I don’t gamble in business. Large financial risk doesn’t personally scare me but I don’t go near it because it is not smart and as much money as you want to make can be made without it. That is why to me marketing is all about testing.

So usually in business one must invest money in marketing campaigns in order to sell their product or service. The problem is knowing how well each campaign will pay off.

If I invest $50,000 in advertising my real estate brokerage company on local billboards for 1 year am I going to get the $50,000 back in revenue? How fast? Will I make a profit from this advertising? How much? Is this the best place to invest these marketing dollars?

Every entrepreneur is faced with questions like these. How do we go about attacking this? We systematically test!

Once you’ve learned some about your target market and factor in some common sense elements like going where your customers are, analyzing historical data, etc, then you need to choose your specific avenues for advertising and publicity. When starting to test, don’t pour your entire budget into just one avenue. Over time, the purpose is to fairly accurately predict the performance of your marketing investments and consistently grow your returns with minimum risk. So from the very beginning you want to focus on finding predicable winners. Depending on your budget and business maybe 10, 50 or 100 initial avenues is a good number to test but not just one.

Testing a good number, yet not too many, allows you to balance risk. By diversifying among multiple avenues you are less likely to blow your budget without returns and since you will gain insight on how several avenues perform you can drastically increase your odds of making healthy profits during the second round.

Example:

You have a $50,000 initial round marketing budget. You decide to test 30 separate marketing avenues through multiple channels.

5 separate regional press releases
3 local billboards
2 local sponsorships
3 magazines ads
2 local newspaper ads
2 local TV ads
10 internet ads
3 supported affiliate partnerships

After each of these runs their course you can see how they performed. Maybe one magazine ad produced a 300% ROI while another produced absolutely no money and a bunch of hate mail. The goal is to know this stuff so next time you can make better financial returns and refine your marketing even further.

Of course, in order to accomplish any of this, you have to setup strategies and tactics for accurately tracking the responses from your marketing back to your business (especially transactions).