July 12, 2023

Two Channels With Very Different Investment Profiles

The top portion of the table below represents an increase in marketing spend of 10% within Paid Search. Tell me what you observe.


The bottom portion of the table represents an increase in marketing spend of 10% within Email Marketing. Tell me what you observe.

In Paid Search, two-thirds of the customers purchasing are new customers. Finding new customers is expensive ... so you lose $34.50 profit per order this year ... then make $60.73 in years 2/3/4/5. In total, you generate $26.23 profit over five years.

In Email Marketing, nearly all of the customers purchasing are existing customers. You cause your existing customers to become better customers! You generate $71.94 profit per existing customer in year one, then you make $85.43 in years 2/3/4/5. In total, you generate $157.37 profit over five years.

Now, I harp on new customer acquisition all the time, and for good reason.

But come on! If you can make 6x as much profit over five years by figuring out how to improve email marketing productivity by 5% (based on a 10% gain in spend), wouldn't you want to do that?

This is the kind of stuff that your garden-variety Marketing Budget Experiment unearths for you.



No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Contrasting Business Models

If you follow the omnichannel thesis as prescribed by "the experts", you'll end up like Staples. I was there on Saturday ... f...