The Best Way to Waste Money on Your Online Ad Campaign

Why are companies spending so much money growing their website traffic while completely ignoring a key ingredient in the recipe for success? It’s innocent really, but someone has to prevent this pandemic from draining profits and stifling the growth potential of companies that invest in digital marketing.

It starts when someone says, “Hey, let’s buy some ads and drive a little traffic to our website.” Before you know it, the ads are up and running and traffic starts coming in. Then the phone starts to ring and a few prospect emails trickle into the company inbox. “It’s working!” someone proclaims and everyone agrees that increasing the ad budget is a good idea.

Before long, everyone is on board with investing in online advertising because it’s bringing in so much new business, but no one sees all of the wasted money that is flying out the window.

The reality is, digital advertising can produce significantly higher returns than traditional advertising, but they could be producing astronomical returns. When companies transition from spending most of their money in the physical world to spending most of it in the digital world, they think they’ve struck gold because their returns are so much better. Unfortunately, their naiveté prevents them from seeing that their campaigns could be working much harder for them.

So what’s the missing ingredient? Conversion Optimization.

For every $92 an advertiser spends on driving traffic to their website, on average, they spend $1 turning those visitors into customers. And while you’re likely thinking that it takes a lot of traffic to capture the likely buyers, the reality is, everyone who visits your website is a likely buyer and every visitor should be nurtured toward a sale.

Marketers have tremendous control over what a visitor does when he arrives on a website. They have access to great tools like Google Analytics and A/B testing software to help them identify what drives him to act and what drives him away. When deployed strategically, these tools can help companies continuously improve the rate at which visitors come on board as customers. And it has the multiplier effect.

In one scenario, a $1,000 per month investment in online advertising yields 500 new visitors and 40 new customers, each worth $100 in new gross profit. Each month, the same amount of money is invested and the results are the same. The payoff after deducting the advertising expense is $36,000 per year. The campaign has an astonishing 8% conversion rate.

In another scenario, a company decides to spend $1,000 per month in online ads, but also decides to spend $200 per month improving their website to increase visitor conversions. They get the same number of visitors for their spend, but their additional investment increased the conversion rate by half a percent each month. By the end of 12 months, the conversion rate reaches 13.5% and the campaign pulls down a total net profit of $50,100. In this scenario, a $2,400 investment led to a 39% increase in profits.

While these aren’t real examples, they are well within the realm of what a company could expect when investing in conversion rate optimization. They also show just how powerful the right strategy can be when deploying digital marketing campaigns.

If you’re investing in online advertising, at the very least it’s worth asking yourself, “How effective is my website in turning visitors into leads?”

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Will Melton is the President of Xponent21, a marketing strategy firm that he founded in 2015. Headquartered in the New Haven, Connecticut, the company delivers exponential growth through 21st Century marketing solutions. This post was originally published at xponent21.com.