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The Math of the Marketing Funnel

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Kevin Sandlin

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We’ve been talking about the marketing funnel just about every session of Digital Marketing, but we hadn’t really brought it to life yet. So, in our mid-term (10th session) of the #DGM2 class, we focused completely on the math of the marketing funnel.

A photo posted by Kevin Sandlin (@kevinrsandlin) on Feb 26, 2015 at 6:24pm PST

It helped that this class was also our maiden voyage into the very cool new General Assembly space at Ponce City Market, so we had Willy’s and beer to help the presenting and teaching. The 18 new marketers presented in their groups of 3 or 4 from our lesson from the previous class, in which each group had the assignment to create a marketing budget to do an ad buy on Google Adwords or Facebook Ads with the goals of 1,000 new users and a 100% ROI on the spend.

Then we dug deep into the marketing funnel, because that was a challenge for most of the group. Here are the six specifics that should be considered when engaging in an early (e.g., very first spend) digital marketing buy.

  • Information is imperfect – the first time you tackle Adwords or Facebook Ads, you’re guessing. You don’t know what your CTR will be, what your best keywords are, or what your conversion rate is.
  • Social media channels want you to spend – so they make it really easy to spend a few dollars at a time to get you hooked on short term results, but their model is to get you spending a little more each time and keep you spending.
  • Finding correct keywords is difficult – trial and error are best replaced here with test & measure, because that’s how we figure out which words work for our campaigns and why.
  • The top of the funnel has to be huge – CTRs from Google and social channels are going to be small, despite “viral marketer” claims that “I got 28% CTR on my first Facebook ad!” so you need to start small, and build your own historical information, upon which you can then make more educated guesses about larger spends in the future.
  • Experiment, experiment, experiment – the first assignment I gave the class after GA so generously supplied them with $25 Visa cards (no beer or shoes!) was to go test something. Just getting used to the process of a social ad buy is a major learning event. Repetition of testing and measuring come much easier with understanding of how things work.
  • Buying the ad is the easy part. Determining the math that goes into the proper ad buy is the hard part.

In the end, the visualization and MS Excel formulas were what brought it home for the class. Marketing is all about the numbers, and it starts with that top of the funnel: total addressable market. Then the key metrics of CTR and conversion rates (into email, warm lead, trial user, user, customer) must be measured and improved to improve the bottom line.

This session was completely off-the-cuff from the students and myself. No slides, no agenda, just digging into a big, important roadblock that had to be destroyed. The beer & Tex-Mex helped a lot.

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