I’ve worked as a digital marketing consultant for dozens of businesses across different industries and been the marketing manager for a top 150 US Quantcast website driving hundreds of millions of pageviews. As far as ad spend goes, I’ve spent more than $10 million on digital advertisements, profitably. I even have a bachelor of science degree in business administration with a concentration in marketing, from Drexel University in Philadelphia. I’ve also ghost written for a number of marketers and billion dollar agencies. Long story short, I know a thing or two about marketing.
Here in this post, I’m going to share with you the top five mistakes I see clients make when it comes to their online marketing.
#1) No Clear Path to Profitability
This is probably the biggest problem for startups. Great ideas are a dime a dozen but it is their PROFITABLE execution that sets apart billion dollar businesses and businesses that flop. Not making money in the beginning is fine and even expected with a startup, but if you’re not making money, you’re losing it, no matter how good the idea is.
There has to be a plan to eventually turn the business profitable and this plan has to be backed up by facts, figures and models.
You have to figure out the LTV (life-time value) of a customer, the cost to acquire that customer, and then also figure in all your fixed costs like hosting, tech, your own salary, etc. Basically, you have to create a mock-up profit and loss sheet and then figure out, by solving the equation you develop, what your acquisition cost, your LTV and your advertising costs can come out to and make a profit, AFTER paying yourself a salary.
It may take a year, or heck, years before you hit these KPIs (key performance indicators) but without modeling everything and accounting for all the costs (both fixed and variable), you’re basically just shooting in the dark and hoping to hit something.
A client I worked with got their app install cost down to around $1 per install. However, the eventual profitability of the business was predicated on B2B sales. No matter how many app installs (or customers) for only $1 each, without businesses paying to be featured on the app, those app installs didn’t generate any revenue.
B2B sales require time, patience, a strong value proposition and determination. Without spending significant amounts of time mailing, emailing, calling, and eventually selling in person, there was no way the business was going to break even. The path to profitability simply didn’t exist without significant work and investment, apart from the B2C app install aspect, which brings me to #2.
Clear communication and discussion on what should be the current focus of the business. Each business unit should be supporting each other. This isn’t a poorly run car dealership, with each department trying to bill each other into their own departmental profitability, so the managers can keep getting their bonuses as the business slowly fails.
Some simple changes to the focus of the advertising campaigns, from app install to generating awareness of value creation from a B2B perspective and supporting the sales team, would have gone a long way. Or the focus could have shifted to one of finding investors or partners. There were other, geopolitical factors out of any one person or even country’s control affecting the business, but few problems cannot be overcome with clear communication and planning.
#2) Unrealistic Budget for Desired Results
You hire a digital marketing expert for $1,000 a month for however many hours and expect to achieve results. Ok, but making a website even in WordPress requires time, graphics and copy (written words).
A simple five page website in WordPress (homepage, sales/landing page, about page, info about the product or service page, and an email/newsletter subscription page) can take about five hours from setup to finish on the quick end using an out-of-the-box theme and free stock images. That’s with the copy (text) already written and any non-stock images provided (pictures of the business owner, the product, etc).
Let’s say the person you hired is on the cheaper-end at only $50 an hour. There’s $250 of your budget. Then you need to figure time for setting up your Facebook page, ad account, Google Analytics, Google Search Console, Google Ads, tracking pixels, etc. Let’s say another five hours or $250. Suddenly half your budget for the month for the marketer is spent and they haven’t even created a single ad yet or tested anything.
Then comes the ads and testing. You didn’t think the $1,000 a month you’re spending on the marketer includes the ad budget, did you?
Suddenly, the entire $1,000 marketer budget is spent in the first month (plus a couple $100 dollars for basic page like ads or blog post ads) and you’re down $1,200 plus your time writing blog posts with basically nothing to show for it except a few hundred page likes on Facebook (exactly how Facebook likes it, tbh).
You expect next month to be better so you pay another $1,000 to the marketer and another $500 for ads. Nothing wrong with that. But anyone good at digital advertising sees their fixed cost (however much a month you’re paying them) as inconsequential compared to the ad spend and potential ROAS (return on ad spend).
Ultimately, the cycle continues for a few months and the business owner gets mad (I mean, they spent $3,000 for the marketer and a good $1,500 on ads so I understand) and ends up shutting it down because they’re not seeing the ROI (return on investment) they expected, because they never had the money to invest in the variable costs or advertising, just the fixed costs.
News flash: Online Businesses Are Not That Much Cheaper to Run than Physical Businesses. (Unless you are smart and run it yourself in the beginning as a side business).
How long does the average, simple business (let’s say a clothing consignment store or a simple restaurant) last? A year, tops. How long until true profitability? Three years.
Why would anyone with a great, novel idea expect their idea to take off in a few months? Madness. Even Apple wasn’t built in a day and had to be bailed out by Microsoft once.
A potential client of mine was interested in sales copywriting (writing the sales/landing page), creating the website, Facebook ads, etc. but wanted a fixed setup cost and then 1,000 email signups for a $1,000 advertising budget on top of that, with no testing of the sales page, no proof of concept, no brand recognition, nothing.
I’m sorry but it costs at least $500 of ad budget to even to start testing ads. How can I get locked into a contract saying I can do 1,000 email signups for $1 apiece in the beginning when for all I know your idea is complete horse shit and no one has heard of you?
I wasn’t the person pitching the potential client, but here is a potential solution. Clearly explaining that it is impossible to give a guaranteed number of conversions or actions with an untested business model. Explain that the fixed cost part can be done and that the email signup part could be tested on a trial version. The fixed part would work for any marketer the business decided to eventually work with on the variable cost (advertising aspect).
It can’t get any better than that, ethically. Plenty of marketers will guarantee something and then when they fall short, either “fake” the results by buying low cost signups that will never eventually convert into customers, or just buy fake signups from a 3rd party. Besides, without figuring out the LTV of a customer, and the conversion rate from email signup to customer, how does a $1 an email signup math even work?
#3) Hiring a Con-Man “Marketing Guru”
As a professional, digital marketer (and maybe Facebook addict) I see ads every single day for “marketing gurus” like Tai Lopez, Sam Ovens and Dan Lok. Type their names into Google and it auto-completes their name plus the word “scam” at the end.
Note: These guys all have affiliate advertising programs for their products that pay a percentage to people who write good stuff about them and generate sales, thus all the poorly written, top ranking Google Search results, claiming they’re the real deal, while not disclosing they are paid by the person in question for each sale–a clear violation of FTC laws.
Double Note: I am working on a series called “Marketing Guru Hall of Shame” to call these guys out, so make sure you subscribe to the Marketing Hackers YouTube channel!
So to the meat of this numbered point.
If it seems too good to be true, it is.
“Mastermind” conferences (go to your local college or university and speak to a professor and you’ll get better advice, for free), giant ($5k-$20k) retainers, and ultimately no money left for your advertising budget is your eventual result, imo.
I know a lot of digital marketers and one was once tricked into working for a “marketing guru” as a marketing manager. One of the clients of the guru was a FOREX scam company advertising the lifestyle, cars, houses, women, etc. that would would make 2 Chainz blush and donate to charity. Now, why did this happen? And what happened?
Someone who is paid to lie is going to be inherently more susceptible to lies by others–especially when it isn’t their money. So they convince their boss–the “scam master”–to pay out thousands of dollars to someone promising to quadruple their ROI and ended up with almost no money to spend on the actual advertising for the contract period.
Of course, if they had any idea how digital marketing worked they would be wondering, “What is the ad budget for this ROAS?” But all they see is that promised 4x or whatever ROI without questioning the process or breakdown of it between fixed and variable costs.
Don’t be like that guy. If you’re a scammer, con-man, or working for one, just stop reading now and close the browser window.
If you’re hurting for money, a digitally marketed business isn’t a get-rich-quick scheme so stop reading.
If you can’t even track revenue to specific advertisements, marketing channels, etc. with your current online business and hoping for a magic fix from a guru, there is a good chance you’ll be scammed. How would you even prove it in court?
If it sounds too good to be true, it is. Do your due diligence. Ask for specific examples, recommendations and question them on their knowledge of specific processes, problems and their solutions. This may be difficult if you don’t have much experience in digital marketing, but do some research before you sign any contract.
Also, make sure the marketer you are thinking of hiring asks about the advertising budget in the first call you have, before you sign anything. No one that is ethical is going to tell you what an amazing ROAS they can achieve for you and not ask what your budget for the actual ads is, and how much you can increase it if they get the results you need (and what the results you need are) especially if they are charging a large retainer. That’s just bad business for everyone involved.
Read the fine print on the website you are buying services from. You would be shocked how many digital marketers are out there that list tons of examples of amazing results with screenshots on their landing pages or ads, but the fine print basically says that none of it is real.
#4) Lack of Tracking and Modeling
You would be shocked at how many online businesses have no Google Analytics, Google Search Console or really any tracking setup. If they do, they more often than not do not have proper UTM tagging of their campaigns so they have no idea where their actual leads and conversions are coming from.
A good digital marketer strives to be able to track every single website visit back to its source and campaign, whether that is in Google Analytics, Adobe Analytics or another, similar tool.
Besides all the tracking, things have to be modeled out down to RPM (revenue per thousand pageviews or impressions) or RPV (revenue per thousand visits or sessions). Or at least something that makes sense for your business.
Cost per lead, cost per conversion, cost per action–these all need to be modeled out. If you’re making $10 as the LTV of an email signup, it wouldn’t make much sense to be buying email signups for $11 each, now would it?
Believe it or not, a digital business requires at least as many spreadsheets as a physical one.
A client had some success generating leads with Facebook ads. However, there were hundreds of different advertisements split across dozens of campaigns. None were tagged with UTM codes and the Facebook pixel was never setup properly. He could see Facebook ads had generated leads but there was ultimately no way to figure out what ads generated those leads and what ads were ultimately a waste. There went tens of thousands of dollars of ad spend down the drain with no way to replicate the success.
There’s a saying in digital marketing that if it can’t be tracked, it didn’t happen. Make sure you are comfortable using some type of analytics tool (I recommend Google Analytics) apart from advertising and sales dashboards. Google Analytics, using UTM codes and goals, can combine your data points.
Remember, if you can’t track each click back to exactly which marketing campaign and copy version it came from, you need to do a lot of work to get there before you start spending a lot. It’s called exploratory analytics and needs to be done first, while you are figuring out the model, before you try to scale into profitability.
#5) Spending Time and Money on Unimportant Things
The first step of any startup should be to try to develop a successful model where profits can be made consistently on a small scale. This is the minimum viable product or MVP. Then, this model can be scaled up with similar, profitable results. (Sorry, Elon Musk.)
You would be shocked at how many clients I’ve seen that spend ridiculous amounts of money (compared to their total budget) on stuff that is really inconsequential at that point in the business’s life.
I’m talking spending thousands on a website re-branding when the previous branding was working adequately and basic profitability logistics and processes of the business are broken or not working well enough to make money.
Or trying to hit an arbitrary number of Facebook likes like 100,000 without a care where in the world they come from or if the page likers will ever become profitable customers, when that budget could be spent on testing ads that generate money!
A client spent thousands on a new home page for their website because it looked flashy and similar to their main competitor’s. Ok, I can see that being fine and dandy if the business was making money. But it wasn’t.
And that home page that looked amazing in a mock-up and pretty good once coded on desktop was terribly slow loading (we’re talking scores in the 20s/100 on Google PageSpeed Insights), nearly 10MB in size, and all the text was in images so it was worthless for SEO! What a waste. But it looks good!
Ask yourself what the actual value of each thing you are spending money on or planning on spending money is. Ask yourself what the ROI (return on investment) is. Ask the people you are paying to consult you what they think about something you want to spend money on and listen to their feedback, then take their recommendations and specifications into account.
I hope you’ve liked what you’ve read and learn from it. Digital marketing doesn’t have to be as hard as people like to make it out to be. Apart from some technical considerations, it’s no different than traditional, offline marketing. However, it is easier to scale with low fixed costs. Don’t shoot yourself in the foot–keep a handle on your fixed costs, figure out your LTV of a customer, model things out, and make sure you track results so you can scale profitably.