Wondering how some companies get to spend $10K, $20K or $50K a day, just on Facebook, while you can’t even spend $1000 per day and keep your cost per sale in the desired range?
Here’s the secret — it’s not just about CPC, CPM, CPA or other C-metrics showing the correlation between the price and desired action.
I’m not saying those metrics don’t matter —they do — but if your ad isn’t communicating a message relevant to the potential customer, even the CPC of $0.01 won’t save you from the pain of failure (or a financial disaster).
Imagine a situation in which you have to explain what’s CPC to a group of 1000 people, consisting of both men and women, aged between 8 and 88, and make sure that they understand it at first. Sounds quite hard ha?
It’s not hard actually — it’s impossible. It’s impossible to explain what’s CPC to 1000 different people by taking the same angle, using the same approach and communicating the same message.
But (there’s always a but), if you first segment the market, and then communicate the message based on the prospect’s interest and awareness of the problem or the solution, your chances for success will drastically increase.
In this essay, we’ll tackle some of the most common digital advertising problems — market segmentation and addressing the right audience with the right message.
The 3 Rights Rule
Most people consider advertising some kind of black voodoo magic that wraps a piece of shit in the shiny paper which ultimately leads to hundreds of thousands or even millions of $ in sales in a period of one night. In the real world, things are bit different than that…
Successful advertising starts with a good, or great product which can provide added value to its customers. Only then, an advertiser can successfully apply the ‘The 3 Rights Rule’. This methodology helps us to increase the efficiency of the split testing process and keep the message clear and simple at every stage of the marketing funnel.
1) Communicate the right message
2) Get in front of the right audience
3) At the right time
It has never been easier to get your message delivered to the right audience, yet the most of the digital advertising campaigns never achieve profitability or even see a break-even.
Consumers Got The Cherry, But Advertisers Took The Sundae
The Internet and social media gave advertisers something that traditional ad placements could never give — two-way communication and direct (on spot) engagement.
When you look at the billboards, read the newspapers or watch the TV, direct engagement, occurs only if you have 2 or more people physically present at the same location. Once the conversation about the selected topic stops, it’s most likely that the 2nd engagement about the same topic will never occur, especially if the selected topic is the advertisement.
On the other hand, internet (social media) didn’t just give us a two-way communication between the advertiser and a potential buyer — it gave us a way to express our reactions, comment on the situation and share it with our friends and family, all of that, in just a few clicks.
In past, advertisers couldn’t directly control who’s seeing the ads, what did a specific person see or when did they saw it… Yes, they could say that they’re going to push the ad in newspapers on Tuesday or that the radio ad should be cast at 5PM while people drive home from work, but still…
In 2017, we can control and see who saw it, how much times, how did he or she engaged with it, but more importantly — we can serve the next ad based on the interaction with the previous ad. Cool, ha? Indeed, it’s very cool.
This gave us an end-to-end control over the whole funnel.
Watched the first video to 50%? Good, serve the next video which tells the other 50%. Then serve the next ad which tells the next thing, and so on.
Ok, delivering the message to the right audience isn’t a problem, and the timing isn’t a problem, but how to determine what’s the right message?
5 Stages of Market Awareness
Theory of 5 Stages of Market Awareness was originally introduced in the first edition of Breakthrough Advertising (1966) by Eugene Schwartz, one of the world’s greatest direct-response copywriters ever.
Schwartz outlined how to create your communication based on the customer awareness of your product or a service and overall market awareness of a problem or the solution.
Although Schwartz initially explains his theory through the structure or a ‘job’ of the headline, its implication goes far beyond that.
This is a place where most advertisers, companies and marketing departments fail miserably. They fail to understand and segment their market, and therefore, they fail to persuade people into buying their products.
Stages of market awareness range from ‘Most aware’ to ‘Completely Unaware’, where ‘The Most aware’ audiences require direct-response approach and indirect approach works better on ‘Unaware’ audiences.
1. The Most Aware
Prospect knows of your brand and product, know what it does and knows he wants it.
At this point, prospect knows everything — what the product does, how it works, he likes and understands your brand and its values. He’s ready to buy.
Just one thing is standing between him and the purchase — the price. In other words — your ad should communicate a special offer, free shipping or maybe a discount.
2. Product aware
Prospect knows of your brand but isn’t completely aware of what your product does or isn’t convinced of how well it solves the problem.
This is the most competitive place in the whole market — a place where big established brands spend their advertising $ to prove that their product is superior to their competitor’s product, and of course, acquire more revenues.
Basically, it all comes up to overturning a customer, from Coke to Pepsi, from PC to Mac, from Nike to Adidas, and the other way around.
3. Solution aware
Prospect isn’t aware of your brand, nor product, but he’s aware that there is a solution to his problem or a desire — your product.
Serious demand for the solution definitely exists at this point, but the supply chain hasn’t yet emerged. It’s time to introduce a new product, a process more commonly known as ‘The Product Launch’.
You don’t need an ad with a plot twist which has its own plot twist. You just need to clearly address the problem, display the solution and briefly explain how and why it will solve the addressed problem.
Note: Most new products or services which come to market are at 3rd or 4th stage of market awareness.
4. Problem Aware
Prospect is aware of his problem or a desire but isn’t aware that the solution even exists.
At this stage, your ad should showcase the problem or desire in a way that prospects can connect with your story. Then dramatize about the solution until prospect realizes just how badly he needs the solution. And then you present your product as the ultimate solution to the problem.
This approach to copywriting is also known as the Problem-Agitate-Solve approach used by Dan Kennedy.
5. Completely Unaware
Prospect isn’t aware of anything.
Schwartz says this is the most difficult one, and I’ll have to agree with him. Prospect at this stage of awareness doesn’t even realize that a problem or a desire exists, which often results in very thin ROI, if the return even exists.
Basically, this job is as hard as explaining what a computer is to a chimpanzee.
I’m kidding. It’s not that hard, and it’s possible. Your ad should intrigue the audience with a shocking or unbelievable fact about the related topic.
Once they start reading (or watching) slowly transition them from a realistic problem behind the unbelievable fact — to a solution, and then, of course, present your product as an ultimate solution.
Here’s a great example, even though it’s not an ad;
Your customers make purchasing decisions based on information they have. Then, they can’t buy something based on information they don’t have, right?
Don’t mistake the 5 stages of market awareness for brand awareness, even though they overlap and have a mutual connection, they’re not the same thing.
Don’t even try to build a demand. It’s not your job. Your job, as a business owner, executive or an advertiser, is to recognize the market opportunity and seize your share of the market.
This powerful methodology can be used at every stage of your funnel, whether it’s cold traffic or re-targeting the prospects who visited your website.
Let’s assume you’re selling a course which helps people to lose weight and regain their health, and you want to sell in the United States.
You’ve conducted a market research and found out that your target audience consists of women, aged 25 to 60. By investigating further, you’ve found that 60% of women in the U.S. are obese or overweight. There’s no need to seek further — you’re dealing with a mass market opportunity.
By looking at the audience insights on Facebook, you can easily spot there are 70–80 million women aged 25 to 60 who are active on monthly basis on Facebook. By crossing that number with the fact 60% of women in U.S. have problems with weight — we get the exact potential of buyers in our market, which is 42–48 million women.
When you cross that audience with an interest in dieting, weight loss, healthy diet and other big interest related to weight loss, that number drops — to 20–25 million.
So ok, our potential market on Facebook is 42–48 million women, but Facebook says there’s only 20–25 million women that showed interest for weight loss, which accounts for around 47% of your potential market.
Those users fall into the 3 different groups of awareness, The Most Aware, Product Aware and partially Solution Aware. They’re definitely aware of the problem and in most cases – they’re aware of the solution.
We’re left with around 53% of the market consisted of women who haven’t shown a direct in weight loss. Those women mostly go into the Solution Aware, Problem Aware, and Completely Unaware group.
Now, since we’ve partially segmented the market, it’s time to start working on the how to communicate your message and decide which audience you’re going to tackle first.
Tackle only one at the time, start with the split testing of creatives, copies, and videos. In parallel with that, start the split testing process on your website — even an amazing ad with CPC of $0.01 won’t get you a sale if the landing page or the offer sucks.
Once you get that done, start tweaking the funnel, aim for the highest possible conversion rate, scale, and work on increasing the average cart value. Then, repeat the whole process with the second audience, and so on.
Note: Have in mind that these are rough approximates made to showcase the market segmentation process.
What about statistics?
Statistics aren’t hard to read — they’re hard to understand. I’ve once read that 92% of business advertising online never see a return on their investment.
That doesn’t mean you should hope you’re the 93rd person reading this blog in order to be successful.
That means — if your company is spending more than $1M/year in advertising, you should visit www.udonis.co or shoot me a message because our campaign success rate averages 83%.