Digital marketing, online marketing, internet advertising…whatever you call it, marketing your company online is a big deal these days. After all, internet usage has doubled over the past decade and this shift has massively affected how people purchase products and interact with businesses.
So, what is digital marketing? Digital marketing is like any other type of marketing—it’s a way to connect with and influence your potential customers. The real difference is, you connect with and influence those customers online.
What is Digital Marketing?
Basically, digital marketing refers to any online marketing efforts or assets. Email marketing, pay-per-click advertising, social media marketing and even blogging are all great examples of digital marketing—they help introduce people to your company and convince them to buy.
Here are some of the most common digital marketing assets and strategies businesses use to reach people online:
Digital Marketing Assets
Almost anything can be a digital marketing asset. It simply needs to be a marketing tool you use online. That being said, many people don’t realize how many digital marketing assets they have at their disposal. Here are just a few examples:
Brand Assets (Logo, icons, acronyms, etc...)
Video Content (Video ads, product demos, etc...)
Images (Infographics, product shots, company photos, etc...)
Online products or tools (SaaS, calculators, interactive content, etc...)
Social Media pages
Digital Marketing Strategies
The list of digital marketing strategies is also constantly evolving, but here are some of the strategies most businesses are using:
Pay-per-click (PPC) advertising is actually a broad term that covers any type of digital marketing where you pay for every user who clicks on an ad. For example, Google AdWords is a form of PPC advertising called “paid search advertising” (which we’ll go over in a second). Facebook Ads are another form of PPC advertising called “paid social media advertising” (again, we’ll get into that shortly).
Google, Bing and Yahoo all allow you to run text ads on their Search Engine Results Pages (SERPs). Paid search advertising is one of the best ways to target potential customers who are actively searching for a product or service like yours.
If you don’t want to pay to show up in the SERPs, you can also use search engine optimization (SEO) to try and rank pages or blog posts on your site organically. You don’t have to pay directly for every click, but getting a page to rank usually takes quite a bit of time and effort (for a more in-depth comparison of paid search and SEO, check out this article).
Most social media platforms like Facebook, Instagram, Twitter, LinkedIn, Pinterest and Snapchat will allow you to run ads on their site. Paid social media advertising is great for building awareness with audiences that might not be aware that your business, product or service exists.
Like SEO, social media marketing is the free, organic way to use social media platforms like Facebook or Twitter to market your business. And, just like SEO, organically marketing your business on social media takes a lot more time and effort, but in the long run, it can deliver much cheaper results.
Conversion rate optimization (CRO) is the art and science of improving your online user experience. Most of the time, businesses use CRO to get more conversions (leads, chats, calls, sales, etc) out of their existing website traffic.
Content marketing is another fairly broad digital marketing term. Content marketing covers any digital marketing effort that uses content assets (blog posts, infographics, eBooks, videos, etc) to build brand awareness or drive clicks, leads or sales.
Ever get to the bottom of an article and see a list of suggested articles? That’s native advertising. Most native advertising falls under content marketing because it uses content to attract clicks (“you’ll never believe what happens next!”). Often, native advertising can be a bit hard to spot, since it is usually mixed in with non-paid content recommendations…but that’s kind of the point.
Email marketing is the oldest form of online marketing and it’s still going strong. Most digital marketers use email marketing to advertise special deals, highlight content (often as part of content marketing) or promote an event.
Affiliate marketing is essentially paying someone else (a person or a business) to promote your products and services on their website.
How Do I Get Started?
The good news is, getting started with digital marketing is fairly easy. Most online advertising platforms make it easy to sign up and create your first campaign (it is how they make money, after all). Here are a few links to beginner guides for several different digital marketing strategies:
Paid search advertising
Search engine optimization (SEO)
Paid social media advertising
Social media marketing
Conversion rate optimization
The core of every successful digital marketing campaign, however, isn’t a guide. Regardless of which strategies you choose to use, here are 4 questions you need to answer before you get started with digital marketing:
To figure out what you need to spend on digital marketing, you first need to clarify what your goals are. How you approach digital marketing can vary quite a bit depending on whether your ultimate goal is to drive clicks, conversions or leads, sales, revenue or a certain return-on-investment (ROI).
When you get right down to it, the ultimate goal of any marketing effort should be ROI. After all, if your digital marketing spend isn’t driving profitable revenue for your business, why are you marketing online?
Clicks and even conversions are great, but your company doesn’t make money from clicks (in fact, you actually spend money on clicks) or conversions. It makes money from sales.
With that in mind, the first thing you need to determine before you decide what your digital marketing budget should be is to decide how much revenue you want to drive. Once you know that, you can use that information to determine how much ad spend it will take to reach that revenue goal.
2. Who Are You Marketing To?
Once you know how much money you want to make from digital marketing, you need to identify who you are marketing to. This is critical, because different buyer personas require different marketing tactics. And, even more importantly, different buyer personas turn into different types of buyers.
So guess what? If you don’t understand your buyer personas, you can’t create an effective digital marketing strategy!
If you’ve got a sales team, talking to sales can be one of the fastest ways to get a decent buyer persona together. After all, they’re the ones who talk to your customers the most, right?
However, even talking to your sales team and doing a little research isn’t enough to really get at the level of detail you need to put together an effective digital marketing plan. To do that, you need to get on the phone and call your actual customers.
Ask how they found you, why they converted and what convinced them to pay you. This information will give you a ton of insight into your marketing and sales process that you can use to both improve the performance of your advertising and choose your marketing budget.
3. What are Your Customers Worth?
Typically, people look at buyer personas as a good way to craft an effective marketing strategy. Buyer personas are great for this, but they are also an important part of putting together an effective digital marketing plan.
For example, imagine you are advertising for a SaaS business called SaaS-A-Frass that has the following pricing structure:
In this situation, you’re probably targeting 3 different buyer personas:
Small business “Steve”
Mid-market business “Mandy”
Enterprise business “Edward”
Small business “Steve” has much smaller and simpler business needs than Edward or Mandy, so he’ll probably choose the Starter package. Mandy will probably want the Professional package and Edward will likely need the Enterprise package.
Assuming that Steve, Mandy and Edward stick around for an average of 14 months, 4 years and 9 years, respectively (average lifetimes for a SaaS client) and buy 5, 20 and 100 licenses (again, respectively), here’s the lifetime value for each of these personas ( [licenses/mo] x [# of licenses] x [typical customer lifespan in months] ):
These numbers look really exciting, but not all of that money is profit.
A normal SaaS company pays about 22% for fulfillment, 9% to sales and has a 40% overhead, leaving them with about 29% of the lifetime value of each client to play around with. That means to simply break even, SaaS-A-Frass has to spend less than the following to acquire a customer from Facebook:
Maximum Acquisition Cost
If SaaS-A-Frass can keep their acquisition cost below this threshold, they’ll make money. If it costs more than this to acquire each of these customers, they’ll lose money.
See why buyer personas are so important to budgeting?
Of course, it’s unlikely that the market is saturated with Edwards, so SaaS-A-Frass will need a mix of these deals to hit their revenue goals. That mix will dictate their Facebook budget.
So, if SaaS-A-Frass is willing to spend $0.18 on marketing to produce $1.00 in lifetime value (for a 11% total profit margin), SaaS-A-Frass’s can afford to pay the following for each buyer persona:
Customer Acquisition Cost
If SaaS-A-Frass can’t produce paying customers from a particular buyer persona at a price point below this threshold, they probably shouldn’t be marketing to that buyer persona.
However, if SaaS-A-Frass’s digital marketing efforts are currently producing buyers from each persona at these CAC (or even a CAC below these thresholds), SaaS-A-Frass can use that information to then calculate their marketing budget.
4. How Much Do You Need to Spend to Reach Your Goals?
At this point, things are pretty simple. Just take your CAC, average purchase order value and average number of purchases (if you have a subscription model, you can just use the average lifespan of each buyer persona here) and plug them into this calculator!
The default for this calculator shows the monthly budget and ROI for SaaS-A-Frass, assuming that SaaS-A-Frass wants to produce $2,425,500 in new revenue from digital marketing each month and they’ve determined that to do that, they need their marketing efforts to produce 100 sales a month (90 Steves, 9 Mandys and 1 Edward).
Per our example, a new Steve pays $125/mo for an average of 14 months, a new Mandy pays $1,500/mo for an average of 48 months and a new Edward pays $15,000/mo for 108 months.
Plugging all of that into the calculator, SaaS-A-Frass will need to budget $348,300/mo to achieve their new lifetime revenue goals.
See? I told you this part is easy! To make things even better, you can use this calculator to calculate your overall digital marketing budget or you can pick a specific strategy and use it to figure out whether or not a given strategy makes sense for your business. For example, if you need a CAC of $75, but your average cost-per-click on AdWords is $25, AdWords may not be the right digital marketing channel for you.
Now, as you might imagine, this approach isn’t a perfect estimate of what it will take to hit your revenue goals. This calculator is only as accurate as the information you can give it. But, it’s a lot better than picking your monthly at random and hoping that digital marketing will produce the results you need.
How is Digital Marketing Different on Mobile?
Digital marketing on mobile is very different from digital marketing on desktop. These differences are particularly important because smartphones are now the primary device people use to interact with the internet.
60% of internet activity taking place on mobile devices, the shift from desktop to mobile has had a profound effect on digital marketing.
To be honest, in today’s digital marketing world, it’s a good idea to assume that people will encounter your marketing on mobile and then adapt your strategy for desktop as needed.
In addition to optimizing your ads for mobile, it’s also important to think about your site and landing page experience. Sure, your website might look beautiful on desktop, but if it’s impossible to navigate on mobile, you’ll end up alienating a significant percentage of your web traffic. At a minimum, you should have a mobile-responsive website, but ideally your mobile experience should be specifically designed to facilitate an effortless mobile experience (not just an adapted version of your desktop experience).
Whether most advertisers realize it or not, digital marketing is primarily a mobile experience now. The good news is, if you’re relatively new to digital marketing, you don’t have to worry about reinventing the wheel. You can start by coming up with compelling mobile advertisements and then adapt as needed for desktop.
Digital marketing is the marketing of the future. In addition to all of the benefits we’ve discussed throughout this article, you can track the results of your digital marketing efforts with incredible accuracy, which means it is easy to see which strategies are producing profitable results and which ones need some work.
Incidentally, if this article has convinced you that you need digital marketing (or need to up your digital marketing game), but you’d like some help identifying the right approach, let me know here or in the comments! I love helping businesses grow with digital marketing.