The answers have always been in the conversion ratios.
Why do page impressions and banner clicks have value to B2B marketers in the display ad world? Because it is widely recognized that these types of inbound engagement are the earliest indications of buyer intent.
Display advertisers recognize a nascent buyer interest that can be built upon. And while a form completion, or obviously a closed sale, are worth significantly more to them, they clearly recognize the relative value of early engagement. They budget for it, they seek it out, and they pay for it.
Savvy marketers have also been making significant investments in web-based surge data for their automation. Surge data is certainly similar to display data as both represent the earliest buyer engagement. And marketing automation is designed to nurture and drive value from every level of engagement – it’s one of the primary reasons for making the investment.
Interestingly, though, that can’t be said for typical brand expectations of third-party email marketing. The prevailing “wisdom” among marketers there has long been that the form completion is the only engagement type that has value. Historically, email marketers have discarded opens and clicks.
Discarding any value seems foolish in such a rapidly evolving and competitive arena as B2B. We all know the early signs of buyer interest appear much sooner. That’s why we pay for page impressions, banner clicks, and web-based surge data. Doesn’t it make sense, then, that similar outcomes driven from outbound email would have value?
So, what is the relative value of early engagement driven by targeted third-party email, if analogous to similar outcomes elsewhere? In my estimation, the answers have always been in the conversion ratios between the differing types of engagement. And while I’d love to cite logic and simple math as the reasoning, I’ll return to the mature display advertising price model for precedent to support my assertion about outbound engagement.
In the display arena, page and banner impressions are less valuable that clicks, and are sold by the thousand (CPM), while clicks (CPC) and form completions are sold individually. Seem logical? Using a recent LinkedIn Ads display campaign as an example – a click is worth $12.50 while 1,000 impressions are valued at $47.75. They are priced relatively, in part, based on LinkedIn’s projected number of impressions per click – in this case 4 clicks per 1,000 impressions. Make sense?
Targeted outbound engagement features much better conversion rates. Since conversion ratios differ, I’ll use metrics gleaned from this great post by Constant Contact about average industry engagement rates for my illustration.
Let’s say we have a target group of 10,000 marketers and that a form completion in this campaign would be valued at $50. If 10% of your group opens, then you have 1,000 of the earliest engagers. If 15% of them (150) click-through to your landing page, and then 13% of those who arrive at your page complete your form (20), you have two additional and more valuable engagement types.
Now let’s apply the math:
Form completions are valued at $50 each.
13% of clicks become form completions, so clicks are valued at 13% of $50 or $6.50 each.
15% of opens become clicks, so opens are valued at 15% of $6.50 or $0.98 each.
In our example target group, the numbers shape up as follows:
10,000 contacts at a 10% open rate = 1,000 opens
1,000 opens with a 15% click-to-open rate = 150 clicks to the landing page
150 clicks to the landing page at a 13% form completion rate = 20 form completions
If we net out the higher forms of engagement from the lower, we’re left with 850 opens, 130 clicks, and 20 form completions.
Applying the values to our numbers, we have:
850 opens at $0.98 = $833
130 clicks at $6.50 = $845
20 form completions at $50 = $1,000
A total campaign value of $2,678
So, in this illustration, using conversion ratios and value relative to a form completion, we show that there’s nearly $3,000 of value in this effort. Not just $1,000 for the 20 form completions.
Thus, it boils down to – is it more prudent to spend $1,000 for 20 form completions, or $2,678 for those same form completions PLUS 980 other engagers?
To me the answer to that question is absolutely the latter – provided I have full and accurate contact data for all of those engagers. Then I can cost-efficiently nurture them inside my marketing automation, after having acquired them at the equivalent of $2.68 each. My need to return to the third-party email marketing firm is diminished from monthly to a few times a year, while my in-house capabilities/counts increase over time.
SCENARIO ONE – monthly leads, 12 purchases
240 form completions over 12 months, $50 CPL, $12,000 budget
SCENARIO TWO – all engagement, 3 purchases
3,000 engagers, including 60 form completions, over 12 months, $2.68 CPE (cost per engager), $8,040 budget
In conclusion, I have to ask – did you arrive at the same answer I did?
You can learn more about the five applications of engagement data in HiP’s new whitepaper “Driving Demand Using Engagement Data.” Or dig deeper into this topic in our recent blog post called “How Engagement Data Can Help Realign Marketing and Buying Processes.”
Do you think there’s value in other forms of engagement? Do you agree with the conclusion I reached in my post? Let me know what you think in the comments section.