Stop Guessing & Start Growing: How To Build A Predictive Marketing Model

Presented By: Danielle Walton, CEO

Adept Marketing

About Adept Marketing

•  One of the fastest-growing internet marketing companies in Ohio.

•  1 of 9 companies in the state to achieve Google Adwords Certified Partner Status.

•  Work with companies across all industries – traditionally online start-ups and small to mid-sized companies looking to achieve high growth

Name Options The Evolution of Marketing

•  Magazines/Newspapers

•  Radio

•  Television

•  Direct Mail

•  Phone Calls

Name Options Then, The Internet Is Born. •  The internet creates permission-based marketing

•  Marketing shifts to helping people find what they need

•  Everything is measurable

So what does this mean when it comes to the way companies market their products and reach consumers?

Measure it !or forget it!!

Name Options Step 1: Know The Numbers The essential metrics:

• Average Transaction Value

• 12 Month Customer Value

• Gross Margin

Name Options Step 2: Apply The Numbers Once the numbers are figured out, it is easy to understand how much can be spent to acquire a customer and still breakeven.

Example metrics:

–  Average Transaction Value: $500

–  12 Month Customer Value: $1,000

–  Gross Margin: 50%

How much can I spend to acquire a customer and breakeven right away?

Average Transaction Value -  (Avg Transaction Value * 50%)

$250

How much can I spend to acquire a customer and still breakeven within 12 months?

12 Month Customer Value – (12 Month Customer Value * 50%)

$500

Name Options Step 3: Know How The Company Site Performs •  Conversion rate is the percentage of all traffic that makes a purchase or

completes a lead action while visiting the site

•  A Typical Conversion Rate is 2%

Name Options Step 4: Build a Marketing Performance Model •  With all of this data assembled, a marketing performance model can be created

•  Just need cost per visitor for each marketing opportunity to be evaluated

•  Example, we can buy visitors from Google for $2.00 and make a $8.00 profit on every visitor! ($800 profit per 100 visitors)

How To Calculate

A Cost Per Visitor $2.00 You Enter (CPC)

B Conversion Rate 2% You Enter

C Cost Per 100 Visitors $200.00 100 * A

D Conversions 2 100 * B

E Cost Per Conversion $100.00 C/D

F Average 12 Month Value $1,000.00 You Enter

G Total Sales $2,000.00 F * D

H Gross Margin 50% You Enter

I Gross Profit (Sales - Gross Margin) $1,000.00 G - (G * H)

J PROFIT $800.00 I - C

Name Options Find & Evaluate Sources of Traffic

•  Paid Search –  Google, Yahoo/Bing Search Networks –  Google Content Network

•  Ad Networks –  Burst Media

•  Affiliate Programs –  Pepperjam –  Commission Junction –  Share a Sale

•  Direct Display Advertising –  Relevant websites

•  Social Advertising –  Facebook –  Twitter –  LinkedIn

•  Strategic Partnerships

•  SEO –  With historic data

Name Options Step 5: Scale It Up •  Once a marketing performance model is built and proves to be working, it can

be considered “predictable” and ready to scale.

•  We typically start with a small budget like $500-$1000/month to finalize the numbers on the previous slide. Once we reach profitability, then we scale.

•  We spend as much money as we can while still generating a positive ROI.

Buy customers for less than

they are worth.

The Goal is Very Simple

Predictive Marketing Modeling Case Study: JackThreads

Step 1: Determine what success looks like.

Determine conversion profitability.

We determined JackThreads could pay $1.00 in marketing per member, and still make money.

Step 2: Identify channels to drive members.

Identify all marketing mediums that can deliver visitors at a low enough cost and high enough conversion to achieve a $1.00 cost per new member

$.25

$.25

$.25

$.25

Example: Pay $0.25 per visit for 4 visitors. 1 converts to a member costing us $1

>>Marketing Channels Tested for JackThreads

Goal Cost Per Member: $1.00

Goal Cost Per Member: $.50

Goal Cost Per Member: $0

Goal Cost Per Member: $1.50

Step 3: Develop creative that converts.

Develop multiple landing pages and A/B test continuously to optimize

Develop ads continuously testing for top performance

Step 4: Find what works and spend more.

While each channel delivered members at the needed CPA, we determined Pay Per Click had the most potential to scale up with a profitable ROI.

Step 4: Find what works and spend more.

Pay Per Click Predictability for JackThreads

Month 1: $1,000 Budget Cost Per Member: $4.25 Sales: $3,529

Month 2: $2,000 Budget Cost Per Member: $3.50 Sales: $8,571

Month 3: $5,000 Budget Cost Per Member: $2.75 Sales: $27,000

--- continued momentum --

Month 7: $15,000 Budget Cost Per Member: $1.00 Sales: $112,500

ROI: 650%

Step 5: Enjoy Predictable Marketing

Share of New Members: 30%

Share of New Members: 30%

Share of New Members: 30%

Share of New Members: 10%

JackThreads’ Model

JackThreads Predictive Modeling Results

Growth Rate Before Adept: 3,000 new members per month

Growth Rate With Adept: 20,000 new members per month and an average ROI of 500% on every dollar spent.

Questions?