Weighing up advertising vs conversion rate optimisation
When you’re setting your marketing budget, you’ll also be thinking about KPIs. Traditionally, a lot of spending goes into advertising; this includes digital marketing, so you’ll look at CTR on your Google Ads and promoted posts. It’s been drilled into us for years, so it’s no wonder we put so much budget into driving traffic to our websites. But what happens once a person lands on your website? How many of your visitors are converting?
In this article, we’re going to compare the benefits of focusing on website conversions vs website traffic. We’ll be looking at why you should optimise your conversion rate and how that compares to investing in increasing website traffic.
Why should you optimise your conversion rate?
Let’s start with an example.
Say your website generates a total revenue of £10,000 per month. You intend to increase that revenue by 2%. Now you have to decide whether you should do this by optimising your conversion rate or increasing traffic by investing in digital advertising.
You invest in increasing your month-on-month conversion rate by 2%.
You invest in increasing traffic month-on-month by 2%.
Increasing both the conversion rate (scenario 1) and the amount of traffic (scenario 2) by 2% have the same impact. After 24 months, both scenarios will increase your monthly revenue from £10,000 to £15,769.
So if they both achieve the same financial result, does it really matter how you go about it?
How does investing in CRO vs Digital Marketing compare?
Let’s look at what happens when you stop investing. The moment you stop paying to promote your website, your website traffic will fall – and so will your revenue. But if you stop optimising your website’s conversion rate, your revenue will stay the same.
Of course, this example is deliberately simplified. It really only serves to illustrate the long term value of improving conversion rates vs the short term gain of digital marketing. It assumes you need the same level of money, resource, and time to achieve each intended objective.
In the real world, the investment will vary. Increasing website traffic using PPC and SEM will inevitably require an increase in your month-on-month spend.
If you invest in optimising your conversion rate, you will increase the return on investment of any marketing spend. It will create a long term improvement in the financial performance of your website.
What are the added benefits of improving your conversion rate?
While more conversions will increase revenue, it’s not only about the bottom line. Improving your website conversion rate will also make it easier for users to comprehend your product and services.
Not only that, but improving the user experience on your website will increase the likelihood that a customer will come away with a positive view of your brand. This, in turn, will encourage repeat purchases and positive online reviews. It will also pave the way for word-of-mouth recommendations. If you’re relying on your website for repeated conversions or transactions, it’s worth focusing on making your website convert more.
The value of making small changes to your website
To increase your monthly revenue, you’re going to have to prioritise which changes to make on your website first. Should you invest in making significant changes? Or should you focus on smaller, incremental improvements?
Some changes will require a larger investment at the start. They may also take a considerable period before you start to see significant returns. And sometimes, there is no immediate financial justification for fixing a problem. Is it worth spending £5,000 to fix an issue that will increase your conversion rate by 0.5%?
When prioritising issues to resolve, don’t just think about conversion. It’s also worth thinking how much an issue will impact on your customer’s experience and, in turn, their perception of your brand. A particular issue might not prevent users from converting, but their experience could involve some pain or frustration. Yes, they’ll convert once. But they might choose your competitor next time.
What’s the best strategy for your website?
As it happens, deciding whether to focus on generating traffic versus improving conversion is a false economy. A website can’t convert if it has no visitors. By the same token, a website doesn’t address issues that prevent users from converting will miss out on revenue.
Traffic generation strategies and CRO are not mutually exclusive. It’s always worth investing in both. And given that digital advertising can be expensive, it makes good financial sense to increase the chances that your hard-earned website visitors will make a purchase.
If you’d like to speak to us about Conversion Rate Optimisation, drop us a line, and we’ll be happy to walk you through the best strategy for you.