Audio Version — 7:56

Marketing Profitability Analysis Defined

Profitability control is a marketing control tool used to perform marketing profitability analysis. The profitability analysis is a systematic and logical process used to analyze profits earned from various marketing activities and marketing channels. Firms show a growing interest in using marketing profitability analysis to quantify the true profitability of varying marketing activities. Gaining insights to true profitability, marketing managers can:

  • Reduce unnecessary resources required to execute different actions.
  • Increase resource productivity.
  • Acquire resources at a reduced cost.
  • Increase prices of products that consume increased amounts of support resources.

Marketing Profitability Analysis Steps

Marketing profitability analysis involves the following steps:

  1. Identifying functional expenses.
  2. Assigning functional expenses to marketing entities.
  3. Preparing a profit-and-loss statement for each marketing entity.

After marketing managers identify functional expenses, assign those expenses to marketing entities and prepare their respective profit-and-loss statements, the marketing professional then needs to determine if corrective action is necessary based on their profitability analysis.

Marketing Profitability Analysis Example

Using the marketing profitability analysis steps is better explained using an example. In our example, suppose you are the marketing director for a mid-sized vitamin (nutraceutical) manufacturer, and you want to determine the profitability of selling your product direct-to-consumer through three types of retail channels: 

  • Health and wellness centers.
  • Retail supermarket chains.
  • Independent pharmacies.

Below is an oversimplified profit-and-loss statement for the vitamin manufacturer that I’ll use for our marketing profitability analysis example.

simple profit and loss statement chart for marketing profitability analysis article

Let’s examine the following steps in determining our marketing profitability analysis.

Step 1: Identify Functional Expenses

Functional expenses are costs incurred for a specific product or service. In our example, the functional expenses are those costs incurred for specific marketing activities for each marketing channel.

In our analysis example, assume that the incurred expenses in the profit-and-loss statement are to:

  • sell the vitamin products
  • advertise them
  • pack and ship the product
  • bill and collect funds

Our first task is to measure the total expense for each activity. We can assume that the sales team incurred most of the costs. The rest of the salary expenses went toward the advertising manager, packing and delivery staff, and the in-house accountant. The Functional Expenses chart below demonstrates the salary, rent, and supplies cost breakdown for each activity.

Functional expenses chart

The rent, in our example, is divided amongst the four activities. However, because the sales team works outside of the firm, the rent is not allocated to the sales team but divided by space used, among the other three activities. 

Most of the floor space and rented equipment are for the packing and shipping department. The $7,200 allocated to the supplies activity account covers promotional and packing supplies, delivery fuel purchases, and office supplies.

Step 2: Assigning Functional Expenses to Various Marketing Entities

In step two, we measure how much functional expense is associated with selling through the various marketing channels. The table below, Allocating Functional Expenses to Channels, shows the selling effort made for each channel. The number of sales calls per channel, indicated in the sales column, refers to how many times a salesperson called or visited one of the channel locations. The total selling expense for all three channels was $7,425, and the sales team yielded 675 units. Note that a unit in our marketing profitability analysis example refers to one item, for example, one sales call or one advertisement. In our case, the cost per sales call unit to our marketing channels costs $11 per call.

Respectively, we ran 450 ads with a total expense of $5,400, which yielded $12 per advertisement. The cost for packing, shipping, and billing follows the same formula, generating $18 per package to pack and ship and $9 per order to bill and collect.

marketing profitability analysis chart

 

Step 3: Preparing a Profit-and-Loss Statement for Each Marketing Entity 

We can prepare the profit-and-loss statement for each channel partner in the final step. In our profit-and-loss statement example below, the health center channel earned 55% of total sales. The channel had the highest cost of goods, yet the highest gross margin as well. After expenses, the health centers channel netted a profit of $9,150 for the firm.

 

channel partner profit and loss chart

The total cost for calls to the health centers was the highest of the three channels, yet its advertising costs were half that of the pharmacy channel, bringing in a meager $430 net profit. On the other hand, total sales calls to retail chains were higher than the pharmacy channel, yet the retail chain channel was at a $2,975 loss for the firm. 

Go through the remaining channel partner data below and see where you might identify areas that can help generate more net profit.

Analysis and Corrective Action

On the surface, it may be easy to eliminate the retail chains channel since they showed a loss compared to the two other channels. Yet, eliminating the retail chain channel may be premature or naive at best. Marketing managers need to determine the possible root causes of revenue loss before removing a channel partner. Marketing managers need answers to the following questions before eliminating a channel:

  • What are the factors that buyers buy based on retail outlets (channel partners) versus the brand?
  • Are there any trends that impact the relative importance of the three channels?
  • Are the firm’s marketing strategies consistent across all three channels, or does the company vary the marketing message based on channel partner?
  • Has the firm conducted a market analysis on competitors currently sold in each of the channels?

Marketing managers can use the answers from the above questions to evaluate the following alternatives:

  1. Establish special charges for handling smaller orders.
  2. Provide more promotional assistance to the retail chains and pharmacies.
  3. Increase ad spending for the retail chain channel.
  4. Evaluate the marketing message and make necessary changes to the messaging strategy for the retail and pharmacy channels.
  5. Remove the poor-performing retail units of each channel.
  6. Create an incentive plan for the retail chain channel to improve total sales.
  7. Do nothing.

Conclusion

Marketing profitability is not without its limitations. Depending on how well marketers understand the analysis methods and constraints, the analysis can lead or mislead marketers. Some advocates argue that the full cost must be allocated to marketing entities, while others say that only direct and traceable costs are necessary for evaluating a marketing entity’s performance. 

Regardless of which side of the argument you stand, marketing profitability analysis does not necessarily prove that the best course of action is to eliminate unprofitable marketing entities, like the retail chain channel in our example. The marketing profitability analysis merely indicates the relative profitability of different channels, products, territories, or other marketing entities. It is up to the marketing manager to ask clarifying questions that lead to effective corrective action of their marketing activities.

For a video tutorial on creating a treemap in Microsoft Excel, scroll to the end of the written tutorial.

A Brief History of Treemap Charts

Treemap charts are a form of area-based visualization developed in the early 1990s by Professor Ben Shneiderman at the University of Maryland Human-Computer Interaction Lab. While area-based visualization diagrams like mosaic plots have existed for decades, Shneiderman sought an efficient way to display hierarchical data visually. He was seeking a less “bulky” tree-structured nod-link diagram that he was already using.

Purpose of Treemap Charts

Treemap charts help visually identify hierarchical rankings in a flat structure. Their efficient use of space and color management makes them an exceptional instrument in visualizing large amounts of information for business and marketing analytics applications and other industrial uses.

The way treemaps display their hierarchies is through rectangles of varying sizes and colors, depending on the amount of data provided for each part. The combination of colors and different sizes of rectangles (or boxes) makes it easy to see patterns often challenging to spot in other scenarios, like pie charts. Because treemap charts use space efficiently, another advantage of them is that you can display thousands of items simultaneously.

The Treemap’s goal is not to display the exact values of each part but to exhibit the datasets into parts to identify its larger and smaller constituents quickly.

Some Cautions When Using Treemaps to Tell Visual Stories

Like other data visualization charts, treemaps have some precautions to heed before telling their visual story using the datasets. These precautions include:

  • Determine if a treemap is the best type of chart to tell your visual story. People are bad at calculating area. Because the Treemap relies on displaying area as its data hierarchy, people may not be able to decode the numerical information by the area. In this case, a pie chart or bar chart may be better suited for your visual story.
  • When you have similar numbers, the Treemap generates similar block sizes resulting in difficulty making comparisons on the chart.
  • Treemaps can only process positive number datasets. They do not process negative values.
  • If you require a common baseline to present your data, treemaps are not advisable. Bar charts are a better approach for this type of visual storytelling.
  • Keep in mind that text may appear very small on treemap blocks. Creating a color legend describing each block is advised. If your Treemap is interactive, you should provide a pop-up tooltip over each chart area.

Creating Treemap Charts in Microsoft Excel

Microsoft introduced the treemap chart along with several other data visualization tools in their Microsoft Office 2016 release. The Treemap is available on both the macOS and PC versions of the software.

Treemap Chart Excel Tutorial

Please note that this tutorial uses screenshots from a macOS. Where appropriate, I will include PC commands for PC Microsoft Excel users.

The data I’m using originates from data.world, and the dataset is titled “Social Influence on Shopping.” I will create a visual comparison of which astrological signs and social media platforms influence university students to make online purchases from the data.

To begin, select the dataset you wish to work with, or you can click the Download link to get the sample .csv dataset I’m using for the tutorial. 

screenshot excel spread sheet for creating treemap charts in excel

Select the data you want to visualize.

image of selected data on excel spread sheet for treemap excel tutorial

For Mac: Click the Insert tab on the ribbon, click the Hierarchy icon, and select the Treemap.

 

Insert tab on excel for macOS

Insert tab in Excel on macOS.

 

Image of treemap icon on macOS excel

Insert tab selected showing treemap chart option on macOS.

 

For PC Users: Navigate to the Insert tab. Select Insert Hierarchy Chart, then select Treemap.

 

Your treemap will appear on the same excel sheet as your data. You can add or change the title by directly clicking into the title box within the treemap.

Conclusion

Creating treemaps in excel is simple, as you can see from both the written and video tutorial. Deciding how you want to convey your data story will dictate how you organize and select your data. The treemap chart allows marketers to quickly display a visual representation of the data they choose to tell their story visually.

Video Tutorial: Creating Treemap Charts in Excel

Audio Version — 19:41

Are B2B Buyer Personas Important for Marketing?

Are buyer personas, specifically, B2B buyer personas, important for B2B marketers to develop and use in attracting the ideal buyer? After all, when segmenting markets, marketing professionals can deploy several segmentation strategies that include demographics and psychographics. 

As you read through this article, you will discover that buyer personas are not a demographic segmentation tool but more of a goal-driven buyer’s behavior. But first, to fully understand the buyer persona, it’s essential to trace the concept to its origins to understand its original purpose. From the first creation of personas, we can then discuss the importance of buyer personas in the B2B marketing context.

What Are Buyer Personas? Definition and Origins

Creating B2B Buyer Personas - sketch of person head down by computerIn Alan Cooper’s 1999 published book, The Inmates Are Running the Asylum: Why High Tech Products Drive Us Crazy and How to Restore the Sanity, Cooper outlines his case for personas to better design user interfaces and leading decisions about visual design, functionality, navigation, and content using technology. Personas are not necessarily actual people but based on real people. In other words, personas, according to Cooper’s book, are hypothetical archetypes for existing users that drive decision-making for interface design projects. 

In 2001, a colleague of Cooper, Tony Zambito, adapted Cooper’s technology design personas for marketing purposes, leading the way to what we know as Buyer Personas in marketing segmentation. It’s best to clear the air now; buyer personas are not necessarily a segmentation tool by themselves but more of an ideal buyer personality defined by their goals. 

Thus, Zambito’s buyer persona definition incorporates the elements of the original persona definition but with a focus on the buyer. Zambito states that the buyer persona definition is:

“Buyer personas are researched-based archetypal (modeled) representations of who buyers are, what they are trying to accomplish, what goals drive their behavior, how they think, how they buy, and why they make buying decisions.”  

 But make no mistake, while they appear to be simple representations of what the ideal buyer looks and acts like, buyer personas are well-researched concepts that help marketers better design marketing messages that move the ideal buyer along the buyer’s journey. 

We can sum up buyer personas in the following seven points:

  • They are hypothetical archetypes (or models) for actual buyers that drive buying decisions for a brand’s products or services.
  • Buyer personas are not real people but represent real people moving along the buyer’s journey.
  • They are not made-up but discovered through research and the investigative process.
  • Personas are imaginary but defined with significant accurateness.
  • Their goals define buyer personas; that is, the buyer’s goals in making a purchasing decision.
  • Creating effective marketing messages and campaigns incorporates a personas’ needs and goals.

Now that we have a basic understanding of what a persona is and is not, it’s time to turn our attention toward the three different types of personas that B2B marketing managers should develop as part of their marketing strategy.

The Three Types of Buyer Personas: Primary, Secondary, and Negative

When discussing buyer personas, marketers often focus on developing several primary buyer personas for a single product and target market. Creating several primary profiles may seem suitable for some small retail businesses. However, to truly understand the buyer’s goal in a B2B context, the marketing professional should focus on developing primary and secondary buyer personas and consider creating a negative buyer persona. I will discuss the benefits later in this article.

Three Types of B2B Buyer Personas sketch of profiles with cogs and gears

Seventy percent of the B2B buyer’s journey is complete once the prospect agrees to speak with a salesperson. Thus, making the first 30% of the journey a critical part. The first part of the buyer’s journey moves the prospect from attention to purchase in what’s known as the AIDA model of micromodels for marketing communications. The second stage of the AIDA model is the interest stage, where B2B buyer personas play a critical role. The interest stage of the buyer’s journey is where marketers develop marketing communications content that fulfills the prospect’s needs and goals, moving them along the journey toward an action, like a sale.

In B2B contexts, there are often multiple people in the buying process. There are administrators, assistants, and other employees of a firm that may participate in the decision-making process, such as provide feedback for the products and services under consideration by the primary buyer. In this instance, the additional participants in the process are considered secondary buyers. Thus we need a secondary buyer persona.

Finally, a negative buyer persona refers to the type of buyer that you want to avoid in your marketing initiatives. However, the negative buyer persona follows the same narrative as the primary and secondary personas but is less critical in developing your marketing strategy.

Developing negative buyer personas will help you better understand your target audience by learning which person is not a potential customer. Creating a negative buyer persona could prevent you from wasting valuable marketing resources and targeting the wrong audience. Negative buyer personas also help your average acquisition cost and strengthen your understanding of your current buyer personas.

B2B Buyer Personas Example

The following buyer persona narratives format follows best practices for creating B2B buyer personas. A recommendation for creating B2B buyer personas is to create a single persona with several secondary personas for each product or service your firm offers and the industry — or market — you plan to target. 

To better understand the personas’ goals, I will write buyer persona examples related to the commercial electric vehicle industry. An industry I spent time marketing for and one that I am familiar with their buyers.

Primary Buyer Persona Example

Sam is a 58-year-old male that was born and raised in Nevada City, California. He currently lives in his childhood city with his wife, Mary. Mary is a homemaker, and the two have been married for 35 years and have two adult daughters and one grandson, all living in the same city. Sam works as a transportation director for the Sutter County education offices and commutes 1-hour each way to his job in Marysville, California, along the picturesque Highway 20. 

As a lifelong resident of his small mountain town, Sam has seen what progress has done to the local environment. He also understands that there needs to be a balance between conservation and progress. Sam does not see himself as an environmentalist; however, he does care about the environment and local wildlife. Sam spends his weekends with his wife hiking in the nearby trails and often takes his grandson fishing at the local lake, just like he did with his two daughters when they were young.

One weekend per month, Sam and his wife volunteer at the local animal shelter to care for and clean up after the animals. Sam sometimes uses his Ford F-250 to help transport the animals when the regular shelter truck is out of service. He doesn’t mind using his truck but does get concerned from time to time about the impact his diesel engine truck is having on the local environment that he and his family love so much. Sam has witnessed the effects of drought and other environmental issues on the local forest and wildlife and wants to do his part to help prevent further damage to the environment while still maintaining jobs in the area.

Secondary Buyer Persona Example

Jarrod is a 35-year-old lead mechanic for the Sutter County office of education transportation department. He’s been married for ten years and has a 7-year-old son he enjoys playing ball with on the weekends and evenings. Jarod’s wife works for the same department as an administrator, and they both drive a short commute to work together after dropping off their son with Jarrod’s wife’s mom in the mornings. 

Jarrod and his wife live in Yuba City and make the 12 miles one-way trip daily. Jarrod has a trade degree from a leading automotive tech school and enjoys working on cars and commercial vehicles. His primary interest includes working on diesel truck engines. However, he has recently been training to support electric vehicles the county is considering buying. Being a family man and the father of a young child, Jarrod is always looking at ways to save money. He understands the need to save and provide for his family and their future, just like his father did for Jarrod and his four siblings. 

Even though Jarrod loves the sound of a diesel engine and the range of the internal combustion engine, he understands the need for the county to save on transportation costs, thus their desire to move toward all-electric vehicles. His concern is not so much moving toward all-electric, but that for the security of his job. 

Jarrod does not have the final decision-making capabilities in making a vehicle purchase for the county; however, Sam often consults with Jarrod. He values Jarrod’s opinion on the types of vehicles he purchases for the county.

Negative Buyer Persona Example

Tracy is a 47-year-old administrator for the Sutter County transportation department. Originally from Los Angeles, California, she moved to Marysville five years ago to get a new start after her divorce. She has twin teenage sons, one in the third year of college on the east coast and the other serving in the US Navy, stationed abroad. 

Tracy is a heavy smoker and likes going out on weekends to local bars and clubs with a few of her friends that live in the same city. Where she lives is not that important to her as long as it’s close to some nightlife. Tracy didn’t initially plan on moving to Northern California but did so because she had relatives living in the area. She often tells her family and friends that she wants to move on from the smaller city and live somewhere on the east coast.

Tracy doesn’t care what she drives as long as it saves her money and she can get up and go where she wants and when she wants. She’s not a fan of electric vehicles considering their short range and the time it takes to charge their batteries. Coworkers often hear Tracy making negative remarks about Tesla car owners and their electric cars.

Explanation of the Three Buyer Persona Examples

The three buyer personas examples above demonstrate the narrative for each type of persona. A combination of demographics and psychographics makes up the buyer’s behavior and goals. We learned that Sam is a decision-maker who cares about his environment while preserving jobs. He feels he can accomplish both goals by introducing all-electric vehicles to his fleet of other existing vehicles.

Jarrod, while not a decision-maker, does provide input on vehicle purchases. His main goal is to keep his job and family’s financial security. However, he is open to electric vehicles providing he can still keep his current position.

Tracy is our negative buyer persona. She is precisely the customer we do not want to target. Some marketing professionals may try to change her mind through various content along the buyer journey. However, it would be a waste of marketing resources considering Tracy does not hold a high value for electric vehicles.

With each persona, the marketing professional can begin to craft messages and content that helps the decision-maker and influencers gain interest in the product and come to a buying decision. With Sam, the marketing message may include environmental topics, sustainability, and job creation. For Jarrod, the marketing messages may consist of job creation and the total cost of saving money on repairs while demonstrating how mechanics can be utilized, with a bit of training, to service electric vehicles and the growth and demand of future EV mechanics.

Let’s turn our attention to the details that go into developing a buyer persona template.

B2B Buyer Persona Template Breakdown of our Primary Persona

Buyer Persona Research Illustration of people and computerCreating the buyer persona begins with research. Research and interviews from real customers or potential customers, then the gathered information is fine-tuned into a fictional character, breathing life into the character with both demographic and psychographic (behavioral) data. An excellent place to begin selecting your samples for the interview may come from your sales team. The sales team is the liaison between the customer and the firm that often gathers customer and prospect data.

Salespeople meet lots of people, understand their needs, and gather information about their prospects. Suppose your sales team collects good, in-depth information about their prospects. In that case, that information can be converted to a buyer persona, reducing the need to conduct in-person interviews of customers.

Keep in mind that a single fictitious persona is a culmination of multiple real people. If you discover that your sales team does not have the necessary data to create personas, you will need to conduct interviews to create effective buyer personas. The interview process can take anywhere from 2 to 6 weeks, depending on the product or service you are selling and how much information you need to gather.

Let’s look at the buyer persona breakdown for Sam to better understand the type of data we require to create our personas.

Demographic Data

Age: 58

Occupation: Transportation Director for a Government Agency in Sutter County, California.

HomeLife: Married to Mary for 35 years. Father of two adult girls, Casey and Amanda. He has a 5-year old grandson named Derek

Education: BA in Liberal Arts from California State University, Chico. He also took business courses at the local community college for two years and one year of auto mechanic classes.

Technology used: Sam is computer savvy and prefers to use his desktop computer. He doesn’t spend much time on his computer or phone when at home but does most of his technology use at work, like checking emails and looking for vendors online. He does use a smartphone, but it’s mainly for calls and some game time when at home.

Lifestyle/Psychographic Data

Activities: Sam is a caring man that is close to his family. When time permits, he likes doing things outdoors on the weekend with his wife and grandson, and daughters. Sam cares about his community and the people living there. He and his wife spend one weekend per month volunteering to help the animal shelter.

Sam commutes to work one hour each way and sees the impact of gas and diesel vehicles and manufacturing plants on the local environment and air quality. He does not consider him an environmentalist but cares about the environment and what he can do to help reduce the negative impact. 

Ultimate Goal: His goal is to find a balance between preserving the environment, especially local areas while helping people stay employed to earn a living for their families. 

Needs: Sam wants the feeling of security for his family, both financially and environmentally. He prefers to do his part in making an impact on improving the air quality. He seeks to balance saving jobs and reducing costs and waste for his organization and personal life.

Pain Points/Frustration: The high cost of fuel and maintenance on vehicles and the environmental deterioration of his local forest. He’s patient but wants to know that there is a solution and that he is doing his part in working toward that solution.

Quote: “I believe we can find a balance between nature and man, where we coexist without the destruction of the environment and the loss of jobs.”

Notice that there are additional elements in the breakdown for Sam than is written in his narrative. The information in his analysis is what we would include in a buyer persona template. However, we may not necessarily write it all out in the narrative, yet all the information is essential when developing the fictitious buyer persona.

B2B Buyer Persona Best Practices: Essential Details and Tips

The following are the essential information required for a successful buyer persona. The data is a culmination of demographics and psychographics of a fictional customer but based on research and interviews of actual customers or prospects. For B2B marketers, it’s ideal for developing 5 to 7 personas, with one primary B2B buyer persona and several secondary personas. Creating a negative buyer persona can help you solidify who your target audience is and is not.

Essential Details

  • A real name, like Sam or Tracy
  • The personas age
  • Add a photo for realism (can be stock photo)
  • Personal information about family and home life
  • Working environment. The working environment may include any tools used, but it’s not a job description.
  • Pain points/frustrations
  • Their attitudes
  • Motivation for wanting to buy your product or service
  • How do they seek information and resources? Perhaps their favorite places to congregate online, like social media sites, blogs, or forums.
  • Personal and professional goals.
  • A direct quote that sums up their attitude or goals.

Tips for Developing an Effective Buyer Persona

The more information you add to your buyer persona, the more focused you will be developing the ideal customer and targeting that customer base. The following are tips to help you achieve an optimal buyer persona.

  • Write a one to two-page narrative with the essential information gathered about your persona. Create the same narrative for each primary and secondary persona you create.
  • Provide one or more fictional details about the buyer’s personal life, interest, or habit, making them memorable and unique.
  • Do not base the buyer persona on a single real person, but a composite of various customer types.
  • Use different personas for different market segments and products or services. Do not recycle a persona from another marketing campaign intended for a separate market area.
  • Minimize the number of personas you create for each target market and product or service. Typically, there is a primary persona and about two to seven secondary personas. Adding a negative buyer persona can help you fine-tune your demographics.
  • Make the persona believable so that it makes sense to develop marketing messages and campaign around that archetype.

Summary

While buyer personas were born from developing personas for technology products, marketing has embraced the concept to target their markets better. While buyer personas are not necessarily a segmentation strategy, they incorporate demographic and psychographics to help develop fictional characters based on research and interviews.

The buyer persona may seem like a straightforward narrative on the surface, but much work and detail develop the buyer persona. Interviews and research can take two to six weeks to create just a primary buyer persona. The more detailed a person gets, the better your marketing department can develop marketing communications messages and content to help move the buyer along the buyer’s journey and down the marketing funnel.

In the end, the question, are B2B buyer personas important for your marketing initiatives? The answer is simple, yes. If you want to reduce marketing costs and resource waste, get precise with whom you are targeting and whom you do not become critical. The buyer persona is a goal-oriented tool to help you reach your goals without waste.

Audio Version — 8:19

The Rise of Social Media Platforms

social media hand sketch illustrationDigital technology, devices, the surging popularity of the internet, and the human need to stay connected have given rise to many social media sites and other virtual communities over the past 20-years. Social media’s popularity continues to accelerate with no sign of slowing soon, allowing marketing professionals to connect their brands with customers.

Ninety-two percent of marketers in companies with more than 100 employees plan to use social media for marketing activities in the coming years, according to stistica.com. The current data shows that more than 91% of marketers use social media platforms to connect with customers. With so many different social media sites, the question remains, should you be on every platform, and how do you select the right social media platforms for your business?

In this article, I guide you through choosing the right social media platform for your brand and answer the age-old question of should you be on every platform, specifically, the popular ones.

When Your CEO Tells You the Company Needs to be on All Social Media Platforms

It’s a story that transcends social media itself — or it feels that way at least; your CEO walks into the marketing office and cluelessly suggests that the company should have a Twitter presence. You look perplexed, thinking to yourself that your high-target value does not congregate on the social media platform. You quizzically ask, “Why?” He responds, “Because XYZ company is on Twitter, and I think we should be too.” 

The CEO exits your office, leaving you confused and bewildered. You ponder the idea of whether you should add the platform to your marketing communication mix or how you’ll inform him that you should not waste marketing resources to explore that platform.

If this scenario sounds remotely familiar, you’re not alone. I cannot tell you how many CEOs I worked with that suggested which social media platform I should direct the company to because their wife, kids, or friends suggested the social site. CEOs — or anyone for that matter — armed with just a little knowledge of social media can be and are dangerous enough to derail your marketing strategy — or stall your plans temporarily

I am going to arm you with information for choosing the right social media platform for your company. Then you will have the necessary information to help persuade your boss why you should or should not participate in specific social media platforms, perhaps saving valuable marketing resources.

Why Marketers Use Social Media: Advantages and Challenges

Social media has proven to have advantages and challenges for marketers. Advantages include:

  • Social media offers a targeted and personal approach to consumers, allowing marketers to create and share tailored content with specific target audiences and communities.
  • It provides a channel for dialogue (complaints, compliments, and needs) between customers and the brand.
  • It’s immediate and timely. Marketers can reach customers anywhere and at any time, making social media indeed a global communication channel.
  • Social media is cost-effective compared to print or television. Small businesses can embark on a social media campaign for almost zero marketing costs.
  • Social media platforms are best for encouraging customer engagement and sharing, allowing marketers to expand their brand message and content through a word-of-mouth strategy.

Conversely, social media presents a few challenges for marketers. The biggest challenge is walking a fine line between promoting the brand and engaging customers with relevant content. Because consumers drive social media through their positive and negative interactions, brands need to earn the right to be on any specific platform. Marketers that jump right into social media promoting products are often met with resistance by consumers. To gain acceptance and trust amongst consumers, making them a part of the brand conversation, marketers need to produce targeted, valuable content for consumers to digest.

Before you can create valuable content, you need to know where your customers congregate online and what they value. Thus, the question remains, what are the right social media platforms for your business?

Finding the Right Social Media Platforms

targeting social media illustrationIdentify your key customers

Determining the right social media platform requires that you understand your audience. You need to know their likes, dislikes, needs, and where they “live” online; what social media sites they frequent. In other words, you need to identify your ideal buyers, also referred to as buyer personas

Research the Channels Audience

If you are new to marketing or have not yet identified who your ideal customer is and where they may spend their time online, you will want to research each channel you plan on engaging. Researching each social media channel may be daunting, considering thousands of social sites exist, ranging from the mainstream ones like Facebook and LinkedIn to niché social media sites like Reddit and smaller, specialized online communities.

High-quality third-party online sources are also suitable for researching social media statistics and the types of consumers that utilize the platforms. The following are a few research websites for learning more about social media platform audiences and trends:

  1. eMarketer. Part of Business Insider Intelligence is a research firm targeting decision-makers such as CMO’s a comprehensive source of information on operating in a digital world, offering transparently sourced and vetted data from thousands of sources. 
  2. Pew Research Center. Pew Research is a nonpartisan fact tank that informs the public about the issues, attitudes, and trends shaping the world. 
  3. Social Media Examiner. The information on this website helps businesses discover how to use social media to connect with customers, drive traffic, generate awareness, and increase sales.

Top Social Media Platforms Demographic Overview

The chart below offers a glimpse into some demographic data about the listed social media platforms. It’s an excellent place to begin your research in your potential audience demographics. However, keep in mind that to improve the success of generating a following on the social media platform, you will need to develop a few profiles of the ideal buyer (personas) to develop better content that engages your audience.

I have included several mainstream social media sites along with a few niché platforms. As a general rule, if you are unaware of what platform to start with, it’s good to craft your messages on the most popular social sites. For example, Facebook and YouTube are the most prominent social media platforms, with 81% of users stating they have used Facebook and 69% reporting using YouTube at some point, according to the Pew Research Center.

However, the top two most active social media platforms marketers use to connect and promote their businesses or products are Facebook and Instagram. Below is a list of leading social media platforms ranked according to popularity for marketers, based on the Social Media Examiner’s 2021 Industry Report. The demographic data comes from the Pew Research Center.

Social Media Demographics and Stats Chart

 FacebookInstagramLinkedInTwitterSnapchatYouTubePinterestNextdoor
Users2.7B854.5M740M187M265M2.1B459M27M
Adult Men61%36%31%25%22%82%16%10%
Adult Women77%44%26%22%28%80%26%16%
White67%35%29%22%23%79%34%15%
Black74%49%27%29%26%84%35%10%
Hispanic72%52%19%23%31%85%18%8%
<$30K70%35%12%12%25%75%21%6%
$30K-$49,99976%45%21%29%27%83%33%11%
$50K-$74,99961%39%21%22%29%79%29%12%
$75K+70%47%50%34%28%90%40%20%
High School or less64%30%10%14%21%70%22%4%
Some College71%44%28%26%32%86%36%12%
College +73%49%51%33%23%89%37%24%
Urban70%45%30%27%28%84%30%17%
Suburban70%41%33%23%25%81%32%14%
Rural67%25%15%18%18%74%34%2%

Data Source: Pew Research Center 4/2021

Summary

Since the explosion of the internet and digital technology, social media has gained and continues to gain popularity. The question marketers have is, should they be on all social media platforms or narrow their choices down to a few high-target value sites? Suppose your company has the resources to deploy content to all of the significant and niché social media sites. In that case, the answer is, yes, participate in all of the social platforms. However, the reality is that most firms do not have the resources and must narrow their selection down to the right social media platforms for their business and products.

Understanding who your customers are by developing two to five buyer personas can help you narrow which platform is right for your message. Targeting the different social media platforms requires research and sometimes trial and error in crafting the right message for the right audience.

Audio Version — 5:15

Financial Analysis Control Tool Explained

The fourth tool for measuring the annual control plan is the financial analysis control tool. This analysis tool looks at the relationship between the expense-to-sales analysis (ratio) and the overall financial framework to analyze where and how the company is making or losing money concerning marketing activities. In other words, it’s an analysis tool used to determine the efficiency of how a firm is using its assets to generate revenue. 

Companies efficient at generating revenue from their assets have a high asset turnover ratio. Whereas the opposite is true for firms that are not efficiently using their assets to generate sales, they have a low asset ratio.

Marketing managers and executives use the financial analysis tool to measure the return rate on their net worth.

The return on net worth is the product of two ratios: its return on assets and its financial leverage. The critical factors in determining the rate of return on net worth include:

    • Profit margin (net profits / net sales)
    • Asset turnover (net sales / total assets)
    • Return on assets (net profits / total assets)
    • Financial leverage (total assets / net worth)

There are two ways a company can improve the return on its net worth. They can:

  1. Increase its ratio of net profits to assets.
  2. Increase the ratio of assets to net worth.

Let’s take a look at an example of the financial analysis tool at work.

Financial Analysis Example

I will use a utility company for the financial analysis example. Utility companies strive to have an asset turnover ratio between 0.25 and 0.5. The higher the asset ratio, the more efficient the firm is in generating revenue or sales from assets. As a side note, utility and manufacturing firms often have a more extensive asset base, which results in a lower asset turnover. On the other hand, retail businesses tend to have small asset bases with a higher sales volume that lends itself to a high asset turnover ratio.

Taking a look at the diagram below — the Financial Model of Return on Net Wort — we can see that the asset turnover for our utility company is 0.5, which is within a normal range for a utility company. However, its profit margin is low at 3.2%, whereas the average profit margin for a utility firm hovers around 9%.

 

Financial Model of Return on Net Worth Formula Diagram

Financial Model of Return on Net Worth graphic chart Financial analysis control tool

How to Improve Rate of Return on Net Worth

 

Before I discuss improving performance concerning the low-profit margin and average asset turnover in the utility company example, let’s address how the firm could improve its rate of return on net worth. I’ll examine the net worth first since the rate of return on net worth relates to the firm’s profit margin and asset turnover and the return on assets and financial leverage.

It’s important to note that the return on assets is the product of the profit margin and asset turnover ratio. The rate of return on net worth is the product of the return on assets and financial leverage. See the formula and calculation below for more information.

 If our rate of return of net worth is 2% in our example, then for a utility company, it appears low. To improve its return on net worth, the utility company must do one of two things in this scenario. They must increase their ratio of net profits to assets or increase the proportion of assets to net worth. To achieve their goal, they should analyze their asset composition to determine if it can improve its asset management. Some assets may include:

    • cash
    • accounts receivable
    • inventory
    • plant and equipment

As discussed above, the return on assets is the product of the profit margin and asset turnover ratios. Because the asset turnover, in our example, appears to be in the normal range for utility companies, but the profit margin is low, the marketing executive can improve performance by increasing the:

    1. Profit margin by increasing sales or cutting costs.
    2. Asset turnover by increasing sales or reducing assets (inventory and receivables) held against a certain level of sales.

Financial Analysis Calculations

There are several calculations for arriving at the Rate of Return on Net Worth in the diagram below. Use the Financial Model of Return on Net Worth above as a model for using the formulas below.

 

Financial Analysis Calculations

Summary

The financial analysis control tool is simple to use when calculating if a firm efficiently uses its assets to generate sales. A high asset ratio indicates that the company is financially efficient, and a low asset ratio indicates the opposite. The tool helps guide marketing executives who want to improve financial performance concerning sales for their companies. Two ways executives can improve performance. First, they can increase the profit margin by increasing sales through marketing programs or cutting costs to produce the product. Second, they can increase the asset turnover increasing sales volume or reducing assets such as inventory and receivables held against a certain level of sales.

Audio Version — 5:03

Marketing Expense-To-Sales Analysis Explained

The marketing expense-to-sales analysis is one of four tools in the marketing annual control plan. As discussed in the article, The Marketing Control Process for your Business, the analysis is partly responsible for ensuring that a company reaches its financial goals. The ratio helps monitor marketing expenses, ensuring that a firm does not overspend on marketing to achieve its sales goals.

Many business leaders and marketing advisors tie marketing spending to industry benchmarks. However, the expense-to-sales analysis tool is a marketing control analysis tool and not a benchmarking tool because marketing drives sales and sales do not drive marketing spending.

When determining if a company is overspending on marketing to achieve its sales goal, the key metric to measure is the marketing expense-to-sales ratio. Other metrics a company uses and that make up the marketing to sales metric are:

    • Salesforce-to-sales ratio
    • Advertising-to-sales ratio
    • Sales promotion-to-sales ratio
    • Marketing research-to-sales ratio
    • Sales administration-to-sales ratio
Practical Application Question

Can you think of other possible sales ratios that a company may use to calculate the expense-to-sales ratio?

Marketing Expense-To-Sales Analysis Scenario Example

We’ll take a look at an example of how the marketing sales-to-expense analysis may impact marketing decision-makers.

A fictional manufacturing company’s marketing sales-to-expense ratio is 40 percent. That is, the firm’s marketing expenses are 40 percent of its sales revenue. Five other metrics make up the total marketing expense-to-sales ratio. The ratios are:

    • Salesforce to sales (20 percent)
    • advertising to sales (6 percent)
    • sales promotion to sales (9 percent)
    • marketing research to sales (1 percent)
    • sales administration to sales (4 percent)

A benchmark for each ratio helps marketers monitor fluctuations in expenses. If expenses fall outside of the “normal” range in any of the sales ratios, there could be cause for concern. For example, if costs are rising, the firm may still have good control over expenses, and the occurrence is considered an anomaly or one-off event. On the other hand, the marketing team may have lost control over the expense, and further investigation into its cause is warranted.

To better monitor expense ratios, marketing managers need to monitor each ratios expenses using a control chart. For example, let’s explore the advertising-to-sales ratio for our manufacturing company example.

marketing expense to sales analysis advertising expense chart

The advertising-to-sales ratio, as noted in the manufacturing company example earlier, is 6 percent. Taking a look at the control chart for this ratio, we observe expenses fluctuate between the upper limit and lower limits, with an observation that expenses steadily increased beginning in the 8th period. Marketing managers should have noted the unusual pattern and rise in expenses. An investigation into the costs should have occurred before the 14th period when expenses rose beyond the upper limit.

 

Practical Application Question

Can you identify possible reasons why the advertising-to-sales expense ratio may be increasing?

 

Marketing-to-Sales Expense Calculation/Formula

The marketing-to-sales expense ratio, along with the other ratios, is relatively simple to calculate. To calculate, divide the total marketing spending by the total sales revenue and multiply the results by 100 to get a percentage. Exclude any revenue that is not associated with the sales activity. These revenues may include royalty earnings or interest and savings. The same calculation method applies to sales-to-advertising spending and the rest of the marketing expense-to-sales ratio components.

marketing expense to sales ratio formula

Example Calculation

For example, if a company’s marketing expense for a particular product is $40,000 and the company generates a total of $100,000 in sales revenue, the marketing expense-to-sales revenue is 40%.

 

Marketing to Sales Ratio: $40,000 / $100,000 (sales revenue) = .4 x 100 = 40%.

Summary

Using the marketing-to-expense sales ratio provides marketing managers with financial insights into how their marketing budgets perform in relation to the sales revenue. With lower ratios, the company has a higher profit-earning potential. However, marketers need to monitor the ratios using a control chart with upper and lower limits to ensure that marketing expenses do not get out of control. At the first sign of heightened costs, marketers need to investigate the causes in the rise of marketing spend.

The better the financial data supplied, the better the analysis and ability to decide a marketing campaigns’ effectiveness.

Audio Version — 10:12

Going Viral, the New Black

Marketers and brand executives dream of taking their content viral, infecting viewers with their messages in hopes of gaining market share, brand recognition, and hours of free advertising.

Marketers learned that digital video and other digital content are an alternative to traditional media at tremendous savings after Evian Water posted their Babies Rollerblade video online. According to research conducted by the author of the book Viral Marketing: The Science of Sharing, Karen Nelson-Field, the video became a viral sensation garnering millions of views in the United States and globally, 

The 2009 Evian Babies video opened the doors for marketers exposing the reality that viral video success is attainable, but with the right mix of content. 

What Does Going Viral Mean?

Nelson-Field points out, in her book, that millions of videos get produced and uploaded annually, yet not all videos or digital content go viral. There are more viral losers, so to speak, than viral winners.

Defining viral is not an easy task. There is no set number of content-shares or specific views determining if one content is more viral than another. Even videos that gain tens of thousands of views in their first few hours of uploading and then dwindle are still considered viral videos. Because going viral is an enigmatic concept, I offer a broad definition of viral:

 

“The frequent sharing of content, still image or video, that spreads rapidly through a population of unique individuals.”

 

One thing is for sure, Nelson-Field points out, going viral requires content to be engaging. In an earlier article, Creating Engaging Videos and Their Optimal Lengths, I touched on the topic of what makes videos engaging and how high-engagement correlates with increased chances of going viral. Content, specifically video content, that elicits high positive arousal-emotions outperforms all other emotions. Content that evokes exhilaration with positive high-arousal emotions exceeds videos with just high-arousal emotions, according to Nelson-Field. Additionally, her findings show that videos that are high-arousal, positive, and demonstrate personal triumph are likelier to deliver shared success.  

However, be aware of negative, high-arousal content. As discussed in my earlier article, content that incites negative emotions gets shared. Nelson-Fields’ research demonstrates high-arousal negative emotions go viral. However, the negative video’s impact is unknown to brands. Brands that decide to experiment with high-arousal negative content need to tread lightly as the negativity could harm their brand image. See the Research Highlights section below for some of Nelson-Field’s viral marketing research findings.

Content Categories That Increase Your Chances of Going Viral

While there is no magic formula for making your content go viral, we have learned that high-arousing positive emotions that evoke exhilaration have a high probability of going viral. Additionally, video content that demonstrates personal triumph has a higher chance of being shared over other creative content.

Since not all content becomes viral content and that most brands do not necessarily focus on delivering high-arousing positive content, other avenues can help take your content to the next level and increase the likelihood of getting shared. As Nelson-Fields points out from her viral marketing research, less contagious videos can be winners as well. The key here is to seed and support your content through multiple platforms and even online paid advertising.

The following categories can improve your chances of increasing content shares and possibly taking your meme, video, story, or image viral.

 

Facts

Content that speaks about the “facts” gets shared amongst like-minded people more often than content perceived to be factual. However, people ignore facts, hence the rise of the “fake news media” and “alternative facts” comments in the past several years regarding U.S. politics. 

Side Note


I placed the word “facts” in quotes because in this instance, “facts” may be subjective, specifically with today’s political climate against actual facts and in support of “alternative facts” amongst like-minded people in specific political circles.

If you plan on posting “facts” as a content piece in hopes of making it go viral, a recommendation is to know your audience first. Do they subscribe to actual, provable facts or “alternative facts?” Knowing the difference between your audience will increase the likelihood that your “factual” piece of content — image or video — will go viral.

The meme below demonstrates the polarity of the alternative facts meaning. George Washington’s original quote was, “I cannot tell a lie.”, however, to drive the point that alternative facts are not facts but untruths, the meme points out the incongruent message from Washington and spread across social media as a viral meme.

alternative facts meme going viral - image of George Washington

Incongruity

Content that strays from the norm and displays things that are typically incompatible, inconsistent, or in disagreement tends to go viral more often than congruent content. For example, the cat and mouse (rat) video below (from the article Creating Engaging Videos and Their Optimal Length.) demonstrates the incongruent behavior of a rat chasing the cat. The rat chasing the cat is counterintuitive to what we know about the predator/prey relationship between the two animals; thus, we are amazed, amused, and bewildered when we see the incongruity. As a result, we want to share the video content with others.

Copyright Viral Hog

The key with incongruous content for your brand is juxtaposing two incompatible or odd items that appear counterintuitive to people into your content video or visual piece. But be careful that the imagery does not negatively harm your brand image.

Humor

Humor is another category that requires careful audience analysis. What one person or culture finds humorous, another may think offensive. 

The current theory on humor is the incongruity-resolution theory. In short, the I-R theory infers that humor occurs when presented with incongruent or unexpected information, which then the incongruity becomes resolved through further details, hence the punchline in many jokes. 

When it comes to humorous content, it’s vital to know your audience. Take, for example, the VW commercial below. The young lady enters the car, “rips a fart,” and then her date introduces two other people already seated in the back that the offending girl did not initially see when entering the vehicle. The commercial was viewed and discussed by millions of viewers in the United States. However, if this type of content aired in many middle east countries, it would be deemed offensive content and possibly backfired for the brand.  

Inspirational

Content that is positive and demonstrates triumph over tragedy ranks high on the viral sharing list. People like to be inspired and like a feel-good story. In 2011, a news video of a homeless man, Ted Williams, went viral with millions of views and shares. Williams, at one point, was a radio announcer that became homeless due to alcohol and drugs. A news reporter videotaped Williams and learned that he had a “golden voice.” That video (below) went viral, and Williams became a national icon as he received numerous job offers for voice work. Here was a rag to riches story that moved millions of people.

Incorporating inspirational messages in your branded content could help boost your chances of going viral. The caveat, though, the content piece must be authentic and sincere. Inspiring content that appears fake or forced can leave your brand looking inauthentic, causing viewers to see your brand negatively.

Psychological Insights

A few years ago, research about the relationship between profanity and intelligence opened the gates for internet goers to share viral memes about the subject. The idea that something frowned upon in society had a positive spin to it was counterintuitive. 

For decades, society viewed people who cussed as uneducated or low-class. The study demonstrated the opposite based on the researcher’s findings. People, specifically those who regularly used cuss words to color their communication, began sharing the news via social media platforms. 

The content was incongruous to what people initially thought about the subject, but it filled a need for curiosity about human behavior. In other words, the psychological insights packed a double punch to help the content go viral; it was incongruous, and it provided insights into human behavior. 

Content that offers psychological insights or knowledge and studies about how people behave often tends to get shared amongst social media platforms, especially if they provide additional viral elements, like incongruity. 

viral meme image of profanity as intelligence

Summary

Marketers want to take their video and other content viral in the hopes of appealing to a broader audience at a fraction of the cost of traditional advertising. However, not all content goes viral. More videos fail to go viral than those that end up spreading across social media platforms with millions of views and shares. Yet, we still do not have a clear definition of what it means to go viral other than a rapid sharing of content across social channels with thousands or millions of unique people.

Improving your chances of going viral may rest within five categories: facts, incongruity, humor, inspiration, and psychological insights. Positive messages that inspire, specifically those content pieces that show triumph over tragedy, do best when it comes to viral content. 

Brands can improve their chances of going viral, not only by producing content that fits one or more of the five categories but by seeding their content across the internet. In other words, brands that promote their content through varying social media platforms and utilize paid ad placement have a better chance at taking their content viral.

Research Highlights

The following highlights are summarized from a few select chapters of the book, Viral Marketing: The Science of Sharing, by Karen Nelson-Field.

Book ChapterResearch Highlight
CH. 3Content that draws a high-arousal positive emotional response is shared more.
CH. 3Generating arousal with video content is useful for both commercial and non-profit organizations to achieve sharing success.
CH. 3Videos that evoke feelings of exhilaration tend to be shared more than any other high-arousal positive emotion.
CH. 3If you choose the high-arousal negative space, proceed with caution. Little is known about its long-term consequences for the brand.
CH. 3Focus less on creative appeal and more on emotional appeal.
CH. 4 Using babies in your content outperform many other creative devices , but only when the video evokes high-arousal emotions.
CH. 4Of all possible creative devices, videos that display personal triumph appear most likely to deliver sharing success.
CH. 5High-arousal positive videos display more branding than the other groups, yet still share the most.
CH.5 The level of branding present has no effect on the degree to which a video will arouse viewers.
CH. 6More than 90% of viewers do not share.
CH. 6Less contagious videos can be viral winners too if they are well seeded and supported. It depends on your definition of success.
CH. 7Videos that elicit high-arousal emotions cut through the clutter and are remembered most.
CH. 7The most commonly recalled positive emotion is exhilaration.

 

 

Audio Version — 8:58

engaging videos article - illustration of man looking through telescopeThe Web – A Visual Medium and Engaging Videos

Humans are visual creatures. Our survival depends heavily on visual cues for fundamental behaviors like locating food, a partner, and shelter. We also rely on visual cues for complex actions like parental care and the forming of social hierarchies. 

In a 2004 research paper by Indiana University School of Law professor William C. Bradford, he notes that 5% of the population are experiential (tactile and role-play) learners, 30% of the people are verbal learners, with the remaining 65% of the population being visual learners. 

It is no wonder that MTV — the music television cable channel that first aired on August 1, 1981, grew in popularity, broadcasting “visual” interpretations of artists’ music. Record producers probably knew that by exposing music fans to music videos, they could reach a potential 95% of their audience.

Fast-forward to 1990, when the first WorldWideWeb browser developed for the NeXT Computer lead to the graphical internet that we know today. The web is a visual medium for the most part, and the birth of social media sites like Facebook, Pinterest, Instagram, and YouTube have helped fuel the graphic revolution, specifically amongst the video medium.

There are over 500 hours of content uploaded to YouTube every minute. It is no wonder that YouTube is the second most searched website in the world after Google. Facebook users watch over 100 million hours of videos daily on the social media site. There are tens of thousands of other videos watched and uploaded to other social media sites and private and public web pages daily. With so much video distributed throughout the internet, it makes it challenging for marketers to cut through the noise and grab your already waning attention span. 

Whether a marketer should produce engaging videos or not is a pointless discussion. Of course, engaging videos must be part of your marketing strategy. The question is, how do you get viewers to engage with your video content, and how long should your video run?

What is Engagement?

The concept of online engagement is reasonably new, and pundits have not locked in consensus on the idea of what exactly constitutes engaging online content. According to research published in the MIT Sloan Management Review titled, Creating Online Videos That Engage Viewers, the authors — Dante M. Pirouz, Allison R. Johnson, Matthew Thomson, and Raymond Pirouz; professors of marketing at Western University of London, Ontario, Canada — offer a broad view of what constitutes engagement: 

“We…define engagement as behavior that includes sharing but also extends to other forms of measurable user involvement.”

The other forms of measurable user involvement — noted by the scholars — include commenting, favoriting, and liking. In other words, engagement is anytime a viewer interacts positively or negatively with your content or, in this case, your video.

In their research, Pirouz et al. dispel several myths about online videos. Their results show that neither professionals nor amateurs are better than one another in creating compelling content for accumulating views. So, you do not have to run out and hire a professional actor to represent your marketing video; anyone can do the job.

Additionally, the study finds that:

  • Branded videos are liked more but disliked more as well.
  • Adding cute babies and animals does not increase engagement either.
  • Attractive people do not increase engagement.
  • Sexually suggestive videos also do not increase viewer engagement. 
  • Satire, associated with hyperbole, increased views and comments, yet it induced anger. If you are looking to generate outrage, satire may be an option for you.

What Makes Engaging Content?

Hand sketch couple looking at smartphone - engaging videosIn their research, the team discovered that the number one element that increased positive engagement — views and likes — was the element of surprise. Interestingly, surprising yet frightening videos garnered more views and likes than videos with just an element of positive surprise. The team does point out that fear-inducing videos increase views but at the cost of generating negative attitudes toward the videos. The key is to produce videos that induce fear and surprise, not frightening videos like those found in horror movies, which decreased engagement the researchers found.

When looking at ways to invoke surprise, the researchers looked at hyperbole (exaggeration), incongruity, and novelty. They discovered that while hyperbole and surprise increased views and comments, it incited anger. That may work for political marketing campaigns, but not necessarily for brands looking to create a positive image.

The best approach for engaging videos, according to the researchers, is to pair the element of surprise with either something novel that viewers have not seen or show something counterintuitive or incongruent that also demonstrates surprise. For example, I conducted a non-scientific experiment on a Facebook group with over 27,0000 members. I posted varying videos to test the findings in the engagement study. The video that received over 200% more likes, comments, and shares was a video (shown below) of a cat attempting to chase a rat; in turn, the rat chased the cat down the street. The video displayed an element of surprise (the fact a cat would run from a rat), and it was equally out of place or incongruent to what we know about the relationship between a cat and rat or rodent. In other words, the video displayed visuals that are counterintuitive to how we see the world, and that alone created the elements of surprise, novelty, and incongruity.

 

Copyright Viral Hog

 

Does Video Length Impact Engagement?

The current assumption is that shorter video lengths improve viewership. That is, if your video time is short, then you will attract more viewers. The thinking coincides with recent studies that indicate people today have about an 8-second attention span, shorter than a goldfish. Add in the reality that 4,000 to 10,000 ads and messages bombard us daily; it makes sense to think that shorter is better when it comes to competing for attention. 

Despite all of the noise and clutter that competes for our daily attention, shorter video length does not necessarily impact viewer engagement. What impacts engagement is content. Set aside most social media platforms’ hard video length limits; you are bound by them regardless of content and viewer attention span. You should direct your focus toward the type of story you want to develop and communicate.

Researchers discovered that shorter videos are not necessarily the most engaging in research conducted by Google’s Unskippable Labs initiative (see video below). What engages viewers is compelling brand stories, specifically amongst the Gen Z and Millennial demographics who have an anti sentiment toward being sold. Unskippable Labs found that the longer the ad, the greater the brand awareness and consideration of the brand offerings. The caveat, though, with longer videos is to develop a compelling, emotional story. The unskippable Labs study shows that longer video cuts (30-seconds and 2-minutes plus) increase brand favorability. An increased interest in a brand with the longer video allows more time to develop an emotional connection between the brand and the viewer.

Shorter ads, like 15-seconds, showed ad recall; however, they did not change a consumer’s mind in regards to liking a specific brand.

Copyright YouTube.com

 

What is the Optimal Video Length for Engaging Viewers?

While the Unskippable Labs study measured videos up to around the 2-minute mark, another study conducted by Wistia concluded that the optimal length for a video is between 2 to 3-minutes. Engagement exponentially drops off after the 3-minute mark.

For best the optimal video best practices, it is best to keep your marketing video under 3-minutes. For brands that want to tell a story, the 2-3 minute video range is optimal without introducing the brand until after the 1-minute mark. For brands looking to halo their brand name and build brand recall, shorter videos, like 15-second videos, do well. 

Takeaway

Video is a fast-growing medium for marketers. The challenge is knowing the right amount of time a marketing video requires before viewer engagement falls-off. Studies show that the optimal video length for engaging videos is 2 to 3-minutes for brands looking to increase brand favorability amongst their viewers. Anything longer than 3-minutes, then viewer engagement drastically drops. Brands looking to increase brand recall do better with shorter videos that are 15-seconds.

Audio Version — 7:18

A Changing Employment Landscape

Let’s not beat around the bush; it’s brutal in the job market right now as COVID-19 rages through the U.S. In December 2020 — the latest data available — unemployment rose 6.7%, virtually doubling from the previous year, according to the Bureau of Labor Statistics (BLS). That’s 10.7 million people out of work. Let that sink in for a moment. It’s like the entire population of Alaska, Delaware, Maine, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, and Wyoming are unemployed all at once. 

COVID-19 has claimed over 2.2 million management, professional, and related occupations of which marketers — like you and I — make up a part of this employment demographic. There’s much competition amongst marketers, more so now than ever before. As marketers, we know that increased supply drives prices down and intensifies competition; and currently, there is an excess supply of marketers, making landing a new gig very competitive.

It is undoubtedly an employer’s market. Marketing salaries are lower than before the pandemic due to the influx of marketers’ supply and low demand in the job market. I spoke with a hiring manager for an Irvine, California based online finance firm who claimed to have sifted through 200 resumes for a single online marketing manager position. He stated that he had more than enough candidates to select from and had difficulty picking the best candidate.

Masked Businessman Illustration - COVID-19

The 200 resumes were a small number of applicants than other industry professionals who had received hundreds more. Remote work for marketers can see up to 500 applicants for a single marketing position. 

Where does that leave the rest of us marketers when looking for our next career move? Out in the cold, if we do not adapt and compete for the few jobs available. After all, we’re marketers, and we should be competitive and poised to out-think our competition. But do we have the skills a post-COVID-19 job market requires from marketers to thrive? 

After my team and I lost our jobs due to a reverse merger acquisition and downsizing due to COVID-19, I found myself on the job market for the first time in 20-years. I had always moved on to the next marketing position with the help of contacts. Unfortunately, those contacts are either not hiring or in the same boat as me, unemployed.

I was humbled when my credentials were not enough to walk into a new position but that I had to compete for my next career role. I realized that I needed to adapt to a changing environment and possibly a permanent change in how business gets conducted for some time in the future.

Four Post COVID-19 Skills To Help You Thrive

Through research, conversations with human resource professionals, and my 20-years of hiring marketing team members, I realized that marketers — and most other professionals — will require specific skills to adapt — or improve upon — to excel in the post-COVID business world.

  • Technological skills
  • Enriched Cognition
  • Adaptability and Resilience
  • Reliability and Integrity

Technological Skills

Post COVID-19 skills illustrationCOVID-19 has changed the way people do business. With many employees working from home, the virus added new challenges to connecting and working remotely. 

The new remote working business model requires employees to be better equipped to manage and troubleshoot technological challenges from their homes or remote locations. Possessing better digital skills will help the worker stay connected with peers, clients, vendors, and other stakeholders they engage with for business.

Improving digital skill knowledge in advanced analytics software, marketing automation, data collection, and data visualization could help marketers work more efficiently while working remotely and without larger teams, as firms scale back their workforces depending more on automation and fewer employees.

Enriched Cognition

The new working environment poses new operational challenges for firms. Remote work and increased competition require marketers to think creatively and sidestep what was once the norm. Marketers need to demonstrate their skills in an increasingly autonomous working environment with the ability to solve challenges remotely. 

Increasing one’s fluid intelligence — the capacity to learn new information — is a matter of training more on new concepts seeking novelty, and challenging themselves by thinking outside of one’s comfort zone or doing things the hard way.

Adaptability and Resilience

Marketing has changed with new technological advancements, and marketers need to adjust to how they once connected with consumers. Marketers need to embrace more digital communication channels than they did before COVID-19. Other marketing technology tools marketers need to acclimate to are marketing automation platforms and analytical tools to serve their customers better and streamline their processes for greater effectiveness.

Marketers also need to build resiliency through emotional intelligence, tolerance, and time management. As companies shift toward remote work, their job pool expands across borders. Simultaneously, as the firms move to more online business models, they raise their reach globally. Marketers that express increased emotional intelligence levels and tolerance will do better in the post-COVID-19 global market.

Equally as important for marketers post COVID-19 are time management skills. Marketers working autonomously and from home need to account for their time more than when working at a physical work location. Being better stewards of their time and tasks will help them succeed in the new business paradigm.

Post COVID-19 Marketing Skills Illustration-adaptability

Reliability and Integrity

It is not to say that marketers are not reliable or lack integrity; however, as firms move away from traditional brick-and-mortar work locations to remote working, marketers are left to their own devices. More so now than ever, integrity and reliability are crucial to building trust between marketers and their supervisors, teams, and customers. Remote work can often tempt employees to stray from their daily job tasks. Working remotely requires self-discipline, reliability, and integrity. Marketers that excel in all three areas will have tremendous success amongst their supervisors and peers.

Takeaway

The COVID-19 pandemic has changed the way we live our lives and how we work and conduct business. If there is a return to the way things were, it will not be for a long time. In the interim, business professionals, specifically, marketers need to make changes to how they function professionally.  

Four skills to set marketers on a path to success in post-COVID-19 include:

  • Embracing new technological skills
  • Increasing their cognitive ability
  • Adapting and showing resilience
  • Being more reliable and increased integrity 

As marketers work autonomously, the four skills become increasingly important. Will things return the way they were? It is yet for certain. But one thing is for sure, business owners are adapting and will continue to embrace the new way of doing business in a scaled-back, remote world.

Audio Version — 13:27

Measuring Facebook Ad KPIs

facebook ad KPI hand drawn illustrationIf you have ever spent money advertising and promoting your product or service on Facebook, you undoubtedly had an objective in mind. For example, maybe your goal was to generate $10,000 in sales from a specific campaign or that you wanted to sell 500 units of your product or, perhaps, sign up ten new clients.

Whatever your goal was, have you ever measured your ad campaign performance relative to your objectives? That is, did you establish key performance indicators (KPIs) to determine if you are on track toward reaching your goals? Don’t worry; if you have not, you’re not alone.

As social media advertising spend amongst business owners and marketers increases yearly (see eMarketer.com chart below), so does the competition. To give you a competitive advertising edge, I discuss several Facebook ad KPIs to monitor when advertising on the social media platform. I also discuss why they are essential to your sales success.

FAcebook ad KPIs social media spend chart

What Are Key Performance Indicators (KPIs)?

Before I dive into the Facebook sales KPIs, allow me to provide an overview of what a KPI is; for those that need a refresher explanation, of course.

A KPI is a strategic objective that targets where you want your company to be by a specific date. It helps you monitor where you are at the present moment with where you want to be in the future.

One example of a KPI may state, 

 

“We will increase revenue for product “A” by 10% by the end of the second quarter.”

 

Notice that the stated objective is to increase revenue for a specific product. The target is a 10% increase by a particular date. The more specific you write your KPIs, the easier it is to measure them.

Facebook Ad KPIs

As part of an ongoing ad campaign management process, I recommend two essential metrics for your Facebook advertising success. The first metric is the Cost-Per-Action (CPA) metric.

Cost-Per-Action (CPA)

Cost-Per-action, sometimes referred to as cost-per-acquisition, is perhaps one of the critical KPIs that you want to track for ad spending. CPA allows the advertiser to pay for only the actions a user makes due to your ad.

An action can be any one of the following:

  • Purchase from your E-Commerce site.
  • App download.
  • Newsletter Signup.
  • Registration for your webinar or conference.
  • Or just about any other activity that requires a visitor’s engagement.
facebook call to action image example for facebook ad kpis article

A sample ad from Facebook desktop news feed shows the advertiser using CPA advertising to increase downloads of their article.

 

For example, you can use CPA to monitor and control costs for visitors who click on your ad link versus paying for cost-per-impression (CPM). 

Note

Depending on your ad and desired action, CPA could cost you less than deploying a CPM ad strategy.

A high CPA cost can lead to higher costs and indicate that your Facebook ad is not performing well. However, the caveat is, you may experience a high CPA in the initial days that your ad is running. It is best to allow your ad to run for at least three days before checking the CPA. Suppose your ad CPA is still high after a few days from its initial launch. In that case, you need to make adjustments to your ad visuals or headline, target group, or Placement.

 

Example Facebook CPA Ad KPI

A written Facebook CPA ad KPI may read like the following:

 

Reduce Facebook CPA by 20% over the next three months.

 

The KPI assumes that you are past the initial ad launch by at least three days and that your CPA is higher than usual. Note that the KPI has a strategic objective to improve ad costs. It states a measurement strategy to reduce costs and has an explicit target within the next three months. 

 

CPA Calculation and Formula

To calculate CPA, divided the advertiser’s cost by the total conversions (or actions taken due to your ad). 

cost per action formula

As an example, let’s assume that the total cost to advertise is $1,000 for a campaign. You receive 25 actions for that $1,000 campaign. 

 

CPA= $1,000/25

 

Your CPA in this example is $40 per action. Some may regard this as expensive. However, compared to industry benchmarks, if you are in the auto, home improvement, or finance and insurance industry, the CPA is considered lower than average. If you are in the apparel industry, your CPA is high, and you must make adjustments to reduce your costs.

 

CTR Facebook ad KPI illustrationClickthrough Rate (CTR)

The clickthrough rate (CTR) metric is vital to monitor, especially for ads running two weeks or more. Although CTR is a simple metric, it is a telling one. 

A CTR drop may indicate that viewers are passing on looking at your ad in their Facebook feeds. Like products, ads have a shelf life too. For example, suppose you experience a 1.6% CTR for beauty products with a specific ad. In that case, your ad performs at the industry benchmark. If your CTR drops to below 1.6% and continues to decline over time, it may be necessary to change your ad’s visuals or the headline, or both.

Suppose your ad does not generate any clickthrough. In that case, it’s also an indication that there are possible issues with your ad’s visuals, headline, or target market. One suggestion is to turn your ad off and run several ad tests to determine which ad generates an increase in CTR.

Example Facebook CTR Ad KPI

An example Facebook CTR KPI may read something like the following:

 

“Increase our CTR on ad “X” from 0.8% to 1.4% over the next three weeks.”

 

CTR Calculation and Formula

To arrive at the CTR, divide the total number of clicks by the total number of impressions.

clickthrough rate formula

As an example, let’s assume that your ad received 200 clicks from a total of 1,000 ad impressions. That’s a 0.20% CTR rate; it’s low for almost all industries where on average, the CTR is 0.90%. In this example, you missed your 0.8% CTR (as noted in the above KPI example) and would need to adjust your KPI and tactics to reach the 0.8% CTR before trying to accomplish the 1.4% CTR. Your new KPI may read like the following:

 

“Establish a 0.8% CTR benchmark in the next two months.”

 

On the other hand, if you reach your KPI, you will want to set new goals.

Optimization

Facebook ad KPI success illustrationTo optimize is to make something as good as possible. Our goal is to consistently “tweak” the ad until it is as good as possible for Facebook ad optimization. When optimizing an ad, aside from changing the visuals and copy, headline, or call-to-action (CTA), there are five key optimization areas to focus on:

  • Age
  • Gender
  • Country/Region
  • Placement
  • Frequency 

Additionally, for new Facebook ads, it’s best to allow the ad to gather data for at least five days after launching the campaign before you begin the optimization process. For older advertisements that were once successful and are now showing a lower CTR, take a look at the visuals, copy, or headline before optimizing any of the above criteria. (See the section on CTR above.)

Age

You’ll launch your ad campaign targeting a specific age group. However, you may find that your highest converting age target group is something else. Facebook allows advertisers to target subscribers from the age of 13 to 65+.

As your ad matures, examine your best-converting age groups. Are they what you expected? Did you discover an entire age segment with a higher conversion rate than your initial age target group? The strategy with age is to move your entire budget to the highest converting age demographic. 

Two possible key performance indicators for age demographics may read like the following:

 

Increase CTR in the age demographic (ad your age range here for the best converting CTR) to 35% conversion within the next 30-days.”

or

Increase sales in the secondary age demographic by 5% in the next seven days.”

 

The first KPI addresses the highest performing CTR age demographic. In contrast, the second KPI addresses growing the second-highest age demographic to increase your revenue.
Once you have established your highest conversion age demographics, the focus should be on growing the second-highest demographic by optimizing your ad visuals, headline, color, or copy.

 

Gender

Facebook allows the advertiser to target a specific gender, men and women. Following the same guidelines as with the age demographics section above, examine which gender category is converting more. Suppose one gender demographic is higher in conversions. In that case, it may be wise to move your ad budget toward that gender category.

Your product may not be suited for both genders. If it does apply to both genders, optimizing the ad for the poorly performing gender demographic may be required.

An example KPI for this demographic may read like this: 

 

“Improve conversions for (gender with low conversions) by 25% of the higher-performing gender category within two weeks.”

 

Country/Region

Targeting different countries or regions can pose challenges for new advertisers. It can also pose challenges for advertisers entering into new markets. The more regions/countries you target, the more the ad can potentially cost you or not perform as well due to a variety of reasons.

It’s best to begin your ad campaign targeting one specific region, providing that your product or service is suitable for that region. Allow at least five days to pass before reviewing the CTR for the ad. If your ad is performing poorly, your options may include optimizing the ad image or headline. 

Once you have mastered and increased the Facebook ad CTR of a specific region, begin experimenting with other same language regions. If you target countries that are non-English speaking, your ad will need to reflect the native language.

Two possible key performance indicators for the country/region metric may read like the following:

 

To increase ad conversions in (name of country) by 25% in the next two weeks.”

or

To enter into new territory (name territory) and have sales earning $500/month by the end of February (or whichever time frame you decide to specify).”

 

Placement

The Placement KPI (or Place) is one of the 4P’s of marketing. Placement identifies where you promote your product or service. 

Facebook offers several ad placement locations on its desktop and mobile platforms. The key is to find the optimal Place on their platform that delivers the highest conversions for your ad. 

As a general rule, ads performing lower than 1% conversion may need further monitoring and continue to underperform, optimize the ad, or eliminate its Placement. 

Another good practice is swapping the low-performing ad spot with a higher-performing (converting) ad to see if the Placement is driving down conversions or the ad itself.

One possible KPI for Placement may read like this:

 

Increase ad conversions of the Facebook right column ad to 10 complete sales per week by the end of the month.”

 

The KPI assumes that you are running several ad placement spots and want conversion improvement on the right column ad.

Frequency

Frequency refers to the number of ad impressions shown to an individual. Frequency becomes essential when the ad shown continues to increase and your conversions begin to decrease. The cause is likely one or several of the following:

  • Your ad has been seen too many times by the same target group. 
  • Your audience size is too small. 
  • The ad’s image needs refreshing. 
  • Your offer is “tired,” and you need a new offer.

Frequency also correlates with increased ad costs. As your frequency number increases, so too does the cost of the ad.

A possible KPI for Frequency may read like this:

 

To reduce our ad Frequency from 8 impressions per person to 3 impressions per person by the end of the week.”

 

The KPI addresses the increased impressions the ad has and the goal of reducing the impressions per person to reduce ad expense and increase conversions per impression.

Frequency Calculation and Formula

Calculate Frequency by dividing the number of impressions by the ad Reach (how many ad exposures per unique individual).

ad frequency formula

Takeaway

Facebook advertising can be lucrative for your business if executed effectively. Setting useful KPIs, monitoring them, and making the necessary adjustments along the way to correct for low-performing ads is essential to your ad success. The key to successful optimization is to monitor and fine-tune your progress consistently. When something is not working, test and adjust until it does work.