Seth posted yesterday about evaluating different kinds of traffic. Not only do I completely agree with the point made, but I would take it a few steps further. For some reason the old adage of "when in doubt, buy them out" has continued to survive despite the sheer poor financial ROI of the concept. It seems that folks are addicted to the top of the marketing funnel without thinking about the all-mighty "conversion". Granted, if the top of the funnel is tiny, it does not matter how well you convert. But, if the bottom is a pin hole, who cares how much you spent.
Just this morning on NPR, there was a story about the big networks pitching "first looks" at their shows for potential media buyers. One comment made was regarding the TV networks concern over the 28% YOY increase in on-line media. Combine this with all the buzz on Web 2.0 (see Fortune article on how to invest in Web 2.0 without getting burned) and I start getting nervous all over again. Lately I am seeing and reading about folks buying millions of media impressions with weak business cases to shroud the real secret....its a land grab baby and you don't want to be left out. Direct mail volumes are growing ever larger and we continue to scream against the hurricane. Marketing dollars are being spent more carelessly now. I fear we forgot what happened just a few short years ago. So, here are a some basic rules to keep you out of trouble when thinking about traffic:
1) Don't bother with trade shows: unless you 1) have no other way to reach your clients or 2) need a bully pulpit to launch your latest new gizmo in a high profile manner - don't bother. I have yet to see any trade show lead generation pan out - and I have not seen one good business case to justify the $25K fior the booth....not to mention the costs for travel, hotels, give-aways, parties etc.
2) Buy based on contribution margin: It comes down to the basics of revenue created per marketing dollars spent. More specifically, contribution = revenue - variable costs. This is not a profit - as it does not include allocated costs - but it is an efficient and easy way to compare programs. Here is a quick tutorial. Stack rank your media buys or marketing programs. Understand their contributions. Compare them to other uses of those dollars within marketing. Don't fund anything that can't outperform your bread and butter. Translation: Kill the weaklings....kill them all.
3) Cut your volumes: I dare you. Try it. This logic is much like blocking key words in your search parameters. Not every viewer is worth the money paid. Try more of a vertical approach, or perhaps (gasp) cut some of those more expensive sites that make you pay more for the brand name than the quality of the cattle behind the gate. The point is, in any game there is a point of diminishing returns. I can't tell you how many banner ROI reports I have looked at that make me wonder why we bother to spend with 75% of the sites listed.
4) Measure, report, track, tweak: As Seth states, what is more important for you is to track your own performance at the top and the bottom of the funnel over time. Don't worry so much if your marketing bill is as big as the other guys.....let them prop up the industry, you have shareholders to please.