5 Tricks for a better understanding of your Marketing Math

Marketing | 9 Mins Read

geometry figures, algebra formulas and symbols
As a marketer I came to love math later in life. It took wanting to deeply understand A/B tests that got me to appreciate the need for understanding the math of marketing. It was 1999 and I was running the home page of a top five internet property. I had recently come from MTV and was seen more as a “brand” guy vs the newly minted Tuck MBA’s and MIT software engineers who conversed fluently in statistical significance and when to use mean vs median.  It is helpful to have a framework that you can use to not only improve your marketing results but explain why to your colleagues.

1. The marketing numbers exist to support a conversation and narrative about your assumptions and how you might test them

As humans we love a good story. I learned quickly that straight numbers put my bosses to sleep but if you support

your numbers with a compelling narrative it makes it easier for your colleagues to discuss the journey with you.

2. What can you afford?

The number one mistake we see clients make is picking the marketing channel that they are most comfortable with vs the one they can afford to start with. Email marketing and SEO are great low cost channels to grow your business with. They consistently have the highest ROI of any marketing tactic you can run but they are unsexy. Instagram influencers and celebrities are a lot more fun but can they pay out? 

We have an average $25 order for a consumable pet product X 50% margin = $12.50 and let's assume we are happy working with $6.25 allowable to acquire an order. We pick a micro-influencer with 50,000 fans and pay them $550 for a post. Typical engagement is 2.2% on Instagram so we get 1,100 to view our content. Having tested social campaigns tied back to loyalty card data we agree that there is no correlation between engagement and sales. Let's use clicks as we know there is value in getting a new customer to your site and it makes it easy to benchmark with paid search and SEO. Using a 2% CTR that influencer would bring 22 visits to the site for a cost of $25 per click. Assuming a 5% conversion rate we would get one direct sale from Instagram for a cost of $550 per sale.  

For the vast majority of clients those would be rather poor metrics for a B2C ecommerce product with a $25 average order. If we used that $550 to buy 275 visits from Google Ad words  at $2 per click we would have 14 sales and $39.28 cost of acquisition. We then add those new customers to a drip email campaign and  35% (5) repurchase monthly and now we have a viable set of economics to test and iterate from.


where do customers spend their time

3. Where do your customers spend their time?

As marketers we often chase the next shiny thing. Today that’s Tik-Tok. In 2019 it was AI and Machine Learning. Start with the basics. Where do your customers spend their time? If you don’t know, survey them using Google or Survey Monkey. Then prioritize your marketing budget on where your desired customers spend their time. 

For a typical US based consumer it looks like this:


Average Time Spent in US

4. Optimize for conversion rate first

Conversion rate optimization is hard. The average conversion rate on Shopify is 1.6% and of course changes dramatically by industry and price point. As marketers we can be an impatient lot. Especially if you have a seasonal business where it might mean 6 or 12 months to be able to recreate the test. I’m a fan of adopting the 80/20 rule here and starting with those items that will move the needle most for your marketing math. 

#1 Great copy and photos. Test, Test, and Test your way to great results. 

#2 A fast site. Customers want your site to be snappy and we continue to see the highest ROI from speed improvements.

#3 Social Proof. Reviews, trust symbols, and awards can double your conversion rate when done well.  

You are never done testing. Pick 3-4 areas that you want to focus on improving and test if adding that smiling golden retriever lifts sales or not.

5. And your CPM second

After you have a repeatable process for improving your conversion rate consistently, the next area to focus on is what you pay for media. Facebook CPM’s were all over the map during the 2020 election. The vast majority of digital media is purchased via auction. Understand when the media math is not favorable and dial your spend back or to another channel. There can be lots of pressure to spend the media budget and hto sales numbers but when Facebook rates go crazy it's time to look at Bing or Amazon or TikTok for a test. Set a max CPC/CPM based upon your conversion rate and reallocate ad budget when the market is running against you.
Today I love the Math of Marketing as it enables our clients to profitably grow. We will be rolling out a series of tools and worksheets to help you continue that conversation with your team about how your Marketing Math could be better in 2021.
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