Are You Wasting Money on Advertising? 10 Ways to Know
Guest Author: Evan Knox, Caffeine Marketing
Most people are wasting money on advertising and don't even know it. This is a serious issue and needs to stop. In this article, we're going to unpack ten of the most common ways people waste money on advertising.
10 Ways You’re Wasting Money on Advertising
My name is Evan Knox. I'm also a StoryBrand certified guide and colleague of Annie Schiffmann’s, but I specialize in advertising. All of the insights I'm going to share in this article come from years of experience and helping hundreds of clients like you.
Making yourself the hero
Not setting a goal
Not measuring objectives
Comparing your business to others
We've always done it this way
Missing a sales funnel
The business isn't healthy
Spending when it's not profitable
Going with the newest trend
Not trusting an expert
Making Yourself the Hero
One of the most common pitfalls in advertising is thinking of it as a medium through which to tell people how awesome you are. I often hear potential clients in the interview stage say, "We just need to get our message out there more. Can you help?"
While we could certainly run Facebook or Youtube ads talking about your story, the truth is that no one would pay attention. People are looking for companies that help them win the day, not talk about how awesome they are. Without telling them how great you are, this might leave you feeling stuck when you're marketing, wondering, "what do I tell them?"
It would be best if you positioned yourself as the guide in the story. Make it feel like you're a push-button solution to a problem that the potential customer or client is experiencing. If you're not talking about the problem that your future customers are experiencing right now, they will not pay attention to you.
To further make matters worse, if someone hears or sees an advertisement from you and does not think it applies to them the first time, it's going to be near impossible to get them to pay attention to the next round of advertisements. Often this is a wasted cost because you've just become white noise, and you're paying to show them an ad.
At the end of the day, your ads should not have you as the center of attention but your future customer.
2. Not Setting a Goal
Even businesses built on referrals know they need to be doing marketing. If you're just checking a box, you're wasting money on marketing. Without a specific direction, it's impossible to determine what your advertising strategy should be.
Even if you just want to "get the word out" you should be setting a goal. My personal preference is to make a goal related to a return on investment for our clients. If at all possible, you should make a goal that is directly tied to growing your company's top line.
If you can not calculate a direct return on investment, otherwise known as a return on ad spend (ROAS), you should pick the closest thing to it that you can. Website visitors are an okay objective, but if you can measure leads or people who add an item to their cart, you're much better off.
Set a clear objective so that you can evaluate if some method of advertising will help get you there.
3. Not Measuring Objectives
Too often, business leaders set loft goals but fail to measure them. Great marketers not only measure their campaigns along the way but also evaluate them afterward. Ask questions like; Did we hit our objective? Why or why not? What worked or what did not work?
Sometimes people pick goals without thinking through if they can actually measure that goal. What gets measured gets managed. If you can't measure it, you will have no way of figuring out if it's working. If you don't know what's working, you're flying an expensive airplane without an instrument cluster in the dark.
This is a risky business, and you should not only set your goals but measure and evaluate your scorecard along the way.
4. Comparing your Business to Others’
I'm a firm believer that all businesses are 99% the same. Businesses like humans, it's the 1% that makes us look and act so differently. In that one percent that varies business to business is the type of marketing and how much you should spend on it.
Often leaders look to their competition to figure out what they should be doing. This thinking style is ridiculous unless you know all the financials, systems, and story of that business you're setting yourself up to fail.
They may have a better product, margins, or sales funnel, and you are running the same ads in the same way, which could run you into the ground. You need to look at your data, team, and businesses to figure out what might work for you.
Look into numbers like your customer lifetime value, your average margin per sale, and cash balance. After doing this for a while, I've been surprised how many larger brands are unprofitable or have a poor customer experience.
Be aware of your competitors and their products, but like humans, don't compare yourself to others.
5. “We've always done it this way”
You're most likely not the person who is saying, "well, we've just always done it that way." If you're willing to dig this deep into becoming more profitable with your advertisements, you've got the right perspective.
The mindset that tells us to do what we've always done or what's comfortable is a tempting one. Sometimes, comfortability shows up as fear of pushing the envelope or making things better at risk of ruining your company's status quo. Moving past this fixed mindset will set your company up for growth and you as a person.
Don't keep doing something because you've always done it that way. The reward is worth it. Try different ways of advertising and marketing. I like to use my businesses as a sandbox for new ideas.
6. Missing a Sales Funnel
For some businesses running ads directly to your website works. For the majority of companies out there, creating a sales funnel is a great way to maximize the return on your advertising dollars.
A sales funnel is a series of emails you send someone who might have downloaded a free guide on your website in exchange for their email address. In reality, you're probably in a dozen people's sales funnels right now. Are you getting regular emails from different businesses?
The process of setting up a sales funnel might seem intimidating. I would encourage you to reach out to Annie Schiffmann for help or have her do it for you.
7. The Business Isn't Healthy
Running ads for your business isn't going to fix everything. If you have major internal issues, more sales are most likely going to cause more issues and sink your business.
In our Tactos group (another business I'm involved with), we acquire businesses, grow them, and then eventually sell them. Often we're able to get a really good deal on a company because it has big issues like culture, operations, fulfillment, profitability, or a poor customer experience. Don't be like these businesses. Dial-in as much as you can before and during advertising. It will make it much easier for your ad dollars to turn into profits.
8. Spending When Isn’t Profitable
Growing at all costs is a bad idea and results in a lot of people, investors, and businesses losing money. Even if you have your eyes on an exit, you should keep a close eye on profits.
Sometimes it's okay to run ads when it's not immediately profitable. There is a scenario where your customer lifetime value is higher than your initial sale amount, and you can afford to lose a little money up front to make it up later. If you sell a subscription or recurring service, this is an okay way to operate.
If it's not profitable, scale it back down and come up with a new game plan.
9. Going with the Newest Trend
If you're trying to keep up with all the latest marketing trends, your attention will be really scattered. There are so many new platforms and algorithm updates that you could not possibly know them all or do them all well. As someone who pays close attention to marketing news, I would encourage you to wait a month or two before hopping on a new trend. Securing your username on a platform is a good idea, but you're not going to miss out on much waiting a few weeks before spending a bunch of time.
10. Not Trusting an Expert
Last but not least is the final way on our list, not trusting an expert when it comes to marketing. When you work with a StoryBrand guide like me or Annie Schiffmann, you're going to save yourself a lot of time, money, and heartache.
How much can you save by investing with an expert and getting it right the first time?