case study: online advertising firm needs a new plan
The Company had created a proprietary system for creating and managing pay-per-click keyword advertising campaigns on the leading search engines (i.e. Google, bing and Yahoo). The Company’s target customers were small businesses that didn’t have the internal resources or expertise to manage pay-per-click online advertising campaigns.
The Company was continuing to burn cash with no end in sight. Projected sales growth was not realized as existing customers were leaving as quickly as new ones were added. Management did not have a strategy for stemming customer attrition.
Change the Target Market: The initial step was to change the target client from individually-owned, local businesses to regional/national entities with multiple locations in the same geographic area. These larger clients have multiple locations in each geographic market, allowing advertising costs to be shared (reducing per-store costs). Furthermore, the Company’s proprietary system allows each store to tailor its advertising message (retaining the advantages of individual store advertisements).
Focus on ROI: These larger clients were seeking ROI metrics upon which to base their advertising decisions. The Company created a ROI Calculator, allowing clients to evaluate the cost effectiveness of each online advertising campaign. For the first time advertisers had quantitative measurements of the ROI for each advertising campaign.
Invite Prospective Client’s to run a Beta Test: New sales tactics were implemented that invited prospective clients to run “beta tests” (i.e. small, localized campaigns used to measure the effectiveness of the Company’s online advertising service). This was successful due to the system’s ease-of-use and ability to measure campaign ROI.
Sales grew by 12X. Net profit margin grew from (102%) to 21%.