How To Make Sure None of Your Ads Dollar Got Wasted
Have you ever spent on Ads and haven’t gotten a good return back? Do you feel like at least half of your ads dollars spent are wasted but you don’t know which half? In this post you will learn a new model that will guaranteed the cost you pay for marketing definitely generates new revenue.
Why our ads money got wasted?
Traditional advertising work like this:
- We pay $$$ to advertising media with pre-determined amount;
- Media use their influence to connect with consumers;
- Some of the consumers may see the ads and find us.
In this model, what the media can provide to the business owners before hand, is the “subscription number”. (TV, Magazines, Website traffic etc.) And how that number of people react on seeing the ads are not guaranteed.
For example, if you spend $30,000 on an ad campaign, and generate $100,000 new business, is a good deal? To some business with high margin, this is pretty good. And in this case, the percentage of marketing cost is 30%.
What if you are not lucky, and the campaign only generate $60,000 new business? Now the effective marketing cost is 50%, which may become a lost.
In either case, the media has a guaranteed $30,000 income.
All the risk are beard by the owners, because no matter how bad the result of the ad campaigns could be, the fix cost of ads is paid upfront.
In another angle, the owner is paying for ads content delivered to the wrong people as well. That’s how a lot of our marketing budget got thrown away.
Can I just pay for what’s effective?
In fact, we can!
In E-commerce, this is called affiliate marketing. And it works like this:
- Media deliver content to consumers first;
- Some of the consumers may make the purchase;
- And business only pay for a percentage of the actual sales.
In this model, the wastage – the content delivered to the wrong audience, are not charged to the business owner. It’s a fair rule to all parties:
- Media will have more incentive to make sure they send out relevant information;
- Consumer get better content, and…
- Business don’t have the risk of paying for noneffective ads.
This awesome model is already widely adopted online. Web technology make it possible for accurate tracking of leads/customer resource and calculate commission.
The biggest e-commerce player Amazon.com runs an affiliate program that offer 4%-8% of selling price as commission, and it’s open to anyone in the world to participate. With this incentive program, Amazon is letting all the talents in the world to help building the shopping platform and they have a better chance staying in the top of the game.
Imagine you can have a similar program setup for you in this structure: you only pay a percentage of the new business generated by a resource until you got the money from the customers. How do you like that?
Let’s look back to the same example above.
Now instead of paying the $30,000 upfront. You only pay 8% of the $100,000 new business, which is $8000, after you received the $100,000 from the customers.
And if there is only $60,000 new business, you pay 8% of the $60,000, which is $4800.
It’s much better, isn’t it?
You know what? This new model is actually happening around the world. In Hong Kong, Apple, Lane Crawford, Japan Home, McDonald, Pizzahut, Sincere, and over 150+ merchants (data from March 2014) have already started to use this more effective marketing model. One of the early restaurant who took part in, generated HKD33,000 new business in the first 4 weeks, and only pay the commission afterwards.
If you are interested in promoting your business, or helping your client to promote in a risk-free way. Contact us!