Powering Companies With Data-Driven Marketing
What is Data-Driven Marketing and Why Does it Sound Expensive?
The terms digital marketing and data-driven marketing are often used interchangeably. For the most part, I honestly don’t think there is anything wrong with that. I’m not a stickler for terms and if it’s wrong, then I’m guilty of it myself. But I think there is an important differentiation to be aware of whether you use the terms “correctly” or not. I’ll use an analogy to illustrate my understanding this complex space. Let’s say digital marketing is a high-tech delivery truck designed to deliver your message to a specific group of people quickly. Data-driven marketing can be looked at as the GPS used to instruct the truck which routes to take.
Rather than driving on gut instinct or memory to get where you’re going, we use current data to navigate the best route. The fastest route yesterday, may not be the fastest route today. Look at the term digital marketing simply as the type of marketing used to deliver the message. Data-driven marketing is the technology and talent used to collect, analyze and measure the data to be leveraged for the best possible outcome for the least amount of money.
Wow! That is Cheap!
I read a blog post on digital marketing recently in which the author said something along the lines of, “If someone tells you that your business needs to be spending over $500 a month on digital marketing, then they’re just a salesman trying to get a higher commission”. Maybe. But I would say the opposite is true more often than not. That’s right. If someone is trying to pitch your business quality digital marketing services for less than $500 a month, buyer beware.
When it comes to marketing, the old adage may be truer here than any other aspect of your business. You get what you pay for! The licensing of software, subscriptions to quality programs, and salaries for talented marketers, sometimes literally worth their weight in gold, all cost legitimate digital agencies money. You can put the pieces together from here. But basically, quality digital agencies that produce positive ROI, are going to have a large overhead just like any other quality service business.
So, How Much Should I Be Paying for Quality Digital Marketing?
Sometimes it’s better to invest nothing. Don’t get me wrong. If you invest nothing you’ll get nothing in return. Investing nothing is never the best option but sometimes it would be better to invest nothing than the amount you’re investing now. I’ll explain. Rather than a linear curve that we would all prefer, marketing ROI functions on an s-curve. You will not get Y for every X you invest. No matter how much we would prefer that math. There is a specific amount that you’ll need to invest before you will see any return. That’s the bottom portion of the s-curve. Anything under that number is going to bring back a loss, and anything over that number is going to result in a return. Of course, there are exceptions and lucky months that happen, but I wouldn’t bank on them. That number is different for every business and every industry. But from my experience, it’s usually above $500.
Back to the Delivery Truck Analogy!
This time we’ll use your marketing budget to represent the fuel used to power the truck. If you fill up the tank before you head out to deliver your message, you might end up being able to deliver that message not only to those you planned on but to more people all over town. If you decide to just put in a quarter tank, you might run out of gas before you make it to your first delivery. Not only did the messages not get where they were supposed to go, but you also wasted your money on the small amount of gas you did purchase. In this case, it would have been better to have invested nothing.
This is often the case. Ther’s a temptation to cut corners. Pay for half of a quality campaign that was proposed and get half the expected results right? It doesn’t work that way. On the same note, some companies want to double down. Pay double the next month and get twice the return. It doesn’t work like that either. This is like coming back to refuel and making another round of deliveries only to find you already delivered your message to everyone who was interested the first trip. This is the top portion of the s-curve. The point of diminishing returns. The key is to find the optimal investment for the optimal return. And that’s the simple underlying purpose and reason for data-driven marketing.
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