Tag : advertising-budget

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197: How Much Should You Spend on Facebook Per Auction?

Every week, I’m asked one or more of the following questions:

“How much do we need to spend on Facebook to get bidders?”
“What should our Facebook budget be for this auction?”
“How many people would [dollar figure] get us on Facebook?”

Facebook rookies seem to believe that there’s a set, static amount—or some price grid—that Facebook charges for results; and they seem to think I know where to find that grid. It makes sense: other media are sold that way. Sadly, though, neither of those assumptions are correct. That said, we can learn to make educated guesses. I’ll tell you what I recommend per campaign, but first I want to show you how I arrive at that suggestion.

Algorithm secrecy

Algorithm secrecy

First, you need to know that how far your money will go on Facebook does and will change. Its ad inventory is dwindling, as more advertisers transition their dollars from less efficient media. Facebook is constantly tweaking its tools and options either to better target your known prospects or to protect advertisers from taking advantage of their options for nefarious goals. Victim litigation and the fight against fake news have actually caused Facebook to scale back some very convenient options—including some that were available even several months ago. So, we advertisers have to keep experimenting. Then, we must continuously measure and compare our results to plan our next campaigns.

Geographic density

Geographic density

Like Google AdWords, part of Facebook’s ad pricing is determined by an auction system. Facebook offers a finite number of ad spots in a consumer’s Newsfeed. So, advertisers must outbid others who want that same space. Advertising costs vary, depending on the physical area you want to target. Typically, rural areas require far less money to saturate than suburban or urban areas—not just because there are fewer people in those areas but also because many products and services aren’t marketed to the demographic realities of those who live there.

Facebook budget penetration

No matter what geographic area you choose, Facebook will always serve your ads first to those most likely to engage with your content. The more you spend, the deeper into the prospect pool you go within the geography you target. The size of your geographic net you cast is thus affected by the distance a prospect would reasonably be willing to travel to purchase an asset or have it shipped. Also, whether or not you offer online, phone, or proxy bidding influences the geographic settings of your Facebook ads.

Prospect accuracy

Prospect accuracy

Connected with physical proximity is interest proximity. Your ideal buyer might not be determined by geographic nearness but by how close you can be with demographic profiling of your perfect buyer. This is especially true with collectibles, niche commercial/industrial items, specialty farming equipment, and some trophy real estate properties. This reality makes harvesting your buyer data so critical.

Facebook budget prospect density

That data is now even more valuable because of Facebook’s Lookalike Audience tool, which can take your bidder and email subscriber lists and turn them into the kind of targeting data formerly available only to Fortune 100 companies. This allows you to cover large geographic areas without having to pay for saturation. You can cherry pick your most likely bidders—not just in America but around the world.

Holiday proximity

Holiday proximity

Because of the competition with other advertisers, holiday seasons raise the bidding price for your ads. You’ll notice a rise from the Monday before Thanksgiving until the day before Christmas. Depending on your target audience’s demographics and geographic location, you might also see cost increases the two weeks before both Valentine’s Day and Mother’s Day. If you have large cultural events in a specific metro area at a specific time each year (like the Boston Marathon or Indianapolis 500 of Bike Week), you might see a small impact as well. I’ve not analyzed Facebook ad costs during the Olympics, but it wouldn’t surprise me if advertising rose 5% or even 10% during those weeks.

Content relevancy

Content relevancy

Maybe the biggest factor in the cost of your ads is the content of your ads. Facebook, like its advertisers, wants paid promotion to seamlessly blend with the user-generated posts in the Newsfeed. Neither the platform nor its users want interruptions; instead, they connect with products, services, and stories that are truly interesting or valuable. They don’t want ads that make audiences flip to a different app or site. So, Facebook rewards ads with high interaction rates with lower cost per click (or other desired action).

Thus, the more your text ties into consumer desires, the cheaper your ads. The same holds true for photo quality, video brevity, and the perceived value of the asset (or service) at hand. Beauty is in the eye of the beholder, but the beholder that determines your ad costs is not you. It’s the viewer. The less you think and act like a traditional auctioneer, the more potential bidders you’ll reach for the same money.

Facebook efficacy

Facebook efficacy

Finally, all of the above assumes that Facebook is the most effective and/or efficient way to reach your target audience. That’s not always the case. There are still some audiences whose demographic factors are not available selections to advertisers on Facebook. This makes these folks less likely, or at least less efficient, to reach there.

So, here’s my standard answer when auctioneers ask me how much they need to spend: “I would spend 25% to 75% of your auction’s advertising budget on Facebook, depending on what your Google Analytics reports show you.” If you’re tracking every medium you use—both online and offline—in terms of the traffic they drive to your auctions’ pages on your website, your Google Analytics will answer that question better than I can.

To shorten this post, know that you can use this method to determine what your overall auction budget should be. You can take that information and drop it into this formula to determine how much of the overall budget to spend on Facebook. If you don’t yet have that data, I would incrementally start shifting more of your budget to Facebook until you reach a point where you don’t get more bidders or higher relative sale prices from more Facebook spending.

Stock images purchased from iStockPhoto.com

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196: Auctioneers Are Braver Than I Am

On the day this post publishes, I’ll be in Antarctica—hopefully ascending an ice-covered mountain. Right before I left home, one of my closest friends was praying aloud for my journey and declared, “This trip is so Ryan.” Not only do I think heaven already knew that, but most of you probably do, too.

What you probably don’t know, though, is that my clients are braver and more adventurous than I am. First: most of them are parents. That’s some high-stakes stuff bigger than any bungee jump or sky dive. Second, most have employees. After my wife developed a successful staffing agency years ago, she confirmed that I’m not cut out for that adventure. More to the point: all of my clients work on speculation. They take projects not knowing how big their paycheck will be or, in some cases, whether there will even be a paycheck on the other end of the deal.

That takes some serious guts, a risk-taking ability I don’t have.

Even though I’m not brave enough for that gamble, I try to grasp the weight of that, the stress of that. Frankly, I’m amazed at the grace many of these auctioneers show in the process—especially when there are two commas in the estimated gavel price.

Between you and me, I absorb some of that stress. I recognize that my clients are performing on a high wire that’s exposed to swirling, cultural winds. They have to be more efficient than ever in a marketing landscape with more media outlets, more subcultures, more competition, and more educated buyers than ever in human history. Along with that, my contribution directly impacts their livelihood. That responsibility makes me really want their advertising to work.

Sadly, though, I can’t always make their advertising work. Here are four of the reasons that sometimes happens.

What works might be something neither of us knows yet.

There are a lot of media and technologies with which I don’t have experience. Same goes for my clients. That includes options already in the marketplace and the ones that demand will soon bring to the marketplace. Some are niche outlets for unique assets. Others are entire platforms that will change how we interact with prospects. Yet others are entities in a particular asset or geographic market that our prospects know but we don’t.

Google can help some with the ignorance, as can interviewing the seller. Oftentimes, adding capability will mean adding vendors, who each specialize in their niche craft. Discovery of new techniques and new media requires experimentation, but that exploration may not help the auction at hand. That’s why almost every auction budget should include some testing of new techniques.

What works might cost more than we have budget to execute.

Sometimes, the best way to reach potential buyers isn’t feasible because of the asset value and the ensuing advertising budget. We can’t take the asset on a world tour like Christie’s can with a nine-figure painting. Maybe a mailing list and postage are out of reach, maybe high-profile billboards, maybe telemarketing, maybe the magazine or news site the right prospects read. Surprisingly enough, I’ve regularly seen where there was somehow no money in the budget even for Facebook, one of the least expensive tools in today’s advertising tool box.

To avoid all of this, the potential buyer needs to be identified before contract signing; and the media necessary to reach them needs to be determined before the budget is set. If you sell the same asset category on a regular basis, you can do that by consulting your buyer acquisition formulas.

What works often isn’t what I’m asked to create.

Regularly, I can’t help an auctioneer find motivated bidders because they aren’t asking me to do so. They’re asking me for something else. I’m not offended by that. I make a significant part of my income each year, generating media that:
• isn’t independently tracked for efficacy or efficiency,
• has little-to-no distribution plan [not even kidding],
• is a last-ditch, hail Mary pass at the end of an unsuccessful or even non-existent campaign, or
• is less likely to work because of its messaging, visual content, and/or emphasis

The tension for me is the balance between (A) submissively making money and (B) pushing back or asking questions that would cost me income. I’ve swayed often from one side of that continuum to the next, and I’m still trying to find the right balance.

The market may not want what we’re selling right now—or at least at the price we’re attempting.

Even the best advertising doesn’t work, if there isn’t a buyer in the marketplace to respond to it. Buyers drop out when the market is flooded with cheaper alternatives, when technology has moved on, when repair or maintenance makes even a free asset expensive, or when location of the asset or the likely buyer is a liability. Finally, there may be potential buyers but none who are comfortable with the terms and/or the process of an auction purchase.

So, market evaluation before signing an auction contract may be the most important part of the promotional campaign. Sometimes the best advertising for a brand is the advertising not wasted on projects that should be declined.

Thankfully, these four scenarios are more exception than rule; and we’re surprising sellers with superlative results on a regular basis. The desire to maintain that success challenges me to keep learning and adapting and passing along what I learn. The residual results provide for me to chase the smaller adventures you see in my Facebook posts—while I try to keep up with your professional example.

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194: The Right Marketing Questions at the Wrong Time

I need to get better at asking questions of my clients earlier in the advertising process. Sadly, I often struggle to focus on the marketing strategy instead of billable tasks.

I can’t tell you how many times I’ve gotten a direct mail piece designed for a client and then asked them for the mailing list—only to learn that they do they not have a mailing list and don’t know to whom they will mail it. Or right before I dive into some Facebook ads, I’ve realized I forgot to ask, “Who do you want to target?”

I’m apparently not alone in my absentmindedness, because a common response is: “I don’t know. What do you think?”

On the times when I’m actually on my marketing game early in the process, I’ve asked the auctioneer, “Who’s our buyer? What’s our prospect profile?”

“Well, I was hoping you could help me with that.”

Mind you, this is after the auction contract was signed. That means auctioneers are booking deals in new asset and/or geographic markets without knowing who their prospects are, let alone which media they need (and in what proportion) to reach targeted potential buyers.

The problem with this tardiness is that the buyer determines the advertising campaign.

The prospect guides where we have to advertise—in terms of both media type and geographic area. That profile dictates what kind of impression we need to make, and that (along with asset value) governs the budget.

So, how is it that so many auctions are booked and budgets are set before anyone asks, “Who is the buyer?”

Right Questions at the Wrong Time

Some of it might be too much trust in “the sound that sells”—the idea that auctions in and of themselves get stuff sold, regardless of asset. While an auction is a great vehicle for transactions of a myriad of items, there is no auction without bidders. So, the most important part of the auction marketing process is the attraction and accumulation of bidders.

To do that, we have to stop thinking like auctioneers or real estate agents or salespeople—or graphic designers. We have to get into the heads of the people who would want what we’re selling. Often, that’s the most difficult part of the process—for both my auctioneers and their advertising vendor. If we personally wouldn’t buy that asset, we have to research who would. We need to have a good idea what they need, and what motivates them.

Why would someone want farm equipment with this age and these hours?
Do hunters check their Facebook during hunting season? (And when is deer season where this land is?)
What kind of consumer is looking for an unfinished condo unit?
Where do subdivision developers search for new opportunities?
How far would someone travel to purchase from an on-site estate auction or pick up from an online auction?
What would convince a real estate investor to buy farmland instead of residential properties?
How much disposable income would someone need to purchase this asset?
For what other industries could this commercial equipment or real estate be used?
Are we building any media only to impress the seller instead of buyers?

These questions speak to buyer motive, media mix, and targeting options. Their answers help us write headlines and select demographic criteria. The followup questions to the examples above would further focus our advertising and make our budget more efficient—even if it means spending more money on fewer people to attract an action from them.

It doesn’t cost you money to ask these questions.

In fact, it might cost you significant money if you don’t ask these questions—especially if you don’t ask them before you sign the auction contract. Save yourself some headaches. Take the prescription four out of five TV doctors recommend: ask two of these questions, and then email your advertising vendors in the morning.

Stock image purchased from iStockPhoto.com

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182: How to Know What Your Auction Advertising Budget Should Be

Click on any of the illustrations below to enlarge them.

If you read business news, you run into the term “big data” on a regular basis. I used to associate it with corporations mining our transactional histories to extract scary quantities of data for creepily-predictive advertising.

After teaching part of the Auction Marketing Management course for a couple years, though, I get inspired to help small businesses use the same processes with the information they already have.

Auction companies, in particular, have some incredible, free knowledge. With a few minutes’ worth of work, that knowledge can become predictive power; and that power can help you convince more and better sellers that you are their best option. It just takes asking a few questions and recording those answers.

How many buyers did you have in your latest auction?

Number of Bidders

Along with that, how many bidders did you have in that auction?

Number of Buyers

Divide the number of bidders by the number of buyers. This will tell you how many bidders you needed to get to each buyer.

Bidders Per Buyer

Divide this number by the number of lots in your auction. This will tell you the average of how many lots per buyer you needed to get everything sold.

Lots Per Buyer

How much did you spend in advertising on this auction?

Advertising Cost

Divide this number by the number of bidders at the auction. This will tell you the average cost per bidder.

Cost Per Bidder

Of course, it’s easy to then compute your average cost per buyer.

Cost Per Bidder

How many unique visitors did this auction’s page on your website generate?

Web Uniques

Divide this number by the number of bidders. This will tell you how many unique visitors to your website it takes to get a bidder.

Uniques Per Bidder

A quick formula will compute how many website visitors it takes to get a buyer, too.

Uniques Per Buyer

If you’re curious, you can divide your advertising expense by the number of unique visitors to see what your cost per website visitor was.

Cost Per Unique

Now, keep track of these fields for every auction this year. (It should take only five or ten minutes per auction to fill in the blanks.) To make it more accurate for predictive value, I would keep separate spreadsheets for each asset category. If you operate in multiple states, you might find value in an extra column for that notation, too.

Maybe at the end of the year, all you’ll have is something to pique your curiosity. There’s a decent chance, though, that you’ll have actionable data from seeing patterns.

Like one of my friends, you might be able to tell the auction manager approximately how many bidders to expect based on your Google Analytics numbers the morning an auction closes. Or you’ll be able to tell that the bidder registrations were an anomaly. If there’s post-auction seller discussions, you can show them their results versus your typical results.

When a potential seller asks why you picked the budget figure you did, you can explain, “For the asset type or the number of lots you have, we’ll need to get roughly [x] number of buyers. To get that many buyers, we’ll need to attract about [x] number of bidders, which cost us on average $[x] each.”

If you don’t think that would be valuable information, skip these questions and recommendations. If you think there’s merit to them, I can send you the formula-driven Excel sheet I used to create the illustration above. Just click here to email me, and I’ll send you a free copy.

Stock photo purchased from iStockPhoto.com

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177: Is the Difference Between Marketing and Advertising Costing You Money?

Our culture uses the words advertising and marketing interchangeably. So does the auction industry in which I work, even though they should know the difference more than most industries.

Most people see the Venn diagram of these two words as this:

Assumption Venn

In actuality, the Venn diagram looks something like this:

Venn Reality

Let me explain.

Marketing is the strategic pursuit of qualified prospects.
Advertising is the media through which marketing decisions are communicated.

In other words, advertising is just a part of marketing. It’s the louder, more flamboyant part; but it’s only a part.

3 real-world examples of this differentiation:

Marketing is my alma mater importing palm trees, lining walkways and roadways with them, and paying us grounds crew guys to insulate the non-native trunks so that they’d make it through the winter. Marketing is putting a palm tree in the college’s logo. Advertising is all the media that includes said logo and is sent to Indiana, Ohio, Pennsylvania, and Michigan—the states from which a large percentage of our student body came.

Advertising includes all the direct mail, newsprint, and signs my former employer dispersed before one of our multimillion dollar land auctions. Marketing is the multi-parcel system they used to get maximum value out of a property. Marketing is the software they wrote for that system when the personal computer was first invented. Marketing also includes all the lender luncheons they held in the new geographic markets they pursued.

Advertising got the registered bidders to an on-site auction, where one of my clients was selling his own farm. Marketing showed up when, after chatting up the attendees, he phoned a friend to get a sight-unseen starting bid by the acre.

Auctioneers make a marketing decision when they choose between live, simulcast, timed online, or sealed bid platforms. Same goes for when they choose whether to offer a buyer broker commission and, if so, at what percent.

Marketing determines who the prospects are, what they want to know about the asset or service at hand, and where to go to connect with these prospects. Advertising just executes that plan, and advertising decisions are easier once the marketing strategy has already been made.

Why do I make this distinction?

Because often, auctioneers ask me to recommend and/or execute advertising campaigns without that marketing foundation. I regularly seem to surprise auctioneers, when I ask them, “Who is your buyer for this asset?” or “Why would someone want this asset, or how would they use it?” The same goes for similar questions, when chasing auction sellers. (For the record, I also have stellar marketers as clients who start our correspondence with this information or answer these questions with dexterity.)

A marketing plan and an advertising budget are two different things. We can spend money on a standard media program that crosses a lot of t’s and dots a to of i’s. Or we can target prospects through the filters of cultural trends, asset appeal, market demand.

I gladly generate media all day. That’s how I make my money. But it behooves auctioneers to think bigger than just the box of advertising. Because marketing is how you make your money.

Stock image purchased from iStockPhoto.com

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