The companies that generate the most profits from online marketing, like any other forms of marketing, are those that use direct marketing principles in everything they do.
Direct marketing, unlike traditional marketing, is all about achieving a return on investment from your advertising spend and tracking the response from each individual campaign.
Direct marketing focuses on producing immediate profits or results. Traditional marketing is about ‘branding’.
The biggest difference between traditional marketing and direct marketing (apart from the immediate, identifiable profits) is that you can achieve all the benefits of traditional advertising with direct marketing, such as branding, but you can’t achieve all of the benefits of direct marketing from traditional marketing, such as immediate profits.
For example, let’s say you advertise in magazines, and you have ads in BRW, Forbes and Times, with each one costing you $8,000 for a full page. Traditional marketing would spend the advertising budget to advertise in each paper for the purpose of ‘branding’ with no real purpose except to let the public know about one of their products or, even worse, to let them know the company exists.
Direct marketing would spend the advertising budget in each paper but they would have a clear reason for advertising, would offer something of value and would provide clear instructions on how the reader can redeem that value, such as a free gift or a coupon. They would use different phone numbers in each of the advertisements so they could track how many sales were made from each ad, and what the ROI was for each ad. With this information, they can identify which ad produced profits and which ad produced a loss, then continue advertising in the profitable medium and stop advertising in the others.
Online marketing is the same. There are those companies which use traditional marketing methods (the vast majority) and there are those that use direct marketing methods (the successful minority).
In the offline world, direct marketing means tracking the results from newspaper ads, magazine ads, pamphlets, radio advertising and TV advertising… so that you know exactly how much profit you make from each advertising medium.
In the Internet world, direct marketing means tracking the results from pay-per-click advertising campaigns, search engine optimisation campaigns, email marketing campaigns, banner advertising campaigns, contextual advertising campaigns, affiliate marketing campaigns and everything you do to drive new sales to your business.
One of the advantages the Internet provides to direct marketers is the speed and ease of tracking all marketing campaigns, identifying profit centres and loss centres and then continually improving ROI from each marketing avenue.
Before the Internet, and even now, tracking response from offline advertising involved setting up multiple phone numbers and waiting (sometimes months) to see the results. On the Internet you can see results in as little as 24 hours and then adjust the marketing spend to suit.
If you want to generate maximum profits from online marketing then you must think like a direct marketer, where every dollar spent must bring back at least two or three times the investment.