Marketing seems to be the most “fun” part of owning a business, or maybe it seems sort of glamorous thanks to shows like Mad Men. Marketing is the part of my business that can feel great because of a successful campaign or terrible because I should have just taken $500 and flushed it down the toilet. At least if I flushed it, I would have saved myself the time it took to implement said failed campaign.
I’ve had my successes, but I want to share my failures so that maybe I can spare another small business owner the wasted cash and the weeks of stress and guilt.
Some background on my company Puppy Cake: we make cake mix for dogs as well as a few other niche dog treats that cost between $5 and $20. Puppy Cake is mostly sold through a few hundred independent pet stores and has an online presence at www.puppycake.com, small online pet retailers and amazon.com. My target market is predominantly women, of all ages, with most women being either empty nesters or not yet had children because their dogs are their children. I judge an advertising campaign’s success based on the sales bump and tracking (whether by “how did you hear about us?”, coupon codes or tracking links).
Google Adwords (including the shopping feed) and Bing Ads have not worked for me. I have tried this SO many times and every time, it does not pay out. I have tried my keywords that fit my product, competitor’s keywords and complimentary product keywords. My average cost per click (CPC) is $1.05. I would need at least 10% of those clicks to place an order for Adwords to work for me. The conversion rate for those clicks is the same as my website, so about 2% of those clicks make a purchase. It ends up costing me about $50 to get 1 order and my average order size is around $23. Even if that customer placed two orders with me that year, it still would not be worth it.
Radio has a place, but not in my advertising budget. I tested this out a couple of times with on air interviews (several minutes just talking about my product!) and it still did not result in a sales bump. I will never spend a dime on radio advertising for Puppy Cake.
I had so much hope for website ads. I started advertising on several different websites when I first started the company. What I have learned is that it requires a lot of impressions to get clicks and then once I get clicks, those clicks still have about the same conversion rate and those who find Puppy Cake organically. For example the click through rate (CTR) for most of my ads was .10% of total impressions. Let’s say my ad would get 1,000,000 impressions. I can predict I will get 1,000 clicks and thus 20 orders. With my average order rate, I can expect a $460 bump in sales. I would typically spend $600 – $1000 on an ad like that.
Now, some companies would say that is successful because now you have a customer’s information, they’ve tried your product and they will likely spend again. I know that because of the nature of my product (being seasonal or special occasion), it takes a long time to get the customer to tell a friend (and a long time for one of those friends to buy) and place a second purchase. I have to wait 6 months to a year to actually recoup my money. And since this customer was brought in through an ad, maybe it will be difficult to bring them in again since they weren’t actively searching for it the first time.
Groupon and similar sites are very popular, but are not effective as a tool for growing your business or increasing your customer base. In these types of sales, it is very difficult for the manufacturer (Puppy Cake) to make any money off of the deal. Groupon wants you to offer your product at a heavy discount, like 50%. Then, they want to take a cut of the already discounted price, usually taking 40%, so the manufacturer is left with getting about 25% of the retail price, which barely covers the cost of the good and shipping it to Groupon’s distribution center.
Typically, the customer who buys from Groupon only wants really steep deals. They have just shown you that they are unwilling to pay full price for your product. What makes you think they will pay full price a few weeks or months down the road? I think that Groupon should only be used to get rid of product. I have used a similar site: www.doggyloot.com to sell off as much of my older packaging as I was rolling out new, updated packaging.
Sampling seems like a great idea. You let someone try your product and they will fall in love with it and buy lots more! In my experience, and I think some of it has to do with the seasonality of my product, sampling has been a big fail. I have gotten asked to put a free samples of my product in goody bags at events. Puppy Cake products have been in 2 different monthly boxes of BarkBox, a monthly subscription that sends out 4-7 dog products to their subscribers.
First of all, people who like free stuff as do not like to pay for stuff, so you already have a consumer with that attitude.
Then, someone who has sampled your product (unless it was sampled at the store where they can buy it) will struggle with finding it. If a consumer has to think about how to get your product, you’ve already lost. I thought I would get a great bump from having nearly 70k people try my products and then I realized, “I’m a BarkBox subscriber and I never buy dog treats anymore.” Why? Because every month I get a box full of dog treats! There are currently four bags of dog treats in my cupboards from a previous BarkBox. It will take a long time before the samples in the BarkBox pay off.
Every company is unique. If you offer a few niche products in similar price points as mine, you will likely find my fails to be failures for you as well. Every company is different and sometimes it isn’t the advertising vehicle, it could be bad creative, the wrong target market, bad timing or any number of this. As a rule, always ask yourself, “How could this go wrong?” and imagine that it is already failed and you are telling yourself why it failed. If you can have a pretty lengthy hypothetical conversation with yourself about why it failed, you probably shouldn’t advertise there!
Photo Credit: Flickr/Sarah