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Prospecting vs Remarketing: The balancing act

Prospecting vs Remarketing: The balancing act

Written by: Calum Covell ()
Categories: Paid Social, PPC

A common setup I’ve seen with many clients is that they run several prospecting campaigns along with a remarketing campaign.

All perfectly normal but the issue comes when the performance of each is evaluated separately.

Campaign name ROAS
Campaign A (prospecting xyz interests) 2.32
Campaign B (prospecting abc interests) 0.65
Remarketing C 6.6
Overall ROAS 3.2

If you saw results like this what would you think? Turn off campaign B quick, right? Well not necessarily, to illustrate my point let’s go back to looking at a typical sales funnel.

Where in the funnel does Campaign B deliver you visitors? If it’s targeting low intent, top of the funnel visitors then it may be doing exactly what it needs to – feeding the next stage of your funnel.

Purchasing Funnel

Remember: It’s not fair to ask your prospecting campaigns to deliver you instant sales. With the possible exception that you’re in an industry where people are comfortable to make a purchase immediately, the decision process is quick and the risk is minimal.

OK so what should we do?

Unless you are able to afford a fancy analytics platform which gives you a single customer view, I encourage clients to take a blended view, by ‘blending’ together the performance of all your Ads. Look at the overall performance of what you are putting in and what you are getting out.

If you reduce spend on the Ads feeding the top of the sales funnel, then after a while your funnel will run dry. The remarketing campaigns will have nobody else to remarked to!
This is where the balancing act comes in.

Know your numbers

Before investing in any advertising you need to work out what your maximum cost per customer acquisition is for your marketing to be profitable?

If you are an established business then you may also want to use the lifetime value of a customer in your calculations.

The basic calculation would be:
Total Ad spend/Total web sales = Cost per Sale
AOV x Profit margin % = Break even value (maximum customer acquisition cost)
So you need your Cost per Sale to be less than your Break even value for your marketing to make you money.

With these figures, we can now work to balance the number of people we add to the funnel with the performance of the remarketing campaign. Their combined Ad spend needs to be within that target customer acquisition cost. The stronger the remarketing works, the more we can put into prospecting. However, the more we put into prospecting the higher the CPA will be – it’s a balancing act.

Remember: Check your blended Ad spend and return. If you see a campaign that doesn’t appear to be performing question whether it is actually doing a good job of targeting the top of the funnel. Does pausing it cut of the audience needed to make the remarketing campaign successful? The only way to know for sure is to test, but do it by looking at the overall website revenue.

I also like to use website engagement metrics to give me an idea if the prospecting audience I am targeting is good or not. Low engagement means the content/product/service we are showing the new visitors does not interest them.

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