From: alexhormozi
Effective ad targeting is crucial for business success, influencing not only lead generation but also the efficiency of sales operations and overall profitability [00:04:41]. Improper targeting can lead to wasted resources, low show rates, and poor conversion rates [00:04:48].
Understanding Ad Targeting
Ad targeting refers to the process of identifying and reaching the specific demographic or psychographic group that is most likely to be interested in a product or service [00:04:43]. It defines “who’s actually seeing this promotion” [00:04:46].
For instance, targeting “teeny boppers” for a laser hair removal appointment would be ineffective, as they are not the intended audience, leading to scheduled appointments that don’t materialize into sales [00:04:48]. This directly impacts the show rate, which is the percentage of people who show up for their appointment [00:00:22].
Impact of Incorrect Ad Targeting
In one business case, the target audience was intended to be 25-35 year olds who were gainfully employed and loved their job [00:05:07]. However, the actual targeting was for 18-24 year olds [00:05:13]. This discrepancy resulted in a significantly low 49% show rate [00:02:43].
The reason for this mis-targeting was an incorrect ad objective where the media buyer was optimizing for the lowest cost leads and lowest cost appointments, rather than qualified prospects [00:05:17]. This meant that the sales team was spending considerable time cancelling 75% of their appointments, essentially “literally burning money” [00:05:44].
Optimizing Ad Targeting
To correct the issue, the ad objective was switched to optimize around cost per sale [00:05:36]. By optimizing for who genuinely converts into a sale, the source of sales shifts to more qualified leads [00:05:41]. This change was implemented by addressing a personnel issue, replacing the negligent media buyer with a new person who could correctly target the intended audience of 25-35 year olds [00:17:18].
Results of Optimized Ad Targeting
Along with other sales process improvements, fixing the ad targeting contributed significantly to a 70% increase in show rate, reaching the benchmark of 70% from a previous 49% [00:22:28]. This 40% improvement in sales was achieved in just two months [00:22:47].
This demonstrates that targeting the right audience from the outset ensures that the sales team interacts with genuinely interested and qualified prospects, leading to more efficient processes and higher conversion rates. It is a critical component of strategies for business growth and plays a significant role in scaling businesses.