Photo Credit: Alan

I launched my first online advertising campaign from a small college dorm at age 21. Out of this first campaign grew a fascination with all forms of online advertising including Google Adwords, Yahoo, Facebook ads, Stumble Upon etc.

I went from spending a few hundred dollars per month from my college dorm to managing many millions of ad dollars online. Along the way I’ve launched and managed hundreds ad campaigns for both small and large businesses.

I’ve seen over and over again what works and what doesn’t. In order to understand why some businesses thrive using online advertising and others can’t seem to get it profitable one has to look beyond just ads and advertising platforms. Here are six business lessons learned from spending millions of ad dollars online.

You Can’t Fix Bad Economics With Good Marketing

I remember nodding my head in agreement when I first heard this quote from the marketing legend Dan Kennedy. It perfectly aligns with my experience from consulting with countless different businesses. Kennedy’s main territory is direct mail but the quote is just as true for online marketing.

Most business owners seem to think marketing is a magic bullet that will turn any business model into a huge success. The power of marketing can only go so far.

Advertising a bad product with low profit margins is like trying to make water flow uphill. Rather than spending a lot of effort, time and money on trying to find better marketing strategies time would often be better spent on developing a different business model.

Advertising As An Indicator Of Business Competitiveness

Online advertising and Google Adwords in particular can be a very accurate indicator of the competitiveness of your business. If you can outspend your competitor on Google Adwords some or all of the following factors are true: The copy of your ads is more persuasive than your competitor’s ad. Your website converts visitors at a higher rate into leads and customers. Your product offering is superior to your competitor’s. Your business is structured to convert prospects into lifetime customers.

All of these factors combined determine how much you are paying for a sale and how much you can afford to pay for a sale. Relying on advertising to generate leads and sales keeps you on your toes at all times.

It’s because advertising makes your cost per sale very transparent. A few good organic Google rankings can make any online business owner lazy. It’s just too tempting to think of it as free traffic but nothing could be further from the truth. There’s always a cost associated with getting the rankings and the rankings can be gone with Google’s next algorithm update.

If you are able to generate sales from advertising profitably because your business is competitive, you don’t have to worry about the next algorithm update. (In some industries large companies are running huge advertising campaigns without an eye on performance. The cost to generate a sale in these industries can be inflated due to these large players. In these cases advertising is not a good indicator of business competitiveness.)

The Power Of Copywriting And Design

The right choice of words can transform a rusty old chevy into a Porsche 911 in your prospect’s mind. That isn’t meant to sound like you are supposed to sell a bad product hyped up with persuasive copywriting and beautiful design. It just means that the actual value of your product can only be communicated by someone who understands the art of copywriting and design.

Even today you come across websites that use boring headlines like “Welcome to Mary’s Shoe Store”. It’s the worst possible way to make a positive impression on a visitor who can exit your website in a matter of seconds. You are fighting for the attention of a visitor so if you get it for a few seconds, you need to make the most of it.

Unless you are a good copywriter you should hire a professional to write your website or landing page copy. It always pays for itself over the long-term. Clean and simple design can be very powerful online. It doesn’t necessarily have to be fancy. Credibility indicators such as testimonials ideally with videos or photos, a clear navigation and strong calls to action are important as well.

Strategy Supersedes Shiny Tactics

Especially in the online marketing world the new, sizzling hot tactics get more attention and page views than the overall strategies. Strategy is not as sexy, yet it needs to be decided upon first to determine the use of effective tactics.

Here are a few examples:

Strategy: Increase website sales by 20%

Tactic 1: Optimise Google Adwords Campaign

Tactic 2: Test Facebook advertising

Tactic 3: Launch website A/B split test to improve conversion rates

Strategy: Increase customer lifetime value by 20%

Tactic 1: Build a email list to inform and educate customers

Tactic 2: Build a Facebook fan base to educate customers

Tactic 3: Develop additional backend products

This process is often done in the opposite way. A business owner reads a case study about Twitter being the new thing to generate leads online. It gets him excited.

At the end of the day he wasted four hours by signing up for Twitter and randomly tweeting people without adding any value. Rather than getting mesmerised by tactics, one needs to be very clear on strategies first and then test specific tactics with respect to their effectiveness.

The Importance Of Tracking Performance

What gets measured gets managed. – Peter Drucker It’s amazing how many businesses are not tracking the performance of their online marketing efforts. I have worked with clients spending upwards of $50,000 per month on advertising without any performance tracking in place even though it’s extremely easy to do so.

Here are the basic requirements: If you are using Google Analytics, set up goals for every action that you want visitors to take on your website. There are normally a range of different metrics to be tracked including email opt-ins, form enquiries and sales.

Additionally if you are running any advertising such as Google Adwords you should use the advertising specific tracking methods in addition to Google Analytics. This normally just means that you add an additional tracking code on your website. Knowing how much each of these actions is worth to you and how much you are paying for a conversion is key to making optimisations.