It was 2001 and there was a dynamic company who had a basic web site. They realised that they could easily acquire email addresses and enquiries from their site if they spent a few pounds (actually about £25k a month) on this new online advertising stuff. This was a great new revenue stream and generated £2m a year.
It worked well and every month they paid their media company invoices. It was great; £25k got them 300 really good leads every month and TV was costing twice as much per enquiry. The really clever marketing person still spent the vast bulk of the budget on TV as that built the brand and the brand was king - but the business owner wanted more enquiries and he saw the way to achieve that was to spend more online. So he doubled his online spend and got another 200 great leads. But now he was worried … Why had the first lot of leads cost £83 each and these extra ones cost him 50% more? It was still much cheaper than TV but it did trouble him so he spoke to the company that built his web site. He shared his dilemma and (pretty rare in those days) he shared his costs and the ‘conversion rate’.
The web company had secretly wondered for a while whether their client was getting good value from the advertising and they shared this information with the owner. The web company thought the media agency were driven to spend more and not actually deliver more. But it was cheaper than those TV leads so why worry?
The web company had built a neat system that recorded every visitor to the site tracking them relentlessly to the end point, the sale. The first surprise was that it took months from first visit to sale and the visitor came back to the site a lot. The second surprise was that most of the advertising generated no sales whatsoever!
The part of the tracking which recorded advertising campaigns produced results that were, to be blunt, shocking. £40k of the £50k online spend generated just 10% of the sales. No one really believed the data - how could it be true? The agency said it wasn’t true and they had lots of reports from their advertising networks that looked really good and didn’t match the data the web company had produced.
The brave owner decided on a test; run the advertising at twice its normal level for the first 2 weeks in the month and then scrap it completely for the last two weeks. You’ve guessed already that the level of enquiries in the second two weeks hardly suffered at all.
The marketing manager had to leave the company, the media agency was changed abruptly and a new one appointed who were told of this tracking system and were shown the data on what worked and what didn’t. The web company were the new heroes and the heroes got the budget to do more.
And the happy ending? Well the company grew to £30m online and dominates the Internet in its field. It had the knowledge to understand what works and what doesn’t.
We are that web company.
Welcome to a new way of looking at online business.