The 90/10 Rule In Ad Spend
There are multiple levels of marketing that are all based in some way along the customer journey. When it comes to digital marketing, you need to target multiple segments of ideal customers. It’s important to segment these so that you can learn about who your best customers are, your worst, and the ones that need a little extra tender love and care to get through to the checkout.
We’ve penned something called the 90/10 rule when it comes to ad spend on Facebook and Instagram. We put approximately 90% of the campaign budget into targeting multiple segments of ideal customers. This is otherwise known as the top-of-funnel. Then, based on the actions and engagement of these prospective customers, we only need to spend approximately 10% on nurturing the people who were most engaged. It is from here potential customers move ‘down’ the funnel through a series of carefully curated ads and messaging. This is where the vast majority of revenue typically comes from, and yet it requires the least amount of budget.
Side note: A Return On Investment should be calculated over a whole campaign budget, not just a nurturing campaign budget alone. This can make for some seriously bloated ROI/ROAS reports!
It’s difficult to access the majority of the potential income if you aren’t prepared to put money into reaching the ‘larger’ target markets in order to find the actual customers.
Sometimes you can be in a situation where you are handed a red-hot target customer base where they’ve already engaged significantly and have been qualified in some way. This would be the ideal and most cost-effective setup for a marketing campaign. However, this scenario is rare and often has actually required significant investment at some point in time to get to that place.
So when you get out there into the digital marketing world, expect to spend some significant money on people who won’t purchase from you, but just know that it’s necessary to find the people who are going to make your campaign a success!