Why paid ads
won’t save you

Background: The Function of an Advertisement

When a firm reports that its advertising did not work, the advertising is frequently the one component that did its job. It delivered a stranger. That stranger then passed through five or six additional steps and dropped out at one of them. Everything after arrival determines whether the person becomes a client: the landing page, what the page asks for, whether anyone responds, how the first conversation goes, and what happens if they do not decide that week.

The Six-Step Model

Between a stranger seeing an ad and money arriving, there are typically six steps. They see the ad and click. They land on a page and stay long enough to read it. They provide a name and an email address. Someone at the firm responds. They take a call. They sign.

The Compounding Effect

Assume each step succeeds four times out of five, an 80 percent rate that most firms would consider strong for any single step.

• 100 Enter: Of 100 people who see the ad, 80 click, 64 read the page, 51 provide a name, 41 receive a reply, and 33 take a call.
• 26 Sign: 26 reach a signature. Nothing failed. Every step performed at 80 percent, and 74 of 100 people were lost to the sequence.

Why Individual Improvements Underperform

Consider the promise of any new tactic: one step made perfect. If a new landing page retains every single visitor while the other five steps remain unchanged, 33 sign instead of 26. The improvement is seven people, for the full cost and disruption of the tactic. Seven people is what fixing one step is worth while five others continue to lose people, which is why each new tactic disappoints in the same way as the last.

Increasing spend is the same move in a different form. Sending 200 people into the same sequence produces 52 signatures instead of 26. The firm has paid twice, and the same three in four still drop out along the way.

Two Steps Already Measured

Two of the six steps have been quantified by independent research, and neither finding came from spending more.

• The Reply Step: Researchers timed the first contact attempt on 1.25 million sales inquiries across 42 US companies. Firms attempting contact within the hour were nearly seven times likelier to reach a live person and confirm a viable inquiry than firms waiting one hour longer. This step can be changed without spending.
• The Click Step: In 2012, eBay stopped bidding on its own brand name across roughly a third of the United States. 99.5 percent of the clicks it had been paying for returned through the free results beneath the ads. The spending was purchasing visits the company already received.

Implications for Your Business

Before the next increase in spend, record how many people saw, clicked, landed, submitted, received a reply, took a call, and signed, using actual records rather than estimates from a meeting. Most firms find that two or three of these figures have never been measured, and that the weakest step is not the ad account under discussion. The cheapest weak step should be fixed first. Raising a step from 40 percent to 80 is worth far more than improving a step already at 80, and the cheapest step to fix is rarely the advertising.

In Conclusion

The six-step model explains why paid advertising, on its own, rarely resolves a revenue problem. Advertising supplies attention at the top of a sequence in which every subsequent step compounds. A firm that measures each step and repairs the weakest one first will typically gain more than a firm that increases spend or purchases a new tactic, because the losses occur after the ad has already done its job.