7/8 #ThreeMinutesADay: When Companies Spend Too Much on Marketing – and Fail
Three minutes a day make bad business decisions go away.
Today's tip: There are five main reasons a company’s marketing fails, no matter how much you spend: you don’t have a good foundation, you don’t have the right resource, you have analysis paralysis, you’re not experimenting enough, or you’re not doing ROI analysis at a tactics level.
In a hurry? Just watch the video below.
Over the last five years, I’ve seen companies spend outrageous amounts of money marketing their companies. I’ve also seen many companies spend this kind of money without actually seeing a true return on their investment.
The numbers here can be astronomical: $200,000, $300,000, or even $400,000 a month spent on marketing! All this money but they get very few leads or sales for their efforts and investment. Their marketing is failing.
This sounds crazy. But it is happening.
I know this because at least once a month a client meets with my team and me and they say, “Hey, I’ve been spending $100,000 on marketing per month and the results are mediocre. Can you help?”
The Five Reasons Marketing Fails
Talking to so many of these companies over the years, I realized that the reason for this almost always stems from one or more of five reasons. Here are the five reasons that companies spend too much on marketing – and fail.
1. You don’t have a good foundation
If you are spending money on marketing without a good foundation for your brand; you are simply throwing good money after bad as they say. Not having a good foundation can include such things as not having a compelling website or having a website that is performing poorly. If your website has a high bounce rate or a low time on-page score, you do not have the infrastructure to capitalize on good marketing and increased brand awareness even if you got it.
The other sign that you don’t have a good foundation is that you don’t have the metrics in place to understand the data, what works, and what doesn’t. I’m not talking about vanity metrics or flashy marketing terms. These are metrics that are fun to spout at meetings or parties but that doesn’t really tell you much about the health of your brand. The important points of information are along the lines of how many total users come to your website and what is your bounce rate.
These are fine metrics but to have a solid foundation, you need to have very granular metrics at a page level to fully understand the fundamentals of your infrastructure and marketing. This includes answering the question: how much content am I creating that is actually being read?
You can answer this question today with a metrics tool that tells you needed information such as, the average reader only reads the top 20% of the page or, readers don’t go past the hero banner on a landing page. You need these types of metrics to understand when and why you should change elements of your website in order to maximize conversion.
2. You don’t have the right resources
We’ve already talked about some of the right resources above such as the metrics tools you need to understand your foundation. To avoid wasting your marketing dollars, you also need the right marketing personnel, such as an Analytics Marketing Manager.
This person is a very important marketing resource, if not the most important marketing resource, your company can have because this is the person who is going to tell you what works, what doesn’t, this is what you should optimize, etc.
There are other human capital resources who can tank your marketing efforts. You may not have enough marketers to create original content or the people you have may not be very good at creating long-form, thought leadership content. Maybe you don’t have anyone who is particularly amazing at or solely dedicated to creating infographics. If you are in a consumer-based or B2B industry where infographics are useful, you don’t have the right resources. This will lead to poor ROI.
3. You have analysis paralysis
I put together a whole video about this very important subject last week. When you see something is not working and you get five or six people who all end up debating amongst themselves what is not working and why that is so… but nothing gets done, that is analysis paralysis.
This phenomenon only leads to wasted time, wasted effort, and wasted money. If you see something wrong, you need to DO something to fix it. You need to remove that bottleneck to ensure you are able to get people into your marketing efforts, either through payment or SEO, so you can get them to do what you want them to do when they get to your website.
4. You’re not experimenting enough
Marketing is all about trial and error. Many people just set up their website and their copy and that’s it. The website never changes. That is not good enough.
The reality is, you should carry out two or three different tests each month. These can be as simple as changing the color of a button, tweaking some copy a bit, or changing the images you are using. Then, you can see if any change leads to a significant increase in conversion. You’ll be surprised what a big difference a small change can make.
5. You’re not doing ROI analysis at a tactics level
So many marketers take their entire marketing budget and say, “I’m going to spend this $100,000 and that’s going to be across all my different marketing channels.” They allocate that budget equally across SEO, content, conferences, and all types of other marketing tactics.
What they don’t do – but should – is individually analyze each element. If you are spending money on, say, social media or SEM, but that’s not working, put the money somewhere else.
Shuffle these budgets according to how people are interacting with your brand. This is very important.
Those are the 5 main reasons companies spend far too much on marketing but still fail. If you can avoid falling into these traps, you will see a much more significant ROI and stop wasting your marketing money.
Have you seen these 5 marketing fails in your own company? Or a company you worked for? Let me know in the comments below.
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