The Importance of Diversifying Your Ad Spend
DIVERSIFYING YOUR AD SPEND
A diverse ad spend is a fairly straightforward marketing strategy to incorporate into your plan. Relying on a single strategy or marketing channel can be risky since your digital footprint is essentially at the whim of a single platform. Imagine, for example, that you do all of your marketing through Facebook ads. Meta is notorious for changing its policies, and if one of the updates is related to your business, your advertising could come to a full standstill, resulting in a significant loss of new and returning customers.
To avoid issues like these that are impossible to predict, diversification of ad spend is a way to ensure that business isn’t affected by unexpected changes. Not only does it help to mitigate risk, but you’ll also be expanding your reach, and maximizing your engagement by building consumer trust. Let’s expand on these ideas -
- Lower Risk : Like I mentioned, by diversifying your investments, you’re better able to mitigate the risks associated if one channel becomes ineffective. Continuing the instance above, when Facebook implements new targeting strategies or limitations, advertisers may experience things like higher acquisition costs while you try to rebuild your viewership. If that’s your only marketing channel, that time spent reidentifying your audience and the most efficient targeting methods is time, and money, lost.
- Wider Market Reach: On any given day, the average American will browse multiple sites or apps, which means each channel or platform is an opportunity. Even though most people use a handful of sites regularly, obviously we don’t all use the same sites. That means, each platform will cater to a different demographic. By expanding your spend to unexpected corners of the digital market, you’ll be able to take advantage of additional audiences you may not have been able to reach previously. For example, a customer reliant on email marketing might get a better response by connecting with their customers through SEO as well, or you may consider local print products as a way to drive foot traffic to a storefront.
- Improved analytics and identify new opportunities: With a diverse ad campaign, a business can compare analytics and measure the effectiveness of each campaign. This will provide better insight on your clients interests and behaviors. By comparing your active campaigns and ROI, you can identify any existing gaps in your campaigns and optimize the more successful channels. This means that you will have an easier time allocating your budget for the most optimal results.
- Building consumer trust/brand legitimacy: in the digital age, consumer trust is going to be the driving force between a potential customer and the final step in the buying cycle, an actual purchase. When you’re interacting with a customer through multiple touch points, you’re building legitimacy and therefore trust. As a consumer, most of us are aware of the potential scams that come from every corner of every market, and that wariness is going to cause disruption to the buying cycle. When you enter the second step of the buying process (the research phase, where you look into how or why a product or service will benefit you) the repeated nudge from a particular brand can cause confirmation bias that the brand is legitimate. This makes it more likely to move from that second step into the final purchasing stage.
As far as building a budget around this strategy, a common baseline for a smaller business looking to expand is the 80/20 split- dedicate 80% of your budget to successful campaigns and channels, and the other 20% to advertising expansion. For more established businesses, you can probably budget slightly less for your expansion, closer to 15%, though it is dependent on your goals.
Embracing a diversified approach ensures that you remain responsive to market and consumer changes. As you refine your ad spend strategy, remember that flexibility is key to staying ahead in the ever-evolving advertising environment. Invest wisely, get creative, and watch your brand thrive.