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From 2009 - 2011, advertising’s share of the overall Internet ad market in the U.S will roughly double from 7.4 percent to 13.3 percent. The average person in the U.S. spending online is expected to grow from $114 to $199 during this same time period.*
Internet Marketing Industry Growth
Digital Marketing Growth
Internet advertising within the U.S. will rise from $24 billion this year to $42 billion over the next four years. –eMarketer.Com
Online Advertising Worldwide
The Kelsey Group has projected that online advertising worldwide will hit $147 Billion by 2012 – an increase from 7.1% to 20%! - Kelsey Group
The Internet has created more than 1.2 million jobs in the US. Internet business contributes 2.1%, or 300 Billion, to the total USGDP. -HC
Popularity of Landing Pages
Landing Pages are an integral part of cost effective web marketing and may in fact be the most important part of an effective online marketing campaign. Marketing Trends demonstrate the marketing shift from websites to Landing Pages.
(Google Trends Report for Search Term “Web Site")
(Google Trends Report for Search Term "Landing Page")
The popularity and importance of Landing Pages in web marketing are directly related to the following causes.
- The Introduction of Pay-Per-Click marketing in 2004.
- The competitive need for marketing firms to create pages that better convert visitors.
- The introduction of high speed Internet and video.
- The need for individualized campaigns that have a “single” call to action.
Establishing Industry Metrics
The industry has established related ratios for the purpose of analysis of the use of Landing Page campaign marketing for businesses. The industry uses the following criteria to establish a basis for results.
CTR - Click Through Rate. This is the number of click through visits from the advertisement to the Landing Page.
CR - Conversion Rate. The conversion rate is determined by the quality of traffic to the website and the effectiveness of the marketing message and type of offer. The conversion rate is the percentage of visitors who complete the offer.
Quality of Traffic - The type of marketing that is directed toward a campaign determines the quality of traffic. For example, an email campaign to a targeted demographic may have a lower conversion rate than a warm market campaign directed toward an existing customer base or social network base.
Marketing Message & Offer Type - The offer message and type of offer include the overall marketing message and terms of the offer. A free report, free trial or an offer that contains limited risk to the recipient will convert higher than an offer that generates leads, orders, or applications, etc.
CPA - Cost Per Acquisition. The cost per acquisition is based upon the cost associated with running the marketing campaign and is tied directly to the desired result of the campaign. To calculate CPA you would divide the number of captured opportunities by the total cost of advertising and marketing an offer through the Internet.
Landing Page Campaign Case Study for Enterprise
Let's create an analysis for Company X, a nationwide direct selling company. We will be considering a few metrics related to both internal and external sources, certain assumptions based upon the effectiveness of the Landing Page campaign and overall web marketing. To establish a basis for this analysis, we will be using industry averages for CTR, CR and CPA. We are also taking into consideration the possibility for a higher CTR and CR from warm market social media and the sharing utilities built into the ad2action platform.
(Relationship between CTR, CPA and CR)
For Company X assumptions we will base our campaign result analysis upon a Landing Page campaign targeted to a demographic on Facebook using Pay-per-click with a total of 1,000 clicks on the advertisement to the Landing Page.
Now let's assume that the landing page has a 10% Click Through Ratio for "More Information" (CTR = 100) - This is sometimes called a "partial lead"
Now let's assume that Company X's Landing Page has a 5% Conversion Rate to Buyers. (CR = 5 sales)
Now let's assume that it cost .50 cents per click through for the PPC advertisement. ($500 for the entire ad spend)
If Company X made 5 sales and spent $500 on the advertisement cost, the Cost Per Acquisition (CPA) would be $100.
This would mean that Company X would need to increase its CTR by improving its Landing Page offer, or it would need to increase its CR by improving its product or service offer or incentive (sometimes this is lowering price or packaging value) in order to earn a profit from the Internet Marketing campaign. This example illustrates the importance of the Landing Page in any online marketing campaign. It is also possible that Company X would need to revisit its targeted audience for the initial advertisement.
Why Every Business Should Market Online
Intellectual Capital Creates Value. When it comes to implementing technology, a company is either creating value or extracting value. In Value Creation, technology is used as a process or method to acquire new opportunities for the company. In Value Extraction, technology is used to extract value from existing company assets that may be either customer related, operational related or product related. Typically cost reduction and efficiencies are tied to value extraction. Both strategies should be used within an organization to meet various needs based upon market timing, goals and company positioning.
The ad2action platform is designed to impact both value creation and value extraction for online marketers.
Value Creation - Value creation-using ad2action is realized by tapping into state of the art web based marketing strategies that will generate new business for the company and have a positive impact on the company brand, image and opportunity. These new opportunities are leveraged through the use of automated processes and efficient methods to bring new distributors to the table and impact acquisition.
Value Extraction - Value extraction is realized by providing a broader value proposition to existing marketing processes that extend beyond existing opportunities and competitor offerings. The ad2action Evolution and Enterprise (ECM) platform introduces a new initiative for companies to market and incorporate the strengths of both warm marketing and cold marketing using state-of-the art technology and web based solutions. This can have a positive effect on retention by reducing the rate of customer attrition.
Increasing Customer Retention for Company X
A survey of senior executives worldwide revealed that 62% did not know their annual customer retention rate. Traditional business focuses on accumulating new customers, rather than on minimizing attrition. It is a known fact that it can cost up to six times more to acquire a new customer than to keep an existing one. For example, let's calculate the possible retention impact that Landing Page technology (Using our Evolution Product) may have on Company X, we are using ambiguous organizational number assumptions.
Now let's assume that Company X has 40,000 customers at the beginning of the year.
Now let's assume that Company X acquires 20,000 new customers throughout the year. (60,000 by years end)
Now let's assume that Company X's attrition rate is 25% during the same year. (A loss of 12,000 customers)
Customer Lifetime Value (CLV)
Customer lifetime value is important to your company. Customer lifetime value is defined as the "present value of all current and future profits generated from a customer over the lifetime of that customer". Customer experience is the key determiner of whether a customer remains loyal for life. This is why "Incentive Based" marketing has become so popular to value minded businesses and customers.
A company’s CLV will change as their retention rate changes. CLV has a major impact on profit even if retention increases only slightly which can result in a steady increase in customer lifetime value as customer retention increases. Your CLV will help the company understand how much it should invest in acquiring a new customer (CPA). If Company X had a Customer Lifetime Value of $300 ($100 per year, per customer)
Let's assume that Company X has a Customer Lifetime Value (CLV) of $300. ($100 per year, per customer)
Now let's assume that Company X uses Landing Page technology and Incentive Based Offers (Our Evolution/Enterprise Product) to reduce attrition by 5%.
Company X would keep 3,200 customers each year. If the customer lifetime expectancy is 3 years, this would have an exponential effect of over 10,000 customers.
By increasing the retention rate by 5% of Company X, the CLV will increase by $15.00 per customer, which will increase the overall "Valuation" of the company.
Too many businesses focus on growth as being more locations, and more sales reps. This is not the only kind of growth. When using technology to extract value, it is important to consider its impact on customer retention. The goal to maximize growth is to retain as many existing customers as possible while accumulating new ones. When a business is committed to customer retention it is embracing the many benefits of low cost high return marketing.