Understanding Marketing Efficiency: Take The Grand Tour

Ask many small business owners how they perceive the marketing opportunities they are presented with on a daily basis and they will, more often than not, place them into two separate categories: expensive and cheap.

This is perhaps the first of many mistakes they make when marketing their businesses. As I often remind attendees at my marketing boot camps, there is no such thing as expensive or cheap marketing. There is only marketing that works and marketing that doesn’t work.

Let’s think about this for a moment:

If you spent several thousand dollars on a paid search campaign which brought in hundreds of new customers and delivered a solid return-on-investment, allowing for a significant margin which meant you were able to sell your goods or services at a profit – would that be expensive marketing?

Similarly, if you bought a last minute advertisement in a trade magazine or newspaper for a couple of hundred dollars and you were never really sure if it attracted any new business at all, would that be a cheap campaign?

Marketing Efficiency

If you’re ever going to place a useful “value” on your marketing spend, you need to think of it in terms of efficiency. And to understand the true efficiency of any marketing campaign, you need to understand two things. These are your Cost Per Acquisition (CPA) and your Customer Lifetime Value (CVA).

When you understand your CPA and your CVA you can start to make strategic decisions regarding your marketing spend which allow you to push the envelope, ramp up your marketing spend and significantly grow your business.

The Grand Tour

A great way of visualizing how this works is to take a look at how Amazon used The Grand Tour (the streaming car show featuring former Top Gear presenters: Jeremy Clarkson, Richard Hammond and James May) to drive Amazon Prime subscriptions.

It would be very easy to look at the headline figures of $78 million (the cost of producing the first series of the show) and think EXPENSIVE AS HELL.

But when you consider, according to leaked reports (http://www.radiotimes.com/news/on-demand/2018-03-16/amazon-prime-video-viewing-figures-the-grand-tour/) , that The Grand Tour attracted more than 1.5 million first time streams of the channel, this equated to around $49 per subscribers or approximately half-the-cost of an annual Prime subscription, this $78 million investment in marketing suddenly looks (dare I say it), rather cheap.

In actual fact, it is neither cheap nor expensive – it’s incredibly efficient. You don’t become one of the world’s biggest companies, headed-up by one of the world’s richest men, by throwing money away on marketing.

Of course, there are very few businesses that would have the funds to take such a large gamble with their marketing budget (even if it did pay off) but this shouldn’t stop small firms replicating the model.

Take Your Own (Mini) Grand Tour in Marketing

One of the great things about working online, is that you can (and should) test absolutely everything before committing to a larger budget.  Prove the point with a few hundred dollars, take the opportunity to learn from your experiences and optimize accordingly and then scale up.

Yes, this will mean an investment in time as well as money but nobody ever old you that marketing was easy. And if they did, they were probably trying to sell you an “expensive strategy” that would never really work.

Marketing is a journey and like any other journey should be carefully mapped out and budgeted for before committing to.

Do you make marketing decision based on available budget or your perception of value? Isn’t it time you got more strategic? Share your comments in our Facebook Discussion Group or use the comments section below:

If you liked this article and would like to engage with other small business entrepreneurs selling on marketplaces, join our . You can also find us on , , , and or sign up for our newsletter below.