We might translate this post into: Should you pay for advertising? The question might seem to be one that I should answer with an emphatic “yes” — because, after all, my business earns virtually all of its revenue from advertising sales.
However, if the question is whether we practice what we preach, then you might find the answer to be surprising. I’m not wildly enthusiastic about paid marketing as your initial, core construction marketing strategy. Paid advertising indeed serves some truly useful purposes, and, done right, can be the difference between your business’s marketing mediocrity and sustainable success. However, it is also quite easy to blow your budget on advertising for little if any gain.
The reason is that you should only pay for advertising after you build your business’s relationship foundations. In a start-up situation, you may call on your friends, clients of your former employer (provided you are not contravening non-competition or non-solicitation requirements, either explicitly stated in your former employment contract or under common-law) and your community and association connections. As you build these relationships and early sales, you should acquire your positive word-of-mouth reputation, and you can then expand your network through an organized referral and repeat business strategy.
Once these elements are in order, you can begin thinking about paid advertising. Done right, advertising allows you to control your lead/sales funnel. Advertising generates the leads — and a certain percentage convert to sales. You can track your advertising costs and your cost-per-lead, and as the sales arrive, build a system to test different media and ad formats/wording/timing and conversion offers to achieve the highest and best results.
The challenge with this process is that in the early stages, even if you follow expert advice and do everything right, you cannot really know how things will go. So you can quite easily blow a wad of money on failed advertising efforts.
Here, keyword advertising has some real advantages. Unlike other media, where you may need to invest significant sums and then hope for the best — and you cnanot simply turn the ineffective advertising off with the flick of a switch — you can set your budget, rules, track your conversions, and then test variables, quickly. If orders are flowing in, and you are getting good results, you continue. If not, you stop and try something different. (In fact, even if things are working perfectly, you should constantly test your results, and see if you can improve them.)
You can do this work yourself or work with advertising agencies or consultants. I think you should start with your own initiatives — you’ll get an idea of the process and the risks. You will want to spend time and energy developing landing pages for your online media, and testing variations. For a good online test, you may need to budget $1,000 or $2,000 — but this is a drop in the bucket when you find a format and conversion model that is effective, because you will have a reliable and controllable lead generation system when you are done.
I write this as an “expert” but admit I haven’t done much in this regard myself, until now. We allocate most of our corporate marketing budget to association memberships — we can track and see the ROI quite clearly (and in some cases, the return is phenomenal). We can trade out “advertising for advertising” in other places where we might spend money on advertising/marketing, such as trade shows and certain online services.
This weekend, however, I’ve decided now is as good a time as ever to see if keyword advertising can help sell the Construction Marketing Ideas book.
It has a tangible price-point, proven market demand, and sells reasonably well through third-party distributors and our website. I also know quite well my margin, which provides a clear break-even point. Will we be able to sell this book through keyword searches on Google AdWords.
Right now, I’m not sure. I don’t think my landing page is strong enough, yet, and the cost per click is quite high — upwards of $2.00 to $3.00 each. So I need to have a really high conversion rate to make the process worthwhile. (In some cases, you find it makes sense to take a loss on initial orders in exchange for the lifetime client value — the challenge is that the book sale, itself, doesn’t lend itself right now to many other more expensive offers, and the conversion process will be harder to measure.)
I’ll let you know how the experiment goes in a week.