How effective is your marketing?
If you spend $10 to place an ad that brings you $9 of net profit, that ad cost you $1. That is, the more ads you place, the more money you lose.
That’s a bad ad. I hope we can agree on that.
Call spending like this Infinite Loss, though “infinite” will end when you run out of money. Maybe it’s not that infinite after all.
If you spend $10 on an ad that brings you $10 in net profit, that’s Infinite Zero. In theory you can keep this up forever, especially if your own salary as owner is factored into your expenses.
Infinite Zero is perfect for nonprofits that don’t feel obliged to grow. It could work for a company with five, 50, or 5,000 employees: everyone is paid, raw materials are covered, as is rent, electricity…. But if there are investors, they aren’t going to like an Infinite Zero marketing strategy at all - and as the owner, you’d be right to feel that your business isn’t going anywhere (except maybe around a hamster wheel).
Then there’s a successful marketing strategy, the thing we owners are all after. It looks more like this:
If you spend $10 on an ad that brings you $11, that’s a good ad. The more times you spend that $10, the more money you make.
Call this Infinite Gain.
If you run that ad 1,000 times this week, you have an extra $1,000 in your wallet. Good going! If you run it 1 million times, that’s - you guessed it - $1,000,000 you didn’t have before the ad ran.
An Infinite Gain marketing strategy will turn your business into a perpetual money machine.
This isn’t just theory. A retired friend of mine is co-founder of a large company. Through lots of small, inexpensive advertising experiments, his rental business figured out that every time they spend $10 on a google search term (the name of the leader in their industry), they made $40 in net profit. Spend $20, net $80. Spend $10,000, net $40,000.
There was a cap to this largess, though: they could only buy so many ads before all their rental units were in use.
They could manufacture more units to rent, and make more money once those additional units were completed. They did this a little at a time, and enjoyed the results.
As with Infinite Loss and Infinite Zero, the real world will step in at some point. Infinite Gain may seem endless (thus the name) but it’s hard for that to actually pan out. Life gets in the way. Running out of stuff to rent or sell. Running out of potential customers.
At some point, if my friend’s company didn’t run out of units to rent, they would run out of people in need of their product. Before they hit that spot, they would find it increasingly costly to add each additional customer - say, $11 for each new customer, then $20, then $30, until finally their efforts brought them to $40 per new customer: their Infinite Zero.
Economists and psychologists call that gradual process, where each dollar you spend buys you less and less, the law of diminishing returns.
Still, I hope the concept of Infinite Gain helps you look at your marketing with fresh eyes.