If it don’t make dollars,it don’t make sense

Agenda

• My Story

• Canada Advertising Trends

• The Advertising Layer Cake

• How To: Calculate Your Digital Advertising Budget

• Q&A

My Story

A-Town

We teach you to fish, rather than fish for you

Canada Advertising Trends

Canada’sInternet Population

Desktop28m

Mobile19.9m

Total 30.5m

Mobile only 2.3m

Source: IAB Canada, 2015

Mobile User Demographics

41%36%

23%

18-34 35-54 55+

Age

M, 55%

F, 45%

Gender

EN, 78%

FR, 22%

Language

Source: comScore, 2015

Advertising Spend

• Digital advertising spend up +21% from 2014 to 2015

• Digital spend +43% more than TV spend

• Mobile spend +79% and now 1 in 3 ad dollars spent on mobile

Desktop

Mobile$3.2

$4.6

TV Digital

$ billions

Source: IAB Canada, 2015

Publishers: Where Ad Spend Goes

Canada11.5%

US / Global, 88.5%

Top  282.0%

Other,  6.5%

Source: comScore, 2015

Google and Facebook account for 82%+ of ad spend in Canada

What is Digital Marketing?

A. Promoting your product online

B. Ads that show on your desktop, mobile, tablet or internet connected device

C. Paid, organic or earned online media

D. Quantitative, trackable activity where you can measure actual return on investment

E. All of the above

The Advertising Layer Cake

Awareness

Consideration

Conversion

Loyalty

The Advertising Layer Cake

Awareness

AwarenessInterest / Behaviour / Demographics Brand or Generic Keywords

Lookalike or Affinity Audiences

Audience

Lookalike Audience

Lookalike Audiences are a way to reach new people who are likely to be interested in your business because they're similar to customers you care about. You can base your Lookalike Audience on a variety of sources (ex: people who like your Page, or visited your website).

Source: Facebook

Lookalike

Awareness

AwarenessInterest / Behaviour / Demographics Brand or Generic Keywords

Look-a-like affinity

Your Brand Story

Value Proposition

Email Subscriber

Visit WebsiteLead Submission

Audience

Message

Goals

Awareness

Awareness

Awareness

Awareness

• Facebook Ad

ConsiderationInterests / Behaviours / Demographics

Research Keywords

Website Visitors & Subscribers

Shopping Feature & Benefits

Social Proof

View Product

Add to Cart

Audience

Message

Goals

Consideration

Consideration

• Facebook Ad

Consideration

Cookie

Cookies are small files that a web server automatically sends to your computer’s web browser (think Firefox, Safari, Internet Explorer) when you browse certain websites. Cookies are stored as text files on your hard drive, and servers access them when you return to web sites you’ve visited before.

Source: AdRoll

Consideration

Conversion

Buy Keywords

Intent to Buy (View Product, Add

to Cart)

Prices

Recommend Product

Risk Free Experience

Customer

Audience

Message

Goals

Conversion

Conversion

Conversion

Loyalty

Current  Customers

Cross sell & Upsell

Replace product

Repeat

Purchases

Audience

Message

GoalsLoyalty

Loyalty

Loyalty

Awareness

Consideration

Conversion

Loyalty

Audience Message Goals

Broad  targeting,  Interest/Behaviours,

Lookalike

Brand  Story,  Value  Proposition

Newsletter  Sign  Up,Homepage,  

Product  Catalog

Email  Subscribers,  Homepage,  

Product  Catalog

Shopping  Feature/Benefits,  Customer  Reviews

View  Product,  Add  to  Cart

Viewed  Product,  Added  to  Cart

Dynamic Product  Ads:  Product, Shopping  Cart  Abandon

Customer

Current  Customers

Replacement,  Cross sell,Upsell

RepeatPurchases

How To:Calculate YourAdvertising Budget

Method 1:Customer Centric Model

Method 1

1. Revenue Target

2. Customers = Revenue Target / Customer Lifetime Value

Customer Lifetime Value (CLV)

Customer Lifetime Value is a prediction of all the value a business will derive from their entire relationship with a customer. Because we don't know how long each relationship will be, we make a good estimate and state CLV as a periodic value — that is, we usually say “this customer's 12-month (or 24-month, etc) CLV is $x”

Source: Custora

𝐂𝐋𝐕 =  Total  RevenueCustomers =  

$1,000,0002,000 = $𝟓𝟎𝟎

Method 1

1. Revenue Target

2. Customers = Revenue Target / Lifetime Value

3. Budget = Customers x Customer Acquisition Cost

Customer Acquisition Cost (CAC)

• The cost of customer acquisition (CAC) means the price you pay to acquire a new customer. In its simplest form, it can be worked out by:• Dividing the total costs associated with acquisition by total

new customers, within a specific time period

𝐂𝐀𝐂 =  Total  Ad  SpendCustomers =  

$200,0002,000 = $𝟏𝟎𝟎

Method 1

1. Revenue Target = $100,000

2. Customers = $100,000 / $500 = 200

3. Budget = 200 x $100 = $20,000

Method 2: Traffic Centric Model

Method 2

1. Revenue Target

2. Budget = Revenue x Gross Margin or % of Revenue

Gross Margin vs % of RevenueGross Marginvs% of Revenue

Method 2

1. Revenue Target

2. Budget = Revenue x Gross Margin (or % of Revenue)

3. Orders = Revenue / Average Order Value

𝐀𝐎𝐕 =  Total  Revenue

Orders =  $1,000,0004,000 = $𝟐𝟓𝟎

Method 2

1. Revenue Target

2. Budget = Revenue Target x Gross Margin

3. Orders = Revenue / Average Order Value

4. Visits = Orders / Conversion Rate

𝐂𝐕𝐑 =  OrdersVisits =  

4,000200,000 = 𝟐%

Method 2

1. Revenue Target

2. Budget = Revenue Target x Gross Margin

3. Orders = Revenue / Average Order Value

4. Visits = Orders / Conversion Rate

5. Cost per Visit = Budget / Visit

6. Cost per Order = Budget / Orders

Method 2

1. Revenue Target = $100,000

2. Budget = $100,000 x 20% = $20,000

3. Orders = $100,000 / $250 = 400

4. Visits = 400 / 2% = 200,000

5. Cost per Visit = $20,000 / 200,000 = $0.10

6. Cost per Order = $20,000 / 400 = $50.00

Key Take Aways

• Online advertising is GROWING in Canada

• Think layer cake, not a silver bullet

• You don’t have to break the bank

• Go Advertise!

We help you sell stuff online

Text BDOT15 to 855-969-5300 to chat about your online store

Blair de Jongblair@bdot.iowww.bdot.io@blairdejong