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FutureNow Article
Friday, Mar. 28, 2008

3 Steps to Recession-Proof Your Online Marketing

By Bryan Eisenberg
March 28th, 2008

Everyone’s using the “r” word. Just a month or two ago, online marketers were whispering the word for fear of contagion. Now it’s spoken out in the open. We all seem to sense that we’re in a recession or that one’s stalking us and tapping on our shoulder.

Some sites are experiencing slight sales declines; others are prepping for the recession by trimming marketing budgets and tightening their belts in other areas. Online marketers are being asked to do more with less. It seems it’s going to get worse.

It’s interesting to watch how different companies respond to tough times. Traditionally during a recession, most will cut their marketing spend and ask the sales staff to squeeze more from what marketing delivers. In the online world, most decrease ad budgets, but the first cuts are aimed at any sort of marketing optimization (like analytics or testing). This bunker-type approach often leads to stagnation. Optimization is the last line item you can afford to cut.

Others will pour more money into traffic acquisition and flashy advertising or gimmicks. This kitchen-sink approach is highly inefficient and risky.

Effective Optimization Is a Scientific Process

I prefer a more scientific approach.

The “r” word doesn’t mean failure or certain doom. While we don’t control the factors that cause a recession, we can optimize the factors we do have control over and do our best to build and continually improve a recession-proof Web site.

A site that converts better will decrease cost per acquisition and, in turn, will increase ad spend efficiency. A site being continually improved for conversion can withstand the storms of finicky economic times. Optimizing your site should be a scientific process that gives customer insight and is accountable, efficient, and measurable.

In the midst of the dot-com boom, we took on our very first conversion optimization client and helped the company build an internal process to continually optimize its conversion rate. Everyone else was talking about eyeballs and, to their detriment, got spanked by the mother of bursting bubbles. Site after site went into the trash heap, while our client’s continued to grow and thrive through the worst of it. During that time, the client enjoyed an aggregated 400 percent increase in conversion. Its advertising spend was potent, each dollar spent on advertising was worth four times more in top-line sales. Its competitors could spend the same and a lot more on advertising and couldn’t get similar traction. Some went under.

Building a recession-proof online marketing campaign is common sense, but you must work on it. It’s well worth it. It’s not about getting the occasional gain from a test or analytics but about having a continual process for doing so.

The Cost of Not Improving Your Conversion Rate

Let’s suppose your site draws 100,000 unique visitors per month and you have an average conversion rate of 2.5 percent. If you average sale is $50, then you gross about $125,000 a month. Let’s also say that after some optimization work and a couple tests, you increase your overall conversion rate by just 10 percent (a very achievable goal), and your conversion rate is now 2.75 percent. Your monthly gross is now $137,500. The annualized revenue realized by the move of the needle is $150,000. With a minor conversion increase, you’ve earned a baker’s dozen: 13 months of revenue in 12 months’ time.

If you continue to optimize better every month throughout the year, that 13th doughnut gets bigger and bigger. Assuming traffic costs remain static, ad spend becomes stronger and your cost of acquisition goes down. Even in the likely scenario that your traffic costs inch up, you’re riding the curve instead of falling below it.If you don’t become recession-proof, your competitors will. There are simply no more excuses. A decade ago, putting together the resources for optimization was a challenge. Today, analytics and optimization software are much more easily available and affordable when you look at them in this light. Google even offers them both for free.

Steps to Recession-Proof Online Marketing

Here are three steps you can take to make your online marketing recession proof:

1. Turn your analytics into customer insight. It’s not enough to get reports. Each click is an action taken by a real person. Learn why your customers do what they do on your site.

2. Turn your insight into action. If customers leave your site or landing pages, theorize as to why, then test variations to confirm or refute your insight based on step one.

3. Rinse and repeat.

Don’t become a victim of a recession; instead use it as an opportunity to take control of the things you can and jack up your conversion rate. The dot-com bust would have been a blip had many focused more on the fundamentals of increasing conversion online.I don’t know about you, but I don’t want to live through another bust. So I leave you with the wise words of Blackie Sherrod: “The reason history must repeat itself is because we pay so little attention to it the first time.”

What are your plans to recession proof yourself? Let us know if you need help.

. .

Originally posted on ClickZ.

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Comments (17)

  1. My favorite article of the month (of the 25 blogs I subscribe to).

  2. This is by far one of the best articles we’ve read in a while. Great way to integrate the current economy with techniques to improve conversions… awesome.

  3. Great article Bryan.
    I wrote one myself with regards to web analytics. You can find it here http://iudaea.com/recession-proof-web-analytics

    Cheers

    Eran

  4. Great article, Bryan. I especially loved the picture, which reminded me of this over-the-top news story about a sales motivational schmuck who decided to out do Alec Baldwin’s Balke in Glengarry Glen Ross.

    http://www.alchemysite.com/blog/2008/03/air-is-for-closers-only-waterboarding.html

    Just plain scary what a down business cycle will drive some businesses to do. Compared with waterboarding sales people, I vote for Bryan’s three steps. How ’bout you?

  5. very nice article, thank you very much. looking forward for your next posts.

  6. Okay, now this is just creepy. I was JUST writing a post for later this week, “ABC is DOA” and up pops yours (I’m stealing the photo – saved me a Google search, thanks!)

    Certainly, the economics have changed – but the basics of commerce haven’t. In order to get and keep business – you’ve got to offer something worth selling. And, to be focused on delivering value to people NOT closing deals.

    I’m keeping this link handy for the next time someone tells me “I don’t want to spend much money on my web site, since I don’t make much from it.” Muchas Gracias!

  7. interesting article Bryan. However, I don’t believe that recession necessarily means companies will discontinue opportunities to optimize and market their sites. A senior executive at Ford told me that in times of recession companies are willing to try different, newer, and better things to increase revenue. Ultimately, I think many of these companies need to be marketed to a bit differently and your blog post nails it. When we discuss optimization with our clients we show them how opting out of optimization can result in a net loss of xxx amount of dollars for them. This is a shocking revelation and it makes optimization a more desirable goal.

  8. I agree with your article, some good information. I think it is interesting to note though that in a recession online is one of the places companies will turn to to spend their advertising bugdets and divert more and more away from traditional media since any online related campaigns are extremely trackable and, as you say, it is very possible to continually get more bang for the buck.

  9. [...] the follow-up post, “3 Steps to Recession-Proof Your Online Marketing“ Technorati Tags: accountable marketing, improve conversion rate, improve web form [...]

  10. We sell birthday party supplies online since 1996, and so far we are still experiencing monthly growth. Every year there are more people that start buying online, the same will happen in 2008, the online market grows, so is our marketing budget. Maybe the average dollar amount per order will be less. But this just asks for smarter marketing efforts, a recession will weed out the weak companies out there, so more market share for the smart companies out there. So don’t see a recession as a threat, use it to get rid of your competition.

  11. @Thomas – It’s great to see that the surge in traffic is increasing your month to month revenue, but examine your analytics data closely. Although you may be experiencing this monthly growth you’re most likely experiencing lower conversion rates as a result. More traffic by default = lower conversion. And you’re right, the smarter companies will weed out the competition because they will realize that increasing that lower conversion rate to capitalize on the increase in orders is key to staying afloat.

  12. [...] it should always be in the budget, right?  We’ve written before about our opinion that in a recession, optimization is the last thing that should be cut from marketing budgets.  If you join a gym and see improvements (you drop a few pounds, keep them off, and feel better in [...]

  13. [...] 3 Steps to Recession-Proof Your Online Marketing – FutureNow – Mar 08 [...]

  14. Hi
    It is reallygreat..

    I think I need a online shop for me..

  15. surge in traffic recession,Great increasing your month to It’s great to see that the month revenue way to integrate the current economy with optimization is the last thing that should be cut from marketing is

  16. Another good way to view what your visitors are doing on your website (besides reporting) is actually watching them with a video recording of there actions. That way you can easily tell if your landing page is capturing your visitors, getting lost in your website or simply pressing the back button. There’s plenty of tools out there that will let your record the actions of your visitors. However, this raises ethical questions about if we should be able to view this kind of information.

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Bryan Eisenberg, founder of FutureNow, is a professional marketing speaker and the co-author of New York Times and Wall Street Journal bestselling books Call to Action and Waiting For Your Cat to Bark and Always Be Testing. You can friend him on Facebook or Twitter.

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