Almost no campaign is going to be profitable from Day 1. It takes time, effort and active management to move a campaign from one phase to another. The time it takes for a campaign to switch from one stage to another is going to vary from product to product and is also dependent on the amount of data gathered. A higher willingness to spend at the launch stage is going to help you get more data and move more quickly into the next stage.
Here is a snapshot of a typical campaign lifecycle:
Let's start by reviewing the phases of the campaign lifecycle:
Use this for new products that require more exposure, impressions and clicks. Willingness to invest more upfront can often lead to better results down the road
Increase Sales (Grow)
Use this for a campaign or product that is entering the growth phase of the product lifecycle. This is generally a time of highest sales volume.
When you are ready to make sure you are making more money per click. You need to make sure that you are willing to sacrifice some of your sales volume to achieve increased profitability.
How do you know if you have moved from one phase to another?
While we would love to provide specific and detailed timelines, the best way to gauge this is actually by changes in metrics. Use the metrics as mile markers and to see how your campaign is maturing:
- At the beginning, every campaign is considered to be in the "launch" phase. The more you are willing to spend, the more "aggressively" you can launch a product.
- As you start to see increase in numbers of conversions and a growing conversion rate, that is an indicator that your campaign is moving into the "increased sales" stage. During this stage you can expect to see spend stabilize, impressions start to decrease and sales volume increase.
- Moving into "target profitability" is a conscious decision. To do so, start decreasing MACS gradually so you can eke out more money per sale.
What to expect as you move through the campaign lifecycle:
NOTE: As with any business decision, there is an opportunity cost associated with advertising.
- If you are focused on increasing total sales and sales volume, this can mean lower profitability.
- If you are focused on generating impressions and clicks, this will mean an increase in spend.
Every seller wants to have the most sales at the lowest cost, but this does not happen overnight. Change takes time and there is always an opportunity cost associated with advertising-related business decisions.