Insurers' journeys to build a mastery in the IoT usage
Building a predictable marketing model 02.21.12
1. Stop Guessing & Start Growing:
How To Build A Predictive Marketing
Model
Presented By: Danielle Walton, CEO
Adept Marketing
2. 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
3. The Evolution of Marketing
Name Options
• Magazines/Newspapers
• Radio
• Television
• Direct Mail
• Phone Calls
4. Then, The Internet Is Born.
Name Options
• 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?
6. Step 1:Options
Name Know The Numbers
The essential metrics:
• Average Transaction Value
• 12 Month Customer Value
• Gross Margin
7. Step 2:Options
Name 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 How much can I spend to acquire a customer
– 12 Month Customer Value: $1,000 and breakeven right away?
– Gross Margin: 50%
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
8. Step 3: Know How The Company Site Performs
Name Options
• 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%
9. Step 4:Options Marketing Performance Model
Name Build a
• 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
10. Find & Options
Name Evaluate
Sources of Traffic
• Paid Search • Social Advertising
– Google, Yahoo/Bing Search Networks – Facebook
– Google Content Network – Twitter
– LinkedIn
• Ad Networks
– Burst Media • Strategic Partnerships
• Affiliate Programs • SEO
– Pepperjam
– With historic data
– Commission Junction
– Share a Sale
• Direct Display Advertising
– Relevant websites
11. Step 5:Options Up
Name Scale It
• 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.
12. The Goal is Very Simple
Buy customers
for less than
they are worth.
14. 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.
15. Step 2: Identify channels to drive members.
Identify all marketing
mediums that can $.25
deliver visitors at a
$.25
low enough cost and
high enough $.25
conversion to Example:
achieve a $1.00 cost $.25
Pay $0.25 per visit for
4 visitors. 1 converts
to a member costing
per new member us $1
16. >>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
17. Step 3: Develop creative that converts.
Develop multiple landing pages and Develop ads continuously
A/B test continuously to optimize testing for top performance
18. 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.
19. 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%
20. Step 5: Enjoy Predictable Marketing
JackThreads’ Model
Share of New Members: 30%
Share of New Members: 30%
Share of New Members: 30%
Share of New Members: 10%
21. 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.