Allocating Marketing Budget to Maximize ROI Amid Economic Uncertainty
By Brittany Klokkenga on April 29, 2020
Buying and selling behavior has changed over the past two months. We know they’re not done changing.
Although economies will start to reopen, the reality is we will continue living in a world with more budget cuts and remote work, and a very limited number of in-person events and business travel for the foreseeable future. This is our new normal.
In times of uncertainty, we know that our job is to maximize ROI with a minimal budget. What we’ve also learned from this experience is that, as revenue teams, we need to be channel-agnostic and ready to pivot if one of our channels suddenly isn’t viable.
The average B2B marketing organization allocates 28% of its budget to digital. As we look forward to the next few quarters, smaller budgets and fewer event line items will inevitably lead teams to divert money to lower-cost digital programs. But think twice before allocating the majority of your budget to digital advertising. While online marketing is an important tactic, no single channel alone will succeed in this new purchasing landscape.
And as we all know, especially in these times of social distancing, people crave real and authentic connection points versus an entirely digital approach.
As competition for digital ad space rises, ad networks will become even more saturated, making the online noise louder than ever before. Costs-per-click will skyrocket. At the same time, the number of impressions it takes to get a click will increase amid a digitally overloaded media landscape. You probably won’t produce the topline numbers you need, and your bottom line will take a hit.
That’s why plays that bridge online and offline experiences have and will continue to become more important than ever. These plays are more cost-efficient in the long run, driving better results, and ultimately, more ROI.
Let’s dive deeper into why.
Cost-Per-Click vs. Cost-Per-Send
We’ll start by illustrating an example with how we measure what we’re paying for digital ads: Cost-per-click.
CPC describes the amount an advertiser pays to a publisher every time an ad is clicked. Commonly referred to as pay-per-click (PPC), CPC helps publishers regulate the cost of showing users ads on search engines, social media platforms, the Google Display Network, and other online publishers.
CPC is calculated by dividing total digital spend by the number of clicks. The CPC formula is typically written like this:
CPC = total cost/number of clicks.
When there’s a significant increase in demand for a publisher’s digital ad space (as we’re seeing today), more companies will be competing for the same amount of inventory. One of two things will happen: your bid amounts will be too low and your ads won’t be shown or you’ll have to increase the maximum CPC bid you’re willing to pay in order to reach the same amount of people.
Now let’s look at an offline channel like sending physical direct mail, gifting, and branded swag.
We’ll define the money metric here as cost per send (or CPS). A “send” is the package, gift, handwritten note, branded swag, eGift, wine bottle, succulent, etc. that is actually sent to a recipient. Similar to digital ad spend, CPS is the cost of a sending campaign divided by the number of recipients. The CPS formula is:
CPS = total sending campaign cost/number of recipients.
In the past, you may have thought of sending direct mail, gifts, or branded swag as being cost-prohibitive. But nowadays the cost of sending is more budget-friendly than you think, even generating more ROI for every dollar spent: direct mail generates a median ROI of 29% while paid search yields 23% and online display produces 16%. That means if you spent $100 on sending direct mail and gifts to convert a prospect into a paying customer, you’d have to spend $106 on paid search or $113 on display to yield the same results. The difference adds up to thousands of dollars when you start bringing in customers by the hundreds. And in times like these, every dollar counts.
Digital efforts in isolation won’t yield your marketing and sales objectives. When you integrate digital programs and physical sending into your marketing mix, conversion rates can be as high as 40%. By achieving higher conversion rates, you’ll increase return on revenue for every dollar spent, decreasing your customer acquisition costs.
To Generate The Most ROI, Direct Mail and Gifting Is Essential
Don’t just take our word for it. Companies, large and small, are seeing some stellar results by making sending a key pillar of their omnichannel strategies:
Uberflip wanted to incorporate direct mail as a part of an integrated, multichannel ABM marketing program. By adding Sendoso into its workflow via SalesLoft, Uberflip made it easy for reps to follow up on direct mail with prospects via automated email Cadences and execute cross-functional ABM campaigns with sales. Uberflip saw a 4X increase in response rates and a 4.5X return on new revenue.
Blend ran a multi-touch, win-back campaign to re-engage accounts that had previously been in a sales cycle but didn’t purchase. By integrating Sendoso with Marketo, they were able to automate sending at specific touchpoints in their automated nurture program. As a result, the campaign generated 40X ROI on pipeline value and converted 62% of cold leads into opportunities.
Cornerstone integrated Sendoso with Outreach to execute 1-to-1 sends as a part of their account-based strategy. Tracking statuses were automatically updated in the Outreach activity feed so that when items were delivered, prospects were added to follow-up sequences to secure a meeting. The campaign saw a 30% lead-to-opportunity conversion rate. For every $1 spent on the gifts, Sendoso influenced $4,000 in pipeline for Cornerstone.
Driving Revenue, Together
Being a revenue professional during times like these isn’t easy. We’re being asked to do more with less, and that’s the nice way of putting it. But we’re finding ways to adapt. Truly understanding the cost of each acquisition channel helps us optimize how we use our budget and make sure we’re getting the most out of every dollar spent.
To our customers, partners, and community: we’re with you. Our team is figuring things out and sharing the areas where we see the most success alongside you. Good luck and good health.
Download our State of Sending report to see data from over 15,000 senders and one million sends: what they’re sending and how they’re measuring the ROI of their campaigns.