funnel investment.
A few months ago, I started noticing declining brand lead volume for an advertiser in the healthy living space. Non-brand performance was still strong, and I couldn’t identify any factors that would contribute to a reduction in brand searches.
I asked the advertiser if they had reduced their budget for radio and TV ads, and it turned out they had cut their budget in half over the previous year. As a result, brand leads were down 37% over the previous period. The full numbers are below:
Why did brand leads decline so significantly with reduced spend on radio and TV? To answer this question, we should refer back to the sales funnel. Radio and TV advertising are at the top of the sales funnel, meaning they function to raise awareness of an advertiser’s brand. All those radio and TV commercials result in lots of new brand searches.
Branded paid search is one of the lowest funnel advertising channels. After users are already aware of the brand, they go online to search for it, and many of them will click on a paid search ad. When you reduce advertising higher in the funnel, this impacts lower funnel channels, which is why decreased spend on offline advertising hurt our branded campaigns in the example above.
You can learn a few lessons from this example to improve your marketing strategy.
Top-of-funnel advertising is one of the best ways to grow and increase leads and revenue. Moving higher in the funnel is how you increase brand awareness and ultimately drive more purchases.
It’s a good bet that your brand search campaign is driving more direct conversions than your ads on TV, radio, YouTube, Facebook or the Google Display Network. But if you decide not to invest in those higher funnel channels, you’ll likely see brand search performance drop as well. Don’t just evaluate your top-of-funnel investments based on the results they drive directly. You also need to look at improvements to down-funnel channels to understand the full impact.
While related to the above, this is an important note on its own. As we’ve demonstrated above, decreasing investment high in the funnel is likely to have adverse impacts lower down the funnel. Similarly, if you decide to stop running on brand search, you will almost always see total leads drop, as searchers have trouble finding your site or click on competitor ads instead.
Whether you’re looking to grow or just trying to better understand the impact of your marketing budget, the sales funnel is one of the best ways to holistically view and adjust your marketing strategy. Consider the marketing funnel as you plan for 2017, and you’ll be much more likely to hit your goals.