The Time It Takes For Your “Marketing To Work.”
I’m going to let you in on a little secret.
Imagine you have a mobile app that gets 100 downloads a day and you’re trying to decide if you should invest in marketing.
For every 100 people who download your app, 5 become a paying customer. You’re averaging 5 new customers a day. For the sake of easy to follow numbers, let’s assume that each new customer is worth 10$ to your business — after costs and the App Store’s cut are taken out. You’re making 50$ a day.
Now you may say to yourself, self how can I make this 50$ work for me in the form advertising.
You draw up a series of ten ads. You build an audience of 500,000 people. You give each ad a budget of $5 dollars*. This means that each ad is set to reach an estimated audience of 5,000 people.
Between 2–5% of the people who see an ad, click. We’ll use 2.5% as the average. Of the people who click, 20% of the people download the app.
That means your ads that reached 50,000 people also generated 1,250 app downloads. For every 100 downloads, you generate 5 paying customers. That means your ads generated 12.5 paying customers. (We’ll say 12.)
If each paying customer was worth 10$ to your business, we could say that your 50$ of ads generated 120$ of profit.
You more than doubled your money.
But that still doesn’t answer the question we set out with: the question of how long it would take to reach your goals.
The trouble is, that question is nearly impossible to answer without some insight as to what your particular goal may be.
What do I mean by this?
If you take a second walk through the example you’ll notice my asterisk. It’s placed there because in creating that thought experiment, I made a very very generous assumption about what astute advertisers might have noticed as CPM.
The truth is, there are very few places you can advertise where $1 of ad spend could reach 1,000 people in your target audience.
It’s also unlikely that a new app would be generating a conversion rate of 5% out of the gate — especially at the price point you’d need to walk away with 10$ per sale.
There are a lot of levers to fiddle with.
But when it comes to calculating how long your ads need to serve to reach your goal, the levers you need to be most concerned with are the ones relating to how many people see your ad, what percentage of them take action and what percentage of those complete the action.
If you have that information, you can figure out how many people you need to reach and at what response rate to generate the number people taking action you’re looking for.
From there, you can figure out how long you’ll need that action to occur in order to hit your goal.
If you need to move at a faster pace, you can increase the number of people you reach at the top of the funnel. If you need to stretch your dollar, you can look for ways to increase conversion rate or slow down the rate at which you reach your audience.
While you won’t ever get numbers quite as clean as you could in our little example above, you will find this a very helpful rule of thumb for calculating just how long you’ll need to advertise.