How Much Should You Spend on Paid Ads? Here’s My Data-Driven Formula

How Much Should You Spend on Paid Ads? Here’s My Data-Driven Formula

A few years back when I first started NeilPatel.com, I spent $66,372.09 on paid advertising through LinkedIn, Google AdWords, Retargeter, Perfect Audience, and StumbleUpon ads.

You might say that’s a lot of money.

It was. But I learned some valuable lessons.

I learned which platforms and networks work best for targeting which audiences with which ads.

Some of my takeaways?

LinkedIn, for example, provided an excellent return on B2B ads, while Google still reigned supreme for B2C. StumbleUpon’s conversion rate for paid products was woefully low.

The top three paid ad spots on Google’s SERPs, for example, get 41% of the clicks. Even the best SEO techniques will only expose you to 59% of the viewing audience, and Google’s knowledge graph and infoboxes are quickly cutting into that as well.

Marketing professionals across the board agree that pay-per-click advertising works. The hard part is getting set up with a solid PPC plan to serve as your foundation.

We need to know how much to spend, when to spend it, where to spend it, and how to spend it correctly.

Those are tough calls to make, especially if you’re a paid advertising newbie. The paid platforms can be complicated and confusing. What do you do with all these options, data, and metrics?

image04

To answer these questions and be successful, instead of playing a guessing game, we need information and cold hard data. 

How PPC works

First, a quick lesson in PPC, which you probably already know. I’m including it for the newbs (and a refresher for the pros—it never hurts!).

Google and other search engines allow you to purchase ad views on their platforms on a pay-per-click pricing model. The actual price is determined by the number of searches and ads running for a particular keyword or phrase.

A popular search term, such as “insurance,” can cost $59 per click to advertise, meaning you’ll have to pay Google $59 for every lead it gets to your website by displaying your ad at the top of the search results for the terms you bid on.

This isn’t your typical example, however, as “insurance” is actually the most expensive PPC keyword by a large margin.

These costs can be mitigated (and conversions improved) by targeting specific demographics, affinity groups, geographic locations, and mobile devices, which are generating more and more search traffic.

image01

Of course, search engines aren’t the only platforms for paid ads. Social networks and video ads are rising in popularity, as explained in this Search Engine Land article by Pauline Jakober.

Video ads in search results aren’t a reality yet, but with Alphabet owning both Google, the world’s largest search engine, and YouTube, the world’s largest video platform, it’s only a matter of time.

Determining CAC and LTV

CPC isn’t the same as your customer acquisition cost (CAC). What ultimately determines your CAC is your website’s conversion rate.

If each web visitor costs $59 to obtain and you’re only converting 50% of your visitors, the customer acquisition cost for your PPC campaign is actually double your CPC, or $118 in the example of insurance.

This doesn’t take into account the rest of the marketing budget either, which also includes radio, print, television, social media, billboard, event marketing, and other customer outreach initiatives.

The CAC is calculated by dividing all marketing expenses by the number of customers acquired in the same period. For example, if a company spent $10,000 on marketing in a year and acquired 10,000 customers as a result, its CAC is $1.00.

Balancing the CAC with the customer’s lifetime value (LTV) is how you create a successful business model.

image06

So long as the LTV is larger than the CAC, your marketing efforts are working, and you have a sustainable business model.

When the CAC rises above the LTV, you’re in trouble.

Because understanding this concept is critical, here’s a graphic to help make the lesson sink in:

image03

To calculate the LTV of a customer, you need to know how much each customer spends in an average purchase, how many purchases the average customer makes in a certain time period (day/week/month/year), and how long the average customer sticks around.

Profit margins, discounts, customer retention rate, and gross margins are all factored in to the final formula, which you can find here.

In the case of an insurance company, if an average policy costs $1,000 ($100 is profit), and the average customer is retained for 3 years, you’re making $300 for every $118 spent on your PPC campaign, which is close to the actual average.

Businesses make an average of $3 for every $1.60 they spend on AdWords.

I’m sure you want to double your money. We all do. But if everyone is advertising for the keyword “insurance,” they’re missing quite a bit of traffic. You need to check associated keywords.

Extending keyword searches

There are millions of searches for insurance every month, but you have no idea whether those people are looking for medical, life, business, home, phone, or auto insurance.

image00

It’s still worthwhile to advertise on a single keyword, but with such a high CPC, you shouldn’t pour all your budget into that one highly competitive keyword.

image07

“Car Insurance,” “insurance quotes,” “auto insurance,” “compare car insurance,” and “car insurance quotes” all have different prices for different search volumes. Spreading your budget across all these keyword phrases increases the chances that your ad is seen by people searching the web in different ways.

At this point, your overall CPC will be determined by the cost and frequency of each individual search term. You can afford to buy some traffic for “insurance” and “auto insurance” so long as it’s balanced out with “compare car insurance,” “insurance quotes,” and “car insurance quotes.”

You now have a potential pool of customers that’s three times the size of your original pool, which maximizes the reach of your ads.

Continue this research into five- and seven-word long-tail searches for the best results. For example, phrases such as “Best car insurance company in Arizona” or “Cheapest car insurance for 2005 Ford Mustang” are great ways to target specific regions or car owners.

The longer a search term, the more specific information a customer is typically looking for. While searches may be lower, bids will also be lower, allowing you to obtain some customers for $5 and others for $50 while still maintaining a low CAC.

Portioning budgets for each keyword is critical as this is one of two places where smart marketers maximize their ROI. The other is targeting specific customers using Remarketing lists for search ads.

Targeting the right customers

A few years ago, Google moved beyond focusing on just keyword searches to looking at contextual information about customers.

The most valuable result from this change was RLSA—remarketing lists for search ads.

RLSA lets you target customers who have visited your website previously.

image02

Bounce rates are high on websites, but just because a customer leaves doesn’t mean they’re not interested. Shoppers may visit a site 9 times before purchasing, so the more they visit, the further down the conversion funnel they may be.

Take a look at this sales funnel:

image05

For every 5,000 visitors, only 100 inquiries are received, so why waste ad money on those 100 when you should be focusing on converting the other 4,900?

Using RLSA, you can optimize bids to increase your ROI. Tirendo Tires, for example, increased sales by 22% and conversions by 163% simply by raising their bids on previous homepage visitors.

World Travel Holdings increased ROI by 30% by using RLSA to target previous site visitors for broad search terms (like “insurance” in the example above).

By adding the remarketing tag to your website, you allow Google to further segment your visitors and hyperfocus your PPC ad campaigns.

Of course, the downside to these PPC ad platforms is you can’t determine who is already a paying customer. I constantly receive ads for products and services I’ve already purchased, which I know is wasting the advertiser’s money.

You also have to be wary of disgruntled customers and employees who may purposefully click your ads without making a purchase. (Seriously, people do this in order to drive up the cost of your ad spend.)

Segmenting and targeting ads in any way is an essential step toward optimizing them and getting the most bang for your marketing buck.

Conclusion

PPC is still one of the most popular methods of advertising, with over $500 billion spent annually on it.

It can be exciting to envision massive ROI and all the extra sales you’ll be able to make by simply toggling some ads and letting them run.

Before spending any money on a campaign, however, it’s important to understand what keywords and searches have the best conversions for your site. Targeting these searches with ads moves you to the top of the search results, giving you optimal visibility.

Beyond just search terms, it’s also important to target customers at specific points in the sales funnel.

The actual cost of your PPC campaign isn’t as important as the ratio of CAC to LTV. It’s okay to spend a little more if you are marketing a more expensive product or a company with higher retention rates.

So long as your overall marketing budget doesn’t outweigh the lifetime ROI from customers, you’ve built a sustainable business model.

How much are you spending on paid search? Are you getting a solid ROI?


Source: quicksprout

How Much Should You Spend on Paid Ads? Here’s My Data-Driven Formula

India Pale Hefeweizen Recipe

India Pale Hefeweizen Recipe
Banana Islands India Pale Hefeweizen.There are a surprising number of beer nerds who avoid “wheat beers.” In general it isn’t the wheat itself that is objectionable (plenty of these same people have no issues eating bread or pasta), but rather the banana and clove notes produced by the hefeweizen strains often associated with wheat beer. I have to admit, even though they are best fresh, I shy away from an average brew pub hefeweizen. Ferment too warm, and the subtle ripe banana aroma turns into banana runts or Now-and-Later: artificial, overpowering, and moving towards bubblegum.

My solution, borrowed from Eric Warner (now brewing  Karbach in Houston Texas) via his Classic Styles: German Wheat Beer, is to ferment cooler than most ale yeasts (he suggests pitching at 60°F and fermenting at 59°F). Jamil Zainasheff advocated this approach as well (62°F fermentation) in Brewing Classic Styles. I usually start fermentation around 58°F ambient, allowing the temperature to rise into the low 60s°F as the yeast slow. Despite the lore that a cold fermentation promotes clove-phenols, I’ve never seen research to support this. Rather, cooler fermentation reduces ester production allowing the clove to be more apparent. The amount of 4-vinylguaiacol (clove) is the result of the ferulic acid from the malt, and the yeast strain selected. The problem with this batch was that I underestimated the amount of ice needed for my recirculating immersion pump and only was able to bring the wort down to 75°F; I gave the beer six hours at 58°F in the fermentation fridge before pitching to compensate.

While I love a well-made traditional hefeweizen, I’m also a fan of introducing citrusy and tropical hop aromatics! My first attempt was based on New Glarus Crack’d Wheat, with Cascade and Amarillo, and my second was hopped with nearly-impossible-to-source Riwaka. For this batch I opted for the Modern Times Fortunate Islands combo of Citra and Amarillo. The Amarillo helps to temper the aggressiveness that can be a single-hopped Citra beer. The malt bill is reminiscent of Fortunate Islands as well, with Simpsons Golden Naked Oats in place of the CaraVienna. I couldn’t help but get a glass of the original on Monday at the Modern Times event at ChurchKey (and I’ll likely have another Tuesday 9/30 at Meridian Pint).

Penthesilia on the left and Hippolyta on the right.I’m a fan of Commonwealth Brewing Co. Taonga (their New Zealand-hopped imperial hefeweizen) as well. Convenient, as I’ll be down there Labor Day weekend for the release of our collaborative oud bruins! We re-fermented half the batch on cherries and dates (Penthesilia), and the rest on blackberries and figs (Hippolyta). Richer fruits to stand up to the darker malts. There is a Sour Beer Dinner on Friday 9/2 in their barrel room, and I’ll also be at their first anniversary party the following day when bottles will be available!  Can’t wait to try the finished beers!

Banana Islands 


Smell – The banana and tropical hop punch have both settled down after some early clashes. The banana is still a little more assertive than in my ideal balance though. I wanted 1a-1b in favor of the Amarillo/Citra, this has it reversed. The hop combo works nicely, providing the fruitiness that a hefeweizen needs without any dankness or pine.

Banana Islands India Pale Hefeweizen, five minutes later.Appearance – Hard to make any argument against that being textbook hefeweizen! Hazy gold body, translucent as it should be. Big, dense, white head, still sitting two fingers high nearly five minutes after pouring. Sticky rings of lace.

Taste – Banana leads with the orange and melon of the hops surging in and then disappearing, leaving a lightly citrusy hefeweizen in the finish with hints of clove. Bitterness is moderate, more than a traditional hefeweizen, but not approaching current American pale ale. Even a hint of vanilla as it warms.

Mouthfeel – The head adds a luscious creamy texture with each sip (reminds me of the substantive foam on cocktails shaken with egg whites). Once that dies down the beer itself is light, but the oats and chloride prevent it from tasting as light as it is.

Drinkability & Notes – If the banana was dialed back 20% it would be a real crusher. As is it is nice, but the hops aren’t as showy as I want, and the banana is tiresome by the end of the glass.

Changes for Next Time – Back to my usual method of buying a few bags of ice at the store rather than trying to rely on ice packs…

Banana Islands Recipe

Recipe Specifics
——————–
Batch Size (Gal): 6.00
Total Grain (Lbs): 10.75
Anticipated OG: 1.049
Anticipated SRM: 4.9
Anticipated IBU: 31.0
Brewhouse Efficiency: 73%
Wort Boil Time: 65 Minutes

Grain
——-
44.4% – 4.50 lbs. Rahr Brewers Malt
41.9% – 4.50 lbs. Briess Red Wheat Malt
6.7% – 0.75 lbs. Simpsons Golden Naked Oats
2.2% – 0.25 lbs. Gold Medal All Purpose Flour
2.2% – 0.25 lbs. Weyermann Acidualted Malt

Hops
——-
0.63 oz. Columbus (Pellet, 12.60% AA) @ 60 min.
2.00 oz. Citra (Pellet, 11.50% AA) @ 20 minute Whirlpool
2.00 oz. Amarillo (Pellet, 9.00% AA) @ 20 minute Whirlpool
2.00 oz. Citra (Pellet, 11.00% AA) @ Dry Hop
2.00 oz. Amarillo (Pellet, 9.00% AA) @ Dry Hop
1.00 oz. Citra (Pellet, 11.00% AA) @ Keg Hop
1.00 oz. Amarillo  (Pellet, 9.00% AA) @ Keg Hop

Yeast
——-
Wyeast WY3068 Weihenstephan Weizen

Water Profile
—————-
Profile: Washington DC, Hoppy

Mash Schedule
——————
Sacch Rest – 30 min @ 154°F

Extras
——–
0.50 Whirlfloc @ 5 min.
0.50 tsp Yeast Nutrient @ 5 min.

Notes
——-
Split batch: hoppy hefeweizen with WY3068 and Citra/Amarillo, plus a Nelson/Mosaic NE-ish APA with Sacch Trois 644! The grains and hops listed are for this batch alone.

6/30/16 2 L starter of 3068.

7/3/16 Minimal sparge with 50% dilution with distilled water 6 g each CaCl and gypsum, plus 2 tsp of phosphoric acid.

Chilled to 75°F with ice-water recirculation. Chilled to 75°F, left at 58°F to cool for 6 hours before pitching mostly decanted starter. Up to 60°F after 48 hours.

7/6/16 Dry hopped with 2014 Citra and Amarillo pellets. Upped temperature to 62°F, then 2°F every other day.

7/14/16 Kegged, put of gas in the kegerator.

I get a commission if you click the links to MoreBeer/Amazon and buy something!


Source: The Mad Fermentationist

India Pale Hefeweizen Recipe

5 Ways Your Fans Can Help Optimize Your Site for Conversions

5 Ways Your Fans Can Help Optimize Your Site for Conversions

I’ve been watching Facebook closely for a long time.

I’ve tested hundreds of ad iterations.

I’ve worked hard to build organic reach for myself and my clients.

Here’s what I’ve concluded: Facebook is awesome. But it’s also tricky.

Why? Because the algorithm is constantly shifting, forcing marketers to up their game, readjust their techniques, and reorient their strategies.

Here’s the thing. If you have a social presence for your business, Facebook has decided that your organic reach needs to shrink.

Again.

You know, of course, that this isn’t the first time the social giant tweaked its algorithm.

In June, Adam Mosseri, VP, Product Management for News Feed at Facebook, shared a post that detailed how Facebook was updating the news feed.

The core of the update is to prioritize posts that come from friends and family while reducing the onslaught of content from businesses and other publishers. Facebook wants users to see more posts from actual people, not businesses doing marketing.

The gist of the algorithm remains the same.

image00

But the variability is increasing. Mosseri explained:

It will vary a lot by publisher mostly based on how much of their referral traffic or their reach is based on people who actually share their content directly…

If you’ve got strong engagement from your audience and they’re shouting your name from the rooftops as they share your content, or generate content around your brand, you’ll be far less impacted by the update.

But most of the businesses I work with aren’t enjoying that level of stellar engagement.

This is what it boils down to. If you want to improve your reach and engagement, you’ll need to find ways to leverage user-generated content (UGC) since that’s what friends and family will see first.

What I want to communicate is pretty simple: User-generated content is one of the most effective forms of content marketing available today.

User-generated content is the future of content marketing.

UGC will act as dynamite to your social media presence, accelerate your onsite content efforts, increase engagement, boost conversions, and build up a wall of defense against any algorithm the world throws your way.

Let’s talk about where the rubber meets the road—your fans helping your site become a conversion-generating machine.

Why you should put your money into user-generated content

There are a lot of benefits to UGC, and those benefits can be significant. And that’s primarily because you’re not limited to social media when it comes to working with customers to acquire and leverage it—though that’s where a bulk of your gains can come into play.

Consider for a moment that more than half of the adult users on Facebook have around 200 people in their immediate networks, according to Pew Research.

image13

That social network graph looks something like this:
image02

If the algorithm wants all those people to see content from their connections first, it’s in your best interest to get your audience producing or creating content about you.

And that’s not just for the sake of a little (or even big) boost in visibility.

Consumers fully admit they find branded information from their peers trustworthy—85% of consumers, to be exact.

image04

That’s because the vast majority of them find that kind of content to be helpful when they make a decision about whether or not to make a purchase.

Nielsen’s study on this subject showed that 92% of consumers trust content and the opinions of their peers over any other kind of advertising.

image01

UGC also has influence over that trust, according to data shared by Yotpo:

image09

UGC is the best way to beat an algorithm that wants to topple and bury your promotions amid pictures of babies, beards, and breakfast platters.

But you’re not limited to Facebook in leveraging it.

With variations in engagement time across different social channels, you can see where there are opportunities to use user-generated content to drive up engagement as well as increase consumer trust.

image12

Some brands are having a lot of success on other social channels and digital properties with UGC.

Below are a couple of examples of brands that leverage UGC using different channels.

A touch of wanderlust

National Geographic asked users to capture unforgettable people, places, and experiences that have impacted their lives from their travels around the world. The hashtag campaign (#wanderlustcontest) brought in tens of thousands of submissions branded to NatGeo.

image10

And, of course, among those public submissions were some truly breathtaking and awe-inspiring photos people were all too happy to continue sharing.

Ignite user creativity

Nissan’s luxury car brand, Infiniti, ran a campaign promoting its Q30 model, aiming to leverage the content of its fans to help promote the vehicle. The New Heights contest had users print out a marker card that would display the vehicle in 3D when used with their mobile app.

Fans were encouraged to show off the vehicle in unexpected places by snapping pictures and sharing them with a branded hashtag via different social channels.

image07

These two great examples of building campaigns and visibility from user-generated content had a couple of things in common:

  1. They both revolved around contests. While this is a good way to encourage action among your followers, it’s not always necessary to give something away in order to source user-generated content.
  2. These two campaigns were actively asking their fans to provide the content.

This aspect—the asking—is the most important part you need to remember.

Why? Because the majority of brands simply don’t ask. If you don’t ask for it, you won’t get it.

It’s just that simple.

So, what’s the simplest and most effective way to get UGC?

Ask your users to provide it.

If you want UGC, ask your followers to provide it

Brands don’t want to be pushy, but with UGC, you’ve got to approach it like you approach a call to action (CTA).

With a CTA, you’re telling your audience explicitly what you want them to do. It’s been proven time and again that without a clear call to action, you lose conversions.

But only about 16% of brands take the same approach with UGC, expressing to fans just what kind of content they want to see. Without that kind of direction, consumers aren’t sure what’s okay to share.

In fact, 50% of consumers want brands to tell them what they should include when creating and sharing content.

You don’t need to give away a luxury or big-ticket item when you make the ask, but you do need to ask.

Don’t sit and wait for your fans to provide you with gold.

Here are some of the best ways you can start sourcing and leveraging user-generated content for your brand and social channels.

1. Curate user-generated content with Yotpo

I’ve long felt that Yotpo is an impressive platform for sourcing reviews, engaging customers, and utilizing customer feedback to promote growth.

Now, it’s even better than ever.

Yotpo has stepped up its game with the recent launch of the Yotpo Curation tool.

image06

This tool allows you to collect relevant Instagram photos from fans and influencers, displaying them on a single dashboard.

From there, you can tag products and handle rights management (including engagement with the original user to say thanks), inject the photos into your product pages, and even sell from your timeline.

This simplifies the tedium of trying to manually source user-generated images and lets you quickly benefit from the social proof tied to UGC.

In one survey conducted by Yotpo, 77% of consumers admitted they preferred to see consumer photos over professional shots:image03

That’s a clear indication of what you should have on your product pages.

Imagine the impact of having quality reviews alongside images showing off your products being used by actual customers.

It would provide a significant lift in conversions when you consider that 63% of customers are more likely to make a purchase from a site displaying user reviews. A study conducted by Reevoo showed that reviews alone, without any other UGC, lift sales by 18%.

The Yotpo tool turns your customers into brand ambassadors right on your product pages, plus you can create your own shoppable Instagram galleries or post that UGC to other social channels.

2. Build a community

When I talk about building a community, I’m referring to a gathering of people. Literal people in online gatherings.

You may view your social channels as individual and separate communities, but they’re really not. At least not without some kind of organization.

There are a lot of ways to build communities, e.g., Facebook groups, subreddits on Reddit.com, or communities built into your website.

A community you create and manage can give your fans a sense of belonging and make them feel connected to your brand. They’ll share a mix of personal content as well as content related to the brand as they engage with one another.

Through this engagement, you’ll see things like images, videos, and testimonials crop up that are ripe for the picking.

That user-generated content feeds back into the community, encouraging others to generate more of it, and it helps anchor prospective customers who were on the fence about making a purchase.

Giant Vapes is one of the largest online retailers of e-liquid for electronic cigarettes. It also operates a Facebook community, roughly 25,000 members strong. Members regularly share the products they’ve purchased, industry news, their opinions about interactions with the company, praise over shipping and deals, and more.

image05

3. Give them customization and unique experiences

Customization provides your fans and customers with a sense of real ownership. They’ll naturally want to share with their friends and family what they’ve created, and you can play on that desire by asking them to do so.

Whether it’s a customized piece of clothing, a bag, or a vehicle, customization often leads to some great user-generated content.

And sometimes you don’t even have to ask.

Scores of people got excited about the announcement of Nintendo’s Super Mario Maker. Players create their own Mario levels to play on their own or share with the community. Fans, new and old, went crazy when it launched, and YouTube was flooded with the creations of streamers, generating a lot of visibility for the brand and the game.

image11

This video has almost 12 million views to date.

In the same vein of creating unique experiences, Hello Games is seeing images and videos of their game No Man’s Sky showing up all over the web, including a subreddit devoted to the game (a user-created community).

No Man’s Sky features a universe boasting over 10 quintillion procedurally (randomly) generated planets, each with creatures and alien plant life different from the last. That guarantees unique content, and fans have been quick to share images and videos of their discoveries since its recent launch.

image08

When you give your audience something they’ve never experienced before and the chance to create something unique they feel they own, they’re more likely to share that experience far and wide. That builds a lot of trust and provides a lift in conversions.

4. The UGC contest

I touched on contests above with a couple of examples, but in recommending this approach, I wanted to add one more because of the success of the campaign.

Back in 2014, Starbucks invited fans to decorate their white cups with customized art. Fans were asked to submit the images through Twitter with the #whitecupcontest hashtag for a chance to win. There were thousands of entries, and, of course, a constant stream of buzz that drove customers to their local stores.

I’m mentioning this contest specifically because it pulls in elements from my last point: let users customize and do something unique.

You don’t have to have a multi-million dollar budget to add customization to your product line.

Sometimes, you just need to give your customers a blank canvas and set their creativity free.

5. Use videos on product pages

Yotpo can strap a rocket onto your conversions with user-generated images, but don’t let the rocket run out of fuel.

If you can get your fans and customers generating videos of your products in use, those should be added to your product pages as well.

Explainer videos are great, but there’s nothing that sells a product faster than a video showing real, happy customers, who are 100% satisfied with their purchase.

Here are some quick stats that show how effective product videos really are:

  • 90% of users admit that seeing a video about a product helps them make a purchase decision
  • 36% of customers trust video ads; imagine the trust you gain from earned media
  • 64% of visitors are more likely to buy a product after watching a video online
  • Product videos can increase conversions by as much as 20%

Conclusion

Aside from those five tips, it goes without saying that you should absolutely be using product reviews on your website and social channels such as Facebook.

Leverage that social proof, and find creative ways to team up with your customers.

A large portion of your audience are happy to create and share content for you—they just need to know what you’re looking for.

Tell them how to help, inspire them to get creative, and watch your conversions climb steadily as your collection of UGC grows.

Are you using user-generated content right now to build trust with your audience and increase your brand’s visibility? What techniques are you using, and what’s the most successful?


Source: quicksprout

5 Ways Your Fans Can Help Optimize Your Site for Conversions