Gossen's first law
Posted: Mon Jan 06, 2025 10:10 am
Even more marketing budget?
But with all these possibilities, it sometimes seems that the online marketer forgets that the bottom line result also depends on the conversion on the site itself. I recently spoke to a client in London, who sold his specialized software online. The discussion was about the fact that they had tried everything, but were unable to get more traffic to the site below a set CPA (Cost Per Acquisition).
The logical conclusion was that the conversion on the site itself now had to be optimized. This is an approach that I unfortunately do not encounter very often: a broad view of online marketing where not only a euro can be moved between media channels, but also between media and the website itself.
marketing
This approach is actually the same as what we learned in our economics books back in the day: Gossen's first law , namely the law of diminishing returns. In short, this says that every subsequent euro you spend yields less than the euro before it. For example, the first media euro will bring ten new visitors to the site, for the second euro you spend that will probably only bring nine. The hundredth extra euro might only bring one new visitor to the site. That last visitor cost one euro, while the first only cost ten cents.
That last euro could also have been used for uae phone data conversion improvement on the site (optimizing forms, ordering processes, proactively making offers, personalized content). Suppose that this investment had increased the conversion on the site from 10% to 11%, then this would have resulted in one extra order for 100 visitors. If you had wanted to achieve this with extra media efforts, this would have meant an extra investment of €10. In other words, this last euro has yielded a return on the site itself that is ten times higher.
Not just for media
Of course, the same applies here as for media: the effectiveness of investments in conversion optimization will also decrease as more is spent. But there is also an interesting additional effect, which argues for considering media and website optimization as a whole. A more effective conversion ensures that it makes sense to invest extra money in more visitors. That is why the online marketer must always consider the use of online media and website optimization as a whole. Not only in terms of responsibilities, but also in terms of budget.
But with all these possibilities, it sometimes seems that the online marketer forgets that the bottom line result also depends on the conversion on the site itself. I recently spoke to a client in London, who sold his specialized software online. The discussion was about the fact that they had tried everything, but were unable to get more traffic to the site below a set CPA (Cost Per Acquisition).
The logical conclusion was that the conversion on the site itself now had to be optimized. This is an approach that I unfortunately do not encounter very often: a broad view of online marketing where not only a euro can be moved between media channels, but also between media and the website itself.
marketing
This approach is actually the same as what we learned in our economics books back in the day: Gossen's first law , namely the law of diminishing returns. In short, this says that every subsequent euro you spend yields less than the euro before it. For example, the first media euro will bring ten new visitors to the site, for the second euro you spend that will probably only bring nine. The hundredth extra euro might only bring one new visitor to the site. That last visitor cost one euro, while the first only cost ten cents.
That last euro could also have been used for uae phone data conversion improvement on the site (optimizing forms, ordering processes, proactively making offers, personalized content). Suppose that this investment had increased the conversion on the site from 10% to 11%, then this would have resulted in one extra order for 100 visitors. If you had wanted to achieve this with extra media efforts, this would have meant an extra investment of €10. In other words, this last euro has yielded a return on the site itself that is ten times higher.
Not just for media
Of course, the same applies here as for media: the effectiveness of investments in conversion optimization will also decrease as more is spent. But there is also an interesting additional effect, which argues for considering media and website optimization as a whole. A more effective conversion ensures that it makes sense to invest extra money in more visitors. That is why the online marketer must always consider the use of online media and website optimization as a whole. Not only in terms of responsibilities, but also in terms of budget.