Some Personal News
#32: Why 43% YoY revenue growth on the same budget is realistic
Happy Sunday. To those I spoke to this week - thank you. I loved connecting and hearing what you’re up to. A very warm welcome to all the new subscribers. I’m thrilled to have you as readers and truly appreciate your feedback and support.
In this post I’ll cover:
NewTV - thoughts
How to set targets for channels based on historical data and org goals
email me at tobesnewyork@gmail.com and I’ll send you the full Excel sheet with formulas – and I’m happy to explain any of the numbers in greater detail using your organization’s numbers.
Launch a Podcast > YouTube
Let’s dig in.
newTV
The newTV industry seems generally impressed with the way Netflix has entered the ad market. Their decision to join BARB (Broadcasters Audience Research Board) was brave, especially given their reputation for being very closed on data about show performance. Recognizing the need for quality saw them offer a low ad load, effective frequency capping and selectivity over the brands that could advertise. The new partnership with Double Verify and IAS reinforces this approach.
They’re now looking at the tech they need to replace XandR and Comcast-owned FreeWheel is back in consideration. It’s seen as the only partnership option and the two leading candidates for acquisitions are Roku and Magnite.
My money is still on Roku as their current strength in ads would be a huge asset for Netflix. If Bloomberg is correct saying that 1M are now on the Netflix ad service - there’s a long way to go and bringing in more inventory would make Netflix a player straight away.
The BARB CEO is very focused on the quality of TV that they measure and shared his thinking on how they measure TikTok and YouTube:
Given the news that Disney+ users seem to have swallowed their price increase maybe Netflix can drive more subscription revenue too.
How to Set Targets for Channels Based on Historical Data and Org Goals
After last week’s edition of SPN, we know how to add new channels to the mix and give them a maximum chance of success by using other channels’ data to hyper-start newbies.
The last – but not least – topic in this series of building a marketing program according to the donor engagement matrix is how to set targets for channels and communicate them to the organization at large.
Short answer – don’t! Don’t set per-channel targets. They only lead to wrong questions within the organization. Instead, set the Donor Lifecycle goals.
As marketers and fundraisers, our job is to generate value that’s higher than our activities' cost – including budgets, people expenses, etc. And ideally, that value-generating machine becomes more effective over time. But we can’t control everything – neither the budgets of our competitors that push the inventory prices up, nor the banking crisis, nor the inflation rate. So, what can we control?
The Donor Lifecycle effectiveness. I’ve shared this picture multiple times before in the context of roles different channels play in the mix:
Let’s break this table down into trackable ratios that most of us already keep a record of – from start to finish:
Cost per Touch
Click Through Rate (CTR)
Conversion Rate to First Donation (CVR)
Cost per Donation (CPD or a more classic CPA)
Average Donation Value
Cost per Current Donor Touch
Conversion Rate to Monthly Donor
Cost per Monthly Donor
Average Monthly Donation
Average Longevity before Lapse
Average Reactivation Conversion Rate
Average Reactivation Donation
Now, the “Cost per” metrics are useless – we can’t improve them directly. I also don’t like the Average Donation metrics – they’re not “independent” because they have to go hand-in-hand with conversion rates and different audience types. Let’s get rid of those and add a few more metrics that can be improved on instead:
Ad Quality Score
Creative Click Through Rate
Landing Page Conversion Rate to First Donation
Donor Segment Average One-Time Donation
Landing Page Conversion Rate to Monthly Donor
Donor Segment Average Monthly Donation
Donor Segment Average Longevity Before Lapse
The above 7 metrics are almost all you need to build an actionable annual marketing plan.
The only other input needed is the cost of media. It’s safe to assume it to be in line with the general inflation, say a 5% increase YoY.
Based on my experience with various organizations, I believe these metrics – every one of them – can be improved by 10% YoY if the baseline we are optimizing against is a classic, non-Donor Lifecycle marketing program. That rate of improvement, of course, slows down after the first year – the safe assumption is a 15% slowdown. Check the below table, projecting 5 years of this scenario:
The key in the above table is the second-to-last row. Yes, you’re reading it right – I’m suggesting that 43% YoY revenue growth with the same budget is realistic and – even more importantly – should be your target and the target you set for your teams and your agencies.
Now, of course, there are some caveats here – first and foremost, where you are in your journey already. The above table mainly applies to newer Digital Acquisition programs that were started or refreshed recently and aren’t yet showing exponential growth numbers but are benefiting from the tips I’ve been sharing over the last months.
Look at your historical rate of improvement – if your campaign was struggling and has never experienced that 10%+ YoY increase in the main metrics, this scenario applies to you. And if you are already past this stage, project my last row – the “rate of improvement” – further to determine what is the right number for you.
The last caveat to address is budget. In my experience, an increase in budget allows testing faster and, therefore, even accelerates the rate of improvement – unless it starts growing too fast.
Based on what I’ve seen across various organizations, my rule-of-thumb relationship between budget increase and rate of improvement in metrics is as follows:
This table might be a bit confusing – in a nutshell, it means that the optimal budget growth YoY is 50%. It results in the highest-possible ROI in a year of increase. Growing the budget faster results in diminishing returns, leading to decreased ROI. So, if your organizational goal is to maximize ROI – don’t ask them for more!
The above table should be handy for any fiscal planning season.
> Ping me directly if you’d like the full Excel with formulas – and I’d love to explain any of the numbers in greater detail using your organization’s numbers.
Launch a Podcast > YouTube
I believe that your brand needs a podcast. It’s a phenomenal channel to narrate your story, your mission, your why - past, present and future - and engage new audiences.
YouTube has 2.6 billion monthly active users. Spotify has 456 million (but only ~30M listen to podcasts). Stitcher has 15.3 million weekly users.
YouTube is used much more heavily for search. And Shorts have massively increased discoverability relative to regular videos.
Plus if you’ve already got a podcast, YouTube is a no-brainer . You should be posting it there. Even if you don't record video (which you should).
Here are 7 tips for podcasting on YouTube to encourage you to get set up and set yourselves apart.
Take snippets of your podcast and share them as Shorts on the same channel. It's far easier to go viral with a Short than it is with a full episode.
Organize different video formats into playlists on your channel.
Include your host or guest speaker’s face in the thumbnail image. Users tend to gravitate toward thumbnails featuring faces. Find more tactics for YT thumbnails here.
Use intriguing titles. Don't write misleading clickbait, but know that you need to capture someone's interest enough that they click.
Add chapters to your episodes. These make your episode easier to navigate and keep people around longer as they can skip to parts that interest them the most. Type the time for each segment in 00:00 format in the video description. YouTube will automatically generate them.
Even if you don’t have video in your recording sessions, you can and should still publish your podcasts on YouTube. Go for an audiogram format—pair images with your audio. For more originality, use an AI art generator like DALL-E.
But we highly recommend recording video to increase engagement and to be able to do Shorts. Riverside.fm is great for high-quality remote recording.
Add captions. Captioned videos have a higher average watch time.
Add a watermark to your video that encourages people to subscribe. Here's how.
This is a super helpful guide from Google/YT.
Reading
This DMA resource from last year proved useful this week, so sharing it here: Making Measurement Meaningful 2022
In a world where data is everywhere it feels good to celebrate creativity - the human superpower. I loved this (old) story of Google inventing a Pizza brand to test what works and what doesn’t.
The age of average — Alex Murrell - how everything is like everything else.
Eric Seyfert has a good breakdown of the ad opportunity for Pinterest.
Eric also features in this Marketecture podcast talking about mobile marketing, the effect of ATT, and the future of hyper-casual gaming.
Thank you for reading Some Personal News
If you find this content valuable please share it.
How can I help you? I use my experience, expertise and network to help mission-driven organizations solve interesting problems and grow.
See you next week.