Advertising

Where To Spend Your Marketing Dollars

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Allsmith Growth

March 14, 2023

In the second episode of the Allsmith Growth Show, hosts Blake Allsmith and Alex Bowman dig into the hard numbers behind Allsmith Growth's advertising spending to find out which online platform offers the best cost-per-click (CPC) ratio for its clients, and whether that ratio can be trusted to give the best conversion rate and dollar return. They’re joined by Allsmith's longtime marketing manager Tracy Sampanis, the show’s first special guest, as she offers her expertise in sorting through the data and figuring out just which ad platform's the best bang for your digital buck.

How does Google’s latest service, Performance Max (PMAX for short), compare with its traditional Google Search ads? How have the past twelve months affected Meta, once the leader of the digital advertising pack? And where do Bing and LinkedIn’s platforms fit into it all? This episode has the answers as Blake and Alex continue to explore the dark arts of digital marketing.

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Playing Against the House

The show begins as Blake recalls one of his first lessons in the value of benchmarks when he was running Cladwell and found himself answering questions from Mike Jones - Science Inc's venture capital CEO - about everything from CPCs to install-to-account-creation ratios. “I knew the Cladwell funnel forward and backward,” Blake explains, “and that was great, but for him to know all of a sudden, ‘ooh, that number’s low’ or ‘that number’s high,’ it was incredibly powerful... I thought it’d be really helpful for anybody who’s running just one ad channel that we [Allsmith Growth] could provide some context as to where you’re at and what we’re seeing, because we are managing so many funnels at the same time.”

Alex agrees that context is important to data and that it’s easy for businesses to get lost within a single set of numbers without ever seeing the big picture; he notes that, while Airbnb used to publish broad and helpful marketing numbers, the recent trend is for companies to guard their data, making this episode’s experiment all the more valuable. “If you think about it,” Blake adds, “we’re playing against the house. Meta has their data, and we’re all individuals going into the casino trying to beat the odds. It’d be cool if we all teamed up... This sounds like this is a great opportunity to get sued.”

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Who’s the CPC King?

Blake, Alex and Tracy consider the range of clients whose ad purchases, totaling over $250,000 per month, are reflected in the numbers, the CPC metric that’s being assessed by the experiment, and the ad platforms themselves, some of which can be very specific. Alex points out that, for instance, one particular company advertises on Reddit, which doesn’t give them enough data to judge how its performance might compare to heavy hitters like Meta and Google.

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Next, they look at how the spending breaks down across those popular platforms:

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It turns out that Google Search makes up almost half of Allsmith’s ad spending, with about 15% apiece going to Meta and Bing Search, another 8% spent on Google's PMAX, and a remaining 10% split between YouTube and LinkedIn, with the difference going to other platforms, such as Apple Search, and Reddit. Tracy offers her insight into why Google Search forms such a large slice of the digital pie. “In most cases, Google Search is going to be the best,” she says. “Google Search is pretty consistent when it comes to driving traffic, especially if you know what they’re searching for.”

Meta, Tracy notes, has lost some of its luster over the past year, primarily due to changes in how the marketing data is handled. “We lost a lot of tracking of conversions,” she explains, “and so that data becomes less reliable. With all those changes, a lot of shift has happened to moving [the] budget to Search, so Meta became like this black sheep of the family of digital ads. It's starting to come back.”

With all those considerations in mind, and some tentative guesses from Alex and Tracy, who have only seen rough versions of the chart so far, the CPC champion is revealed:

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The results might come as a surprise after seeing how the spending's split between them. PMAX leads the group at 82 cents per click, while Bing and Google Search are nearly tied at $2.04 per click and $2.25 per click, respectively. YouTube comes in at a close fourth with $2.50, Meta is a bit higher at $2.85, and LinkedIn lags far behind the rest at $7.34 per click.

“I think the most obvious question,” Alex asks, “is why don’t the bars match up? Why aren’t we spending what we’re spending on Google Search on PMAX if this is the result that we're getting?”

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New Kids on the Digital Block

Tracy explains that the CPC benchmark on the chart, while important, isn’t necessarily the whole story, and that, depending on the industry and consumers, other factors like conversion and CPA (cost per acquisition) might be a bigger concern. “It’s also a very new tool,” she adds about PMAX, “and a lot of people are very apprehensive because there’s a lack of control.” Blake notes that Google’s PMAX is the “new kid on the block” when it comes to advertising, and they take a closer look at how it takes individual assets, such as a digital storefront and product list, and distributes them in separate ad campaigns driven by AI. This can be a double-edged sword for advertisers, as Tracy observes. “It’s a black box,” she says. “They have some identifiers... but not really."

Alex notices the oddity of Google and Bing having almost the same numbers, and Tracy explains that Google's ads are typically duplicated on Bing, which leads to the numbers leveling out between them. YouTube presents its own special case, as both Blake and Tracy offer examples of how they watch it for family time and personal use, making it an awkward fit for business ads. But YouTube does have its place in advertising. "If you have a small budget,” she advises, “start with a hyper-target. If there is a competitor channel, or you have your own channel, you can put ads in front of that.”

The next platform up is Meta, which encompasses Facebook and Instagram, and Tracy notes that it can be particularly useful for business-to-business campaigns, so long as there’s a focused and attentive audience that’s being targeted. The outlier, LinkedIn, is also considered. “If they look at this chart,” Blake says to Tracy, “they’ll think ‘okay, I just won’t use LinkedIn.’ Save that founder from themselves, or confirm their intuition.” Tracy points out that LinkedIn is a very focused platform that works best for marketing to people in their roles as employees.

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One Piece of Advice

With this experiment concluded, each of the hosts offer their advice to take away from the results. Tracy offers five tips: know your core audience, keep an open mind about different ad channels, use a multi-targeted approach to reach your audience, leverage your organic community, and, finally, remember who you build your business for and stay focused on them. Alex notes how helpful it is to just be able to see the numbers and understand what they actually say about each platform, and Blake agrees with Alex that knowledge is power. “If I had one piece of advice to founders,” he says, “it’s that you have to share these numbers with your peers. Well, first, you need to have peers. As a founder,” he adds, “you need to be talking to other founders who are also trying to use the same channels for growth as you. It's good for your mental health, and you can avoid so many mistakes and remove years of experimentation from your life just by sharing information.”

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Episode Timestamps