Digital Chai Pe Charcha – 101 on Digital Advertising for Startups

The third edition of the Digital Chai Pe Charcha, held at our office on 23rd April 2016 received a wonderful response with about 25 participants including entrepreneurs, professionals, digital marketers and social media influencers taking active part in the discussion. The topic of discussion, led by Social Beat co-founder Suneil Chawla, was the effective use of digital advertising for customer acquisition and business growth.

As a recap for those who attended the session and for the benefit of those who didn’t, here’s a summary of the key takeaways from the session:

Digital Advertising Terminology:

For those who are new to the world of digital advertising, there was a brief introduction to the terms that are used in the space:

Cost per Click (CPC): How much an advertiser pays, on average, for each ad click. CPC is calculated by dividing the total amount spent on a campaign by the number of clicks generated.

Cost per Mille (Thousand Impressions) (CPM): Metric that shows how much it costs to serve 1,000 ad impressions. Also used as a standard measure for buying display ads, as inventory is generally sold on a CPM basis.

Cost per Lead (CPL): How much an advertiser pays, on average, for each ad click that results in a lead conversion. CPL is calculated by dividing the total amount spent on a campaign by the number of leads generated.

Cost per action (CPA):  A pricing method which calculates cost based on the number of times a user takes action based on an ad (conversions).

Click-through rate (CTR): The percentage of impressions that results in a click through.

Digital Advertising Industry Benchmarks:

Following a brief discussion on how attendees were using digital advertising for their business, there was a discussion on the CTR, CPC, CPA and CPL benchmarks one can expect to see for different industries, based on the years of experience Social Beat has in the space. The table with the industry benchmarks is below:

Digital Advertising Exercises:

Event attendees then made four teams and brainstormed on a digital advertising exercise – Two teams worked on increasing the number of orders for an ecommerce client while two worked on expanding the business for a retail chain to 100+ stores across two Indian states.

The ecommerce exercise can be downloaded here and the retail chain exercise can be downloaded here.

Key takeaways from the exercises:

1. While scaling up digital advertising spends, always allocate more budgets to the platform or channel that is known to be performing and delivering results. So, for example if Google Adwords is proving better leads/orders and sales, revenue then grow that channel further. For many brands it might be Facebook, for some it could be Adwords, Third Party Platforms, Linkedin or even Pinterest.
2. Every platform will have some ceiling beyond which spends cannot be scaled up anymore without increasing CPA. Past data from individual platforms and from Google Analytics can help with this.
3. It might be prudent to allocate a small percentage of your advertising spends (anywhere between 5% to 10%) to experimenting with newer channels and avenues for customer acquisition.
4. Facebook tends to be the lowest cost of acquisition for most industries and is an excellent medium to target audiences who are not necessarily searching for your product/service yet.
5. More detailed ideas on leveraging digital advertising can be seen here.

Those of you who missed the first two editions of the Digital Chai Pe Charcha can check them out below:

Edition 1 - Challenges faced in marketing a startup

Edition 2 - Content Marketing Success in 2016

You can follow us on Facebook and Twitter or check out the hashtag #DigitalCPC for more details on the next Digital Chai Pe Charcha meet.

Are there any challenges you face when it comes to digital advertising for your brand? Do let us know in the comments below and we will be happy to help you out.