How To Make Money By Spending Money

Today’s lesson is officially the final instalment of Black Chair’s Super Guide To Love and Happiness: Get Rich Quick(tm) By Improving Your Web Traffic.

Or something like that. (Sorry, I guess I’m feeling a bit goofy…)

Until now, we’ve covered measurement, email marketing, social media, and search engine optimisation. The final element of a well-rounded introduction to internet marketing is this: paid ads. Yes, contrary to popular belief, not everything on the internet is free.

A lot of people waste a lot of money on internet ads every day. That’s not because the ads don’t work, it’s because most people (I don’t have any stats, but I honestly believe them to be the majority) who buy online ads have no idea how to use them effectively. That’s probably because most people who buy online ads are more familiar with buying ads on a billboard or in a phone book, so they set up (or pay someone to set up) an ad on Google for the keywords they want and wait for the customers to come rolling in. Don’t do that.

The “phone book model” of internet advertising will probably bring you some customers eventually—hopefully enough to return a profit on your advertising investment—but it’s far from ideal. Savvy internet advertisers take advantage of the medium to do something that’s far more difficult with billboards or print ads: they are constantly testing different ads and refining their message and/or placement to get the best ROI. The gains are substantial—even the most basic attempts at optimising ad conversions regularly see double digit percentage increases in returns over un-optimised campaigns.

The process is really quite straightforward. For each advertising network (I’ll outline the important ones in a minute), you’ll want to run multiple ads at the same time. If you are running simultaneous campaigns (eg. for different products) you will need to run multiple ads for each campaign. Most of the time, it’s best to only run two ads against each other at any point—it’s possible to do more and can sometimes make sense, but for now we will assume the simpler two-ad approach. This method is referred to as A/B testing, and it can be used for more than just ads—I already alluded to testing email subject lines, but online marketers use A/B testing for almost every element of design, marketing copy, and product development. (Having more than two options running at the same time is called multivariate testing.) At its most basic, A/B testing means showing two different options to two randomly divided groups of people and seeing which one performs best. For online ads, you’ll run two separate ads from the same campaign but with slightly different messaging (either on the ad itself or the page that it points to), wait for a significant amount of people to see each of them (you usually need to spend about $100 per option to have statistically significant information) and then choose the one which performed best (“click-through rate” or “CTR” is a useful performance metric to start with) and start the process again using a different variation. The approach can become a bit more complicated (controlling for the time of day the ads were served, as a simple example) but that is the basic idea, and that basic idea has made a lot of money for a lot of businesses.

You will also want to monitor ad performance across various networks. Google AdWords is usually a good place for any business to start, but (contrary to the prevailing opinion of the trade press as I write this) Facebook Ads can be an excellent investment for certain businesses, and there are other networks worth considering. Here’s a quick breakdown:

Google AdWords is the service behind the text ads which appear on the Google results page (in the yellowish box at the top of the page and in the sidebar to the right of the results) as well as on GMail, YouTube, and an enormous network of “content sites” (non-Google properties who receive money in exchange for displaying the ads). You can buy ads for certain keywords, and price is determined by an auction system (so that more competitive keywords are more expensive). They make it very easy to run multiple ads simultaneously for each campaign for the purpose of A/B testing.
Microsoft AdCenter is basically Microsoft’s version of AdWords for the Bing search engine. It represents a lot less traffic volume than Google AdWords, but one interesting aspect of this service is that, since Bing is the default search engine in Microsoft’s Internet Explorer, which is the default web browser in Windows, Bing users tend towards the older, less tech-savvy end of the spectrum (since more tech-savvy users are likely to change the search engine setting, if not use a different browser entirely). That’s very useful information for businesses targetting that demographic, and we’ve had clients use Microsoft AdCenter to great success in that regard.
Facebook Ads can be extremely valuable, but they require a different strategy than search engine ads. Whereas search engine ads such as AdWords or AdCenter can often work well pointing directly to a relevant page on your own website, Facebook Ads are most useful when used in tandem with a company Facebook Page. For companies who have chosen to have a Facebook presence (see the lesson on social media), Facebook Ads are the best way to drive new traffic to your company Facebook page. In particular, they should be used to collect “Likes”, since they function both as social proof for your company and as a form of subscription channel. The other way Facebook Ads can work well is as part of a re-targetting campaign (more on that in a minute).
LinkedIn Ads are theoretically a good fit for business-to-business marketing, or companies marketing to business professionals. Quite honestly, I don’t have enough good data points on LinkedIn Ads yet to provide valuable insight, but it’s too promising of a platform for me to omit it.
StumbleUpon Paid Discovery is a bit different than the other entries listed here, as it’s not technically an advertising platform. StumbleUpon users depend on the service to show them content that they might find interesting, and it is possible to pay StumbleUpon to be inserted into the mix. Users are brought directly to the page, and they will only stay if they find it interesting. I don’t recommend sending StumbleUpon users to a sales page—it would be a waste of money. But StumbleUpon Paid Discovery is an excellent way to drive traffic to your company blog, if you have one, or even to interesting articles about your company in some other online publication.

As I write this, an emerging trend in social networks is the concept of “sponsored posts” where you can pay to reach a larger audience than you normally would. The effectiveness of this approach remains to be seen—we will certainly be testing the possibilities ourselves and will send out an update when we learn more.

Another emerging trend is “re-targetting”, where it becomes possible to specifically target your ads toward people who have already been to your website. This can be an extremely powerful technique if used well—I prefer to use a subtle approach with a generic ad, as it creates the impression of a big successful (and thus, reliable) company who can afford to plaster the entire internet with their ads, rather than the reality of a specifically targetted user, which some people might reasonably find a bit creepy. One company that currently offers excellent re-targetting services is called Perfect Audience.

Anyway, that’s it! That’s the course. We’ve only just skimmed the surface, but you should now be armed with significantly more information about online marketing than you had a month ago.


Software developer, book writer, beer brewer :)

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