One of the many questions Manufacturing, Electronic and technology companies always ask is, "Why is Inbound marketing better if it takes longer? Followed by "With PPC we can achieve quicker results". When generating B2B leads such as Manufacturing lead, technology leads and electronic leads, you have to build customer trust before your product engineers and sales team can promote and sell the company's products and services.
In this blog we have put together a real world marketing budget analysis for a IT Technology based firm on why Inbound Marketing has a superior Return On Investment in comparison to PPC.
Understanding Inbound Marketing Vs PPC Marketing
Using Inbound Marketing to Attract customers, your results will have a longer lasting impact and by the end of an Inbound Marketing campaign, it will be generating leads for you longer after you've stopped.
It should also be noted that the organic search results are nearly four times more trustworthy than PPC Adwords. Inbound Marketing also contributes to building brand awareness and increasing trust among customers.
This translates into building a greater audience, more frequent purchases, which will give you an advantage over your competitors.
When a PPC, campaign begins its effects are immediate. In the case of PPC banner ads, the results achieved are related to the amount of money that can be invested in advertising on Google, as well as management fees. The fees are for managing data analytic, A/B split testing, ad-word optimisation and much more.
However once a Paid per Click campaign is stopped, there will be no residual traffic back to your business. The PPC model is based around how much a keyword or phrase costs. Therefore if your keyword becomes successful, Google will offer them to your competitors who could potentially outbid you or drive up costs resulting in less paid traffic. Short term are always beaten by long term planning and execution.
While we can get results fast for specific phrases from PPC campaigns, getting the results from Inbound Marketing can take up to several months but it is far more cost effective.
Calculating PPC cost
PPC has two cost components
- Advertising Budget : What you need to Pay Google
- Management budget: What you pay an agency to ensure best performance
Budget vs Results
If we apply three different monthly budgets using an IT Technology company's keyword research, we can calculate the approximate amount of visitors.
Applying the same keywords, we can calculate the amount of traffic we are likely to generate each quarter. Because of this, Inbound Marketing has an accumulative effect. If we look at the top 30 ‘advanced’ & ‘basic’ keywords or terms and presume that we achieve an average google ranking position of #3 across all the keyword terms:
Persona Targeted Inbound Marketing
Applying the same keywords, we can calculate the amount of traffic we are likely to generate each quarter. Because of this, B2b Inbound Marketing has an accumulative effect. If we look at the top 30 ‘advanced’ & ‘basic’ keywords or terms and presume that we achieve an average position of #3 across all the key terms then we are looking at an average of 1,600 searches per month with a conservative CTR (Click through Rate) of 10%.
Cost Comparison Analysis
A PPC campaign has to have results measured over one quarter. While SEO has to have results measured over two quarters. We have created a cost comparison for PPC vs SEO. For PPC to have the same number of searches as SEO the maximum budget of £1,500 has to be applied.
If we use a customer conversion rate of 5% for all driven traffic we can calculate the Cost Per Acquisition (CPA) for a new customer.
In the case of PPC banner ads, the results achieved are related to the capital that that can be invested in advertising on search engines as well as management fees. Once a campaign is turned off, there will be no residual traffic.
In the long run, targeted Inbound Marketing offers far superior returns, because it is cheaper, more cost-effective, and has more creditability with customers which PPC can not convey. From an internal business point of view Inbound Marketing gives you time to implement business changes, such a hiring new staff to cope with new customers, targeting new sectors integrating existing or new campaigns.
As you can see from our analysis the inbound marketing’s CPA is £164.62 per customer, whilst the PPC’s CPA is £337.73. If we use lower PPC budgets, this will impact your traffic and will increase your CPA. We can conclude that an Inbound Marketing campaign has a 48.8% cheaper CPA and provides value for money and a better ROI. Do you want to own or rent your marketing?