30 second summary:
- Very few SMEs use multiple channels for their online advertising
- Facebook is the most effective channel based on the cost of CPM and CPC
- It is important to remember that every company is unique when it comes to making budget allocation decisions
For any Software as a Service (SaaS) company, data analysis and science are critical to ensuring they keep driving the advances that can really make a difference. With this in mind, the Cambridge MBA team tried to leverage Adzooma’s extensive data to identify new opportunities for SMBs to maximize their advertising spend with cross-channel marketing.
For the Cambridge University team this has been an exciting opportunity to gain some really unique insights as even the big players like Google and Microsoft only have data related to their individual channels. The project promised to offer a much broader perspective and some new insights thanks to access to anonymized data from thousands of accounts on the three major platforms through Adzooma.
A cross-channel approach
The results immediately showed that very few SMB customers use multiple channels (Facebook, Google and Microsoft).
While this wasn’t part of the main project, it was a really interesting analysis and we emphasized the importance of a lot. For example, most people only stick to Google because they think they should be there, but that’s not always the best case for every business, and it can be critical to digital marketing across multiple touchpoints to become – or at least try out several channels of success.
Our analysis showed that Facebook is the cheapest channel for SMEs based on costs (CPM, CPC) and ROI (impressions, clicks). However, Microsoft has come out on top in order to reach a more professional and affluent audience.
The study showed the importance of determining your specific target audience in advance. So when choosing the channel (s) for your business, consider what you are trying to achieve with your advertising spend and who you are really trying to reach.
What are you really trying to achieve?
Right at the offset, it’s important to think about your end goal and ask yourself who the customers you are trying to target and how you can most efficiently get to them.
Previous studies have shown that winning new customers for SMEs was the most pursued goal on the customer journey, followed by “raising awareness”, “generating leads” and “customer loyalty”.
With this in mind, the Cambridge team found that merging the traditional sales funnel with the customer lifecycle model is the best way for an SMB to manage its overall marketing goals.
The overlapping resolution method then allowed the team to determine the impact of the cost on different marketing channels. This allows SMBs to effectively determine which platform is best to use when similarities arise.
We found through research that it was the choice of channel itself that had the greatest impact on both CPM and CPC. After establishing a relationship between channel and cost KPIs, further research was conducted to determine the average CPM and CPC for Google, Facebook, and Microsoft ads.
While Facebook was, on average, the most cost-effective channel for SMBs overall, the recommendations were that companies should continue to review other channels’ click-through rates to see if other factors, such as industry or geography, could make a significant difference.
If you choose between Google and Microsoft, the results suggest that Google can be used because of its high reach and low cost. However, Microsoft could come in handy too, especially since it has high-level targeting and demographics that may be appropriate for certain types of businesses.
What does your ad say?
Another factor that many companies may not consider when deciding which platform to use is the sentiment of their messages.
When analyzing the data, this was another area where the research team saw a differentiation based on the channel the ad was running on.
Microsoft emerged as the most popular platform when it came to positive sentiment with a click-through rate of 4.2 percent, compared with 3.6 percent for neutral sentiment and 3.3 percent for negative sentiment.
Interestingly, the opposite was true for Google ads, where negative sentiment was found to be the most popular among users, achieving a click-through rate of 6.5 percent versus 5.7 percent for neutral and negative messages.
Again, it highlights the importance of taking this time to tweak your ads for testing purposes and see what works best for your target customers so that you can capitalize on your spending.
Every business is unique
It’s no secret that the unified approach doesn’t necessarily work. All companies are different and therefore their advertising spend and usage will of course be different.
Some people, like all of us, want to go with the stats and what has proven to be good for businesses in the past, and while that can be taken into account, that doesn’t mean it will work for every business. Hence, it is always important to take the time to consider where to spend money and who to contact.
Also note that while Google, Facebook, and Microsoft Ads are the most popular online advertising platforms, there are alternative (and cheaper) places to list your ads, including Reddit, Amazon, and industry-specific websites like Capterra. Although there are fewer users, these are still effective as it is often easier to reach your exact target audience and can serve as a complement to your primary platform.
We hope that through this research we have encouraged SMBs to think carefully about their target audience and specific goals before allocating ad spend. What we’ve shown here is that the advertising platforms examined in this study work effectively on their own depending on the end goal, and we hope that these findings will enable SMEs to achieve better overall results.
These insights help determine how best to leverage cross-channel partnerships for SMB customers. Since Facebook appears to be the most frequently used channel by 70 percent of SMEs and the data analysis indicates that it is optimal in terms of costs and returns, the data is used to scale Facebook’s functions and capabilities. Much of the knowledge we gained from this study also flows directly into the core technology of the Adzooma product.
Rob Wass is the co-founder and CEO of Adzooma.
Akanshaa Khare is currently pursuing an MBA from Cambridge University and has five years of product management experience and three years of consulting experience to support consulting firms such as BCG and ZS Associates.