7 Sad Ways that Small Businesses Waste a LOT of Money on Digital Marketing 

Sometimes I get sad when I look at how entrepreneurs and small businesses are spending money on digital marketing and advertising.

As an entrepreneur and small business owner myself, I know both how exciting it can be to run a successful campaign, but I also know very well how painful it can be to see that you’ve spent money that is never coming back. And if you’re an entrepreneur or small business owner, then you likely don’t have the almost-infinite marketing budgets of Coca Cola or Apple.

So it blows me away to see just how much money is wasted on digital marketing on a daily basis by small businesses.

And yet…

With just a few exceptions, you really need to spend money on digital marketing. Over the next 3 years, businesses will spend 33% of their marketing budget on digital marketing, and that’s because there’s a lot of money to be made, so long as you don’t lose it all first.

I’ve Been on Both Sides of the Aisle

7 Sad Ways that Small Businesses Waste a LOT of Money on Digital Marketing

My first business was a food manufacturing company where a large portion of our sales were direct to consumer. So we did a lot of digital marketing, from web advertising to SEO to CPC.

And we wasted a ton of money. Sure, I learned some great lessons – which I’ll share with you today – but we also made a bunch of mistakes that we didn’t really need to make and that were painful at the time.

The biggest reason we made most of those mistakes is because we didn’t understand how digital marketing really works (and it’s not how most folks think – even many fancy marketers in big business get it wrong).

My second business was in publishing – my wife and I owned and operated 2 magazines. We spent money on marketing, but we also sold advertising to companies.

And several of the companies we sold advertising to didn’t see a profitable return on the money they spent with us – something I truly wish we’d been able to change. And the thing is, our advertising rates were either at or below our industry average, meaning that if they’d spent money advertising elsewhere, it likely would have been even worse for them.

The point is, I’ve made these mistakes myself, I’ve seen other businesses make them, and I want to help you avoid them.

Mistake #1: Branding

small business mistake - branding https://jeremyhendon.com
This is a trap that I see and hear over and over again. Every small and medium business wants to build a “brand.”

And I understand why you might want to brand your business. “Branding” usually means that you want people to recognize the name of your company and to associate positive feelings with that name. Maybe you think of Mercedes, Coca Cola, or Louis Vuitton when you think of branding.

You want people to like and respect your business so that they’ll be more likely to buy your products or services. (And also, it’s just nice to have a company that people like and admire.)

But if you approach your marketing this way as an entrepreneur or small business, then you’re pretty much doomed to fail. Even if you’re a big business, this is still rarely a good approach, although it can potentially work for businesses with enormous budgets.

Here’s why “branding” is generally a bad approach to marketing…

1. You Don’t Have An Enormous Budget. True branding takes a lot of time and money. Think about pretty much any of the companies who have great brands. They’ve often been around for 50 or more years. And they have billions of dollars that they throw into marketing. 

If you don’t have that kind of time and money – and I’ve yet to see a small business that does – then branding is going to fall short for your business.



2. Sales Drive Brand, Not the Other Way Around. Brands are built on the basis of customer experiences with your product or service. In other words, although having a great brand might help sales, it’s actually sales that really build a brand. 

A lot of people need to buy and love your product/service in order to build a solid brand. Mercedes didn’t become respected just by shouting that they make great cars – it actually happened the opposite way. Mercedes produced great cars for a very long time, and the vast majority of their customers over the years loved their products and then told other people about them (or just showed off…).

And over time, people came to believe that Mercedes is a great brand – not because they said so but because people saw or drove their cars.

The point is, you need to approach marketing in a way that will drive sales quickly, and branding is one of the slowest, hardest, and most expensive ways to get there.



3. People don’t actually care about your brand. In fact, people are caring less than ever these days. What your potential customers really want is for you to understand and then solve whatever problem they might have.

If you sell a food, people are probably worried about whether that food will taste great and make them healthier. If you sell consulting services, your potential clients probably care about whether you understand their business and can help them earn more money. And if you sell clothes, then your customers probably want you to make them look pretty, sexy, or slimmer.

I am NOT saying that branding doesn’t matter at all. Obviously, people are paying a lot of money for Louis Vuitton bags for reasons other than their practicality.

But when you design your digital marketing campaigns, the name and brand of your company should be an afterthought. If people love your product or service, then they’re going to remember your brand and probably tell their friends about it.

What you should actually be focusing on in your digital marketing is this…

(a) what specific pain/problem do your potential customers want to solve (and what words are they actually using to describe that problem?);
(b) how can you empathize with that pain to make them feel like you understand their pain and their situation?; and
(c) how can you show them (with no risk to them) that you will absolutely be able to solve their problem?

If you focus only on those 3 things, then you will never design an ad or digital marketing campaign that prominently shows your brand or company name, because nobody cares.

On the other hand, your ads (and all of your digital marketing) will contain messages that echo the voices that are already in your customers’ heads. You’ll speak their language, acknowledge their pain, and then show them the way out (which hopefully you can actually deliver on, because otherwise, your good marketing is just going to expose a bad product or service).

Mistake #2: Not Adequately Tracking Your Results

small business mistake - not adequately tracking your results https://jeremyhendon.com

A few years ago, I was in New York City (where I lived at that time), and I was at a networking event. I ended up talking to a woman who worked for an advertising agency, and we discussed marketing for a while.

As it turns out, many of her clients are big companies that you’d probably recognize, and she was part of a team that helped design marketing and advertising campaigns for them – on TV, in print, and in digital media also.

Because I was fascinated, I started asking about how they measured and tracked all of their campaigns and what sort of metrics that their clients were generally looking for. The short answer is that yes, they measure and track, but only on a very superficial level. They measure views, engagement, and a few other things, but their clients generally have very little idea how much money they’re making off of each ad or campaign.

This is certainly not true of all big businesses or all advertising agencies, but after having worked with many small and medium-sized businesses, I’m astounded at the number of businesses that still don’t track basic performance indicators for their marketing.

We’re well into the 21st century, and tracking is not only easier than ever – it’s absolutely essential. If you don’t know exactly how much money you’re making for every dollar you spend on marketing, then you are almost certainly losing money on your marketing, which means your company isn’t really a sustainable business yet.

If nothing else, here are two things that you absolutely must do:

1. Track Your ROI. You must know for each $1.00 you put into a digital marketing channel (social media, advertising, event promotion, etc.), whether you’re making $0.85 or $1.25. The difference between those two numbers is the difference between bankruptcy and spectacular success.

And do NOT base your ROI on lifetime customer value, even though that’s a very popular thing to do today. But as a small business, you don’t have that luxury, because it often takes exactly that long – a lifetime – to earn back your marketing money. Track your ROI over 60 or 90 days. If you’re not at least breaking even after 60 or 90 days, then you need to change your marketing very quickly.



2. Track each channel, each creative (ad), and each target demographic as specifically as possible. You don’t necessarily need to go insane with this, and it varies a little from business to business. If you’re running a pretty popular app, then you’re going to want to (and be able) to track a whole lot more than if you’re running a local health clinic. 

However, at the least, you need to know, for instance, if your particular Facebook ad that’s targeted at men between 35 and 55 in the city of Houston is working or not. This is the power of digital marketing, and if you’re not tracking to this level of detail, then you’re missing out and losing money.

And that’s it.

There’s a lot more you can track, and if you have the team or resources to do it, then most tracking is usually beneficial. However, if it’s just you or a very small team, then don’t go overboard.

And don’t settle for telling yourself that there’s no way to track some of these things in your business. There always is. Even if you sell food 100% in grocery stores, you can still track your marketing in a multitude of ways (coupons for instance).

Mistake #3: Pretty versus Effective

small business mistake - pretty vs effective https://jeremyhendon.com

Louise (my wife) and I love to create pretty things. Louise likes taking beautiful photos and designing awesome graphics, and I love building beautiful code behind beautiful websites. (Even if not everyone thinks the things I build are beautiful…lol).

So because we love doing those things, we still do them to some degree.

But when it comes to marketing, pretty is more of a bonus than anything else. Pretty is useful, and it’s nice to show your friends and family, but it’s not nearly as important as your message, your targeting, and your testing.

A few of the clients that advertised with our magazine had us design their digital ads. Those ads generally performed about 50% better than the ads that other clients would provide themselves, and it’s almost entirely because the ads that we designed were built for one thing only – to get a click.

That’s just a single example, but it applies to pretty much every aspect of your marketing. It’s easier than ever to make nice looking landing pages, ads, and more, which means that you barely need to focus on it at all.

The vast majority of your time and energy should be focused on figuring out (through surveys or otherwise) exactly what message resonates with your market and then crafting your offers and marketing to that specific message. Oh, and also to focus on this…

Mistake #4: Not Testing Enough

small business mistake - not testing enough https://jeremyhendon.com
As with tracking, this is something that you can actually go overboard with. However, the more likely scenario is that you’re not doing enough testing.

No matter how well you know your market and your customers/clients, you never know exactly what marketing message is going to work. And as I’ll discuss in Mistake #7 below, you also may not know who your best ideal customer is. (And yes, I really do mean your “best” ideal customer…)

To get started, you need to test at least your primary message, by which I mean a few things: (a) the problem that your audience is facing, (b) the fears or concerns that they have, and (c) the reason that your product/service is the best solution.

Often, these 3 elements will be part of your ads, your sales pages, and pretty much every aspect of your marketing (or at least they should be). You need to connect with your customers by talking about their problems in the same way that they think and talk about them. You then need to connect further by addressing their fears about those problems – in other words, what’s really going to happen in their life if that problem doesn’t get solved. And finally, you need to show them how you can help them solve the problem.

That’s your primary message, and you need to test all three parts of that. For the most part, all that means is creating variations of those 3 elements and then creating ads, sales pages, and other creatives that contain different versions of your primary message, and tracking to see which versions get the highest click-throughs, sales, and opt-ins.

Apart from your primary message, you also need to test different customer segments. This is something I’ll talk about a little bit more below, but particularly with digital advertising, you should constantly be tracking which customer types are spending more money with your business.

Start with the major distinctions (sex, age, location, etc.), and then keep narrowing down from there.

Mistake #5: Not Pre-Selling

small business mistake - not pre-selling https://jeremyhendon.com

In our health business, we’ve surveyed our entire audience to find out what they were having the most trouble with. As it turns out, building healthy habits was near the top of that list.

So we took what they told us, we used their own words and struggles, and we built a program to help people build healthier habits. But after months of trying to market it to our audience – the same people who told us that this was one of their biggest struggles – we finally accepted that it just wasn’t going to sell.

Perhaps if we’d spent even more time marketing the program and changing the message, then it would have eventually sold. I don’t know. But it reinforced this very important lesson.

Market your product or service BEFORE you build it.

Now, we don’t build anything until we’ve sold a sufficient amount of it. We don’t even start writing a book until we’ve sold at least 20-30 copies of the book.

The alternative is that you spend a lot of time and money building a product, not knowing for sure whether or not it’s going to sell. And then when you do build it, because you’ve committed so much to the product already, you’re likely to keep throwing money into marketing the product, even if it’s not selling.

Sometimes that can work. There are certainly exceptions. But the much easier and more efficient option is to simply pre-sell whatever product or service your business is planning on developing. You can usually offer it for a discount and tell people very clearly that it’s not done yet, but because they’re committing early, they’re getting a big price break (and possibly even input into how the product or service will work).

Mistake #6: No Call to Action

small business mistake - no call to action https://jeremyhendon.com

If you’re going to advertise in any way (and I’m focusing here primarily on advertising rather than all marketing), then you need to have a clear call to action.

In your ad itself, you need to tell your potential customer/client exactly what to do. Do you want them to click on the ad, call a phone number, visit a website, or take some other action?

And if you’re driving people to a webpage, app, or other digital property, then that landing page must be exceedingly clear about what you want them to do.

I’ve seen a lot of companies (mine included in the past) drive paid traffic to a store page that contains a bunch of products. But I’ve never seen it work out profitably. Even driving to a specific product page rarely works.

You need to be driving traffic to a page that resonates with the particular audience you’re driving to that page and that has one goal and one goal only – to get that person to take a particular action (adding to cart, buying, calling, etc.).

No matter where a potential customer sees your offer, ad, product, or service, your goal should be to get them to take a single option. And the way to do that is to give them no other options. If it’s a webpage, don’t put any other links on the page. If it’s an ad, tell them only where they need to call or click (never both and certainly never more).

This single change to all of your marketing can take only a few minutes, but it can dramatically increase the results.

Mistake #7: Not Targeting Your Customers Specifically Enough

small business mistake - not targeting your customers https://jeremyhendon.com
This is the granddaddy of all marketing mistakes, whether you’re using digital marketing or any other medium.

It used to be – with TV advertising, for instance – that you could only pick the shows or time of day when your ad would run. Same for radio advertising. And with newspaper and magazine advertising, you could pick the publication, but that’s about it.

Digital advertising has changed all of that. You can still pick where you want your marketing message to run (on any particular website, on Google, on Facebook, on Pinterest, on a particular app, etc.). And you can almost always choose what times to run the ad.

But much more than that, you can narrow down precisely who sees that ad. It could be single dads from Minneapolis who love cotton candy. Or maybe you want to target 27-30 year old women who earn at least $50,000 and have a passion for paintball.

Listen, maybe it’s not necessary for your particular business to narrow down as much as I’ve just suggested. But then again, maybe it is. It’s impossible to know until you start breaking it down.

No matter what you do, you should constantly be trying to cater to your ideal customer(s) as much as possible. Best Buy is famous for dividing their customers into very specific “types”. A “Buzz” customer was a young tech enthusiast, while a “Jill” customer is a suburban mom who might be slightly intimidated by tech jargon. In fact, Best Buy went so far as to build particular stores that would cater to one or more of those customer types.

In other words, Best Buy – a store that could theoretically have appealed to everybody – knew that they needed to target their customers as specifically as possible.

When you do this, your customers automatically feel like you understand them and as if they’re being treated in a special manner. And that makes them infinitely more likely to do business with you.

Recap

For the sake of those who didn’t want to read this entire 3,600 word article, here’s what you need to know, mostly in order of importance…

1. Small businesses and entrepreneurs waste a ton of money on digital marketing.

2. Above all else, target your ideal customer(s) very specifically. Focus on appealing as much as possible to them in your ads and other marketing.

3. Forget about branding. It will happen naturally as you reach your ideal customers and provide them with great product and service solutions. Your brand name or logo should be the last thing anyone sees in your marketing. Focus instead on talking about the specific problems and concerns of your ideal client or customer.

4. Test as much as possible. This will vary based the size of your team and your resources, but definitely test at least your primary message and several different customer/client demographics.

5. Pre-Sell every product/service you ever offer. Never create anything before you have people already paying you money for it.

6. Track as much as possible. If you don’t know whether a campaign is going to be profitable within 60-90 days, then you should assume that you’re losing money on it.

7. For every ad, landing page, and other creative, have a clear call-to-action for the one action (click, add to cart, call, etc.) that you want a potential customer to take.

8. Mostly forget about how pretty your marketing is, until you’ve got everything else in order.

Finally, a word about hiring marketing firms and advertising agencies…

For the most part, marketing firms and advertising agencies are good people, but their incentives are backwards. They tend to make more money when you spend more money on your marketing and advertising. So while they no doubt want you to get great results so that you’ll stick with them, they’re often more focused on convincing you to spend money on marketing and advertising that you don’t need.

That doesn’t mean you should never hire a marketing firm or advertising agency. But if and when you do, you need to be very clear about exactly what you need them to do and what kinds of results you’re looking for from them. For me, I would always want metrics that show me exactly how much revenue they’re bringing in for me every 60 days for every $1.00 that I spend with them.

If you’re doing your own marketing, keep it simple. Focus first on narrowing your target market and perfecting your message, and most everything else will start to fall in place.

7 Sad Ways that Small Businesses Waste a LOT of Money on Digital Marketing

Your Experience

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