Marketing has profoundly changed since the social media boom, and new platforms and ways of reaching the customer continue to be invented. However, most digital marketing campaigns suffer from a low conversion rate. The platforms are growing increasingly complicated, so the lack of adequately organized data from which to extract insight is at the core of the low conversion rate.
Industry Problems
For every 1000 ads displayed, you get 0.5 clicks from sidebar ads and between 5 and 16 clicks on average for Facebook ads. This is a meager click rate, and you can imagine how many of these clicks are by mistake and instantly closed, how many people are not interested in the products or services being sold, and how many are interested but still decide not to purchase. I will consider a very positive conversion rate of the clicks of 10% for a very well-thought and promoted campaign.
With an excellent campaign, you need over 10,000 displays on sidebar ads to get one conversion.
Huge companies employ people that know the complex systems of social media and how to handle the campaigns and still get these low scores. If you sell Ferraris, 1 in 10,000 displays is quite a good conversion rate, but you do not sell Ferraris. You usually sell products that are far less expensive, and if you do not employ proper data-driven approaches and hire some professionals to increase those conversion rates, you are just wasting money on useless advertising.
Challenges
One of the hottest topics over the last 12 months has been user data privacy and security – securing the data is indeed a challenge for targeted advertising. We have the Facebook Cambridge Analytica scandal in the US, and, worldwide, the new regulatory reality presented by GDPR.
A second challenge is increasing the efficiency of marketing campaigns as conversion rates, not just by having millions of views, likes and zero purchases.
For the third challenge, I pick the abundance of intermediaries that increase advertising costs for you and the price of products for consumers.
Data-Driven Approaches
I chose safety first, because as a business you need to be very careful which advertiser you work with, with which platforms they work with and ask them for proof of the security and anonymity of your customer data, because if they use unethical tactics and they blow out, your business may go down along with them. Having your department understand marketing and advertising, as well as law and ethics, is a must in my opinion. Also, please make sure the cloud provider you use is GDPR-compliant as the EU fines are quite severe in their protection of customers.
Increasing the efficiency of marketing campaigns is an ongoing and challenging issue. You need to understand how to collect and where to store the data. Also, data that is not properly prepared will yield false insight into your customers’ needs and interests. It is better not to rely on such false insight at all than build your whole advertising on false leads. Choose integrated systems that work correctly, employ data scientists that prepare and analyze data with a sound scientific base. Many self-proclaimed data scientists and analysts do not understand the systems they work with and misuse them.
With the right team, however, the insight you gain from data will allow you to reduce the marketing costs through better, less-intrusive targeting and increase the conversion rate to a level that makes advertising genuinely profitable.
Cut the middlemen. Yes, cut the middlemen as much as possible, may they be huge platforms like social media platforms or small commissioners that provide low value yet they may even charge percentages of your income on a daily basis. Referring to intermediaries is a must for services like cloud computing, where building and maintaining the infrastructure yourself is cost-ineffective, but in general try to cut as many middlemen as possible.
Running big data properly on your marketing campaigns can weed out these middlemen as well.
Conclusion
Nothing is a goldmine if done wrong; no profits are coming from bad practices or working with low-skill “professionals.” Doing big data for your marketing is a real goldmine only if performed right by building the right team. Referring to intermediaries without yourself understanding the inner workings of the new digital marketing will have you pay for influencers or ads that will unfortunately result in no conversions.
