A close friend recently recommended The Six-Month Fix: Adventures in Rescuing Failing Companies by Gary Sutton. Sounded interesting, so I just started reading it today. Sutton’s blunt and in-your-face writing style is addictive and so far I’m really enjoying the book — but I’ll warn you, it’s not for the meek. Sort of reminds me of my peewee league football coach (who was a prison guard).
The reason I bring this up is because the approach Sutton uses to turn around failing companies is similar to how I approach rescuing a failing ad campaign. One of the critical concepts in the book is to “Find the margin, cut all other costs.” In other words, identify what’s working (aka what’s profitable) and eliminate your waste.
Sounds simple, and it really is. Just 2 steps. Let’s take a look at how this can be done in practice.
Step 1. Find the Margin
The phrase “find the margin” is just another way of saying “identify where you’re getting the highest profit margin.” Or, where are you getting the best return on investment (ROI) from your ad campaigns?
Do you know? Most advertisers do not, unfortunately. In fact, I had a call today with a woman spending several thousands of dollars every month in various ad campaigns, and she was complaining that she didn’t know which (if any) were driving sales.
So the first step should be obvious. In Sutton’s case, he has to make sure the accounting is rock-solid, so he knows which areas of the business are profitable and which are just burning a hole in the bank account.
In our case, with an ad campaign, we must set up online tracking that clearly shows leads and sales for each source of traffic. For example, if you’re advertising in Google AdWords, Facebook, Yelp, and any other ad platforms, then you need to be able to run reports that show you traffic, leads, and sales for each source, so you can see what’s working (and not working).
Step 2. Find the Margin Within the Margin
OK, at this point you’ve got tracking installed and you know which traffic sources are driving the highest profit margin. Plus, you have trimmed the fat by pausing any ad campaigns that were not generating return on investment (ROI).
Pat yourself on the back because you’re now head and shoulders above most businesses. But let’s not stop here.
Next, use this same approach within the ad platforms you found to be profitable. Let’s use Google AdWords as an example.
Within an AdWords account, there may be many different campaigns. And within campaigns, there may be many ad groups. And within those ad groups are keywords and placements. I can safely bet that there are plenty of keywords, placements, ad groups, and maybe even entire campaigns that are NOT profitable, even if your account as a whole is generating a positive ROI.
Days and Weeks, Not Months
In Sutton’s experience (and he has a ton of experience turning around companies), it typically takes about 6 months to get the ship back on course. Not a huge amount of time, but let’s face it, most small business owners don’t have that kind of time to turn around an ad campaign.
Luckily, with online advertising, you shouldn’t have to wait 6 months to achieve a turnaround. It’s often possible to generate big improvements in days or weeks, not months. For example, about a month ago, I started working with a client who had let her AdWords consultant run her account into the ground. Last year her cost per conversion was $5, but this past August it had risen to $27 in one campaign. That’s when I was brought in as the “Sutton of AdWords.”
By following the advice above, I drove the cost per-conversion down from $27 to $5.95 in just one month. That’s a 78% cut in cost per conversion without a significant drop in volume. How would a 78% drop in cost per conversion change your campaign’s ROI? Don’t guess. Go find your margin and turn your campaigns around in the next 30 days!
Google AdWords Webinar
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Thursday, October 10th at 12pm Eastern time
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