Efficiency doesn’t equal effectivity

What a customer thinks they want and what you can efficiently provide them may not be what is most effective.

An email from a large web services provider offering “guaranteed visitors to your website” made the gears whir in my head this morning. The web hosting company offered four packages of traffic generated through Google AdWords:

  1. 100 Visitors for $99/month
  2. 200 Visitors for $179/month
  3. 400 Visitors for $349/month
  4. 800 Visitors for $649/month

Their email spouted: “Advertising with guaranteed visitors” and “effortless advertising” and “top performance at a fixed price.”

efficient advertising spendLet me be a customer for a moment – a customer running a small business who hopes (and expects) his website to do magic for him and bring in the business which has been hard to come by during this time of economic recession. This customer has tried print ads and the yellow pages and other forms of advertising without seeing much return for his precious dollars. Along comes this email and “Bingo!” Guaranteed traffic at a bargain! This customer hops on the bandwagon and signs up to begin driving traffic to his business website. What are his expectations? Yes, he’s expecting traffic to his site to increase; however, his real expectations are for sales to increase. He expects that, with higher website traffic, there will be a correlation of profit generating sales.

Now, let’s jump into the mind of this web hosting company. They have a staff (earning an hourly wage or salary) which will need to invest time into setting up and, hopefully, managing these AdWords campaigns. Since at the first level, $99 is far from being pure profit (Google will walk away with a lion’s share), the web host is pressured into

  1. minimizing the actual ad spend (ie how much they pay Google for the ads)
  2. minimizing the amount of time spent setting up and managing the ads (thus, keep the campaigns as automated or simplistic cookie-cutter fashioned as possible)
  3. make a profit through this service (the driving factor: profit = monthly fee – (Google ad spend + employee management costs)

So the web hosting company is driven to be as efficient as possible because an increase in efficiency equals an increase in profitability. However, is this efficiency truly effective? Let’s look at the results.

The web hosting company guarantees traffic for the buying customer on a monthly basis. Typically, from my experience, they run AdWords on the company’s name and other inexpensive words (the lower the competition, the lower the ad bid) which can drive somewhat relevant traffic while not cutting too deeply into the overall monthly ad spend. Ironically, the small business usually ends up paying money for an ad which appears directly above (or beside) the organic listing for his website. While searchers would have previously entered his website through the free, organic listing, now some of the same searchers are clicking on the paid ad and fulfilling the web hosting company’s promise of 100 visitors per month.

Is this efficiency truly effective? The customer pays for traffic and receives the promised traffic to his website. Some of it converts, but much of what converts would have found him without the paid ads. That which comes to his website through the mildly relevant search phrases may or may not convert (probably not). The customer ends up receiving traffic, but the traffic generation doesn’t reflect that which would result from an effective advertising campaign. It’s just lukewarm traffic.

If I can promise that I’ll drive 20,000 new people to your brick and mortar store next month while cutting back on your overall advertising budget, is my efficiency equaling effectivity for your business? Maybe I just slashed your TV ad campaigns and posted a large folding sign in front of your store that says “free samples inside.” Yes, people will come in, but will they convert to buying customers? A pure money saving campaign (emphasizing efficiency alone) is useless unless effectiveness is closely correlated with the drive to be efficient.

With the AdWords campaigns, a customer should be willing to pay a fair amount (a couple dollars a click) for a more-likely-to-convert customer than merely wasting cash for useless click thrus. An efficient ad spend does not intrinsically equal an effective ad spend. Efficiency doesn’t equal effectivity. As we strive to increase our efficiency, we must balance that drive with the quest to be effective.

About Andrew Jensen

Andrew Jensen, a business growth, efficiency & marketing consultant, provides business advisory services for clients in the Baltimore; Washington, D.C.; York, Hanover, Lancaster & Harrisburg, PA regions. Andrew advises regarding business growth, productivity, efficiency, business startups, customer service, and online/offline marketing. Follow Andrew on Google+

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