U-MUSIC Case Study

How I utilized online advertising to ramp up Income for a small business

In Janurary 2019, a good friend of mine turned to me to help him take his business to the next level. Up until the beginning of 2019, USR-studio (now known as U-Music) was a recording studio. Their main business was recordings and mixing of songs, albums, voice-over and video clips for different events. Located in a residential area outside of central Jerusalem, Israel – the main way to get new customers was through word of mouth, and a small budget allocated to Google search ads.

The business was generating a decent income, but the owner U wanted to scale up his profits, and cut the tie between income and hourly rates. For this to happen, the owner had the idea of using the space he has to add live courses to his business repertoire. By doing this, he could ramp up the income per hour by the amount of students in each course.

When we set up to build our online media funnel, there were a few questions that needed to be answered. We set out to answer them during a limited time pilot, and later on in the year:

  • What would be the CPL (cost per lead) for each of the courses? 
  • What would be the sale rate and ROAS (return on ad spend) for leads that we acquired online?
  • How long will the sale process take for these Leads? 
  • What is the best way to go on Facebook ads – native lead generation on Facebook, or a website conversion campaign?
  • Can Google Ads yield leads in a price range that leaves room for profit? What type of campaigns are right to work with on that platform?
  • What is the ideal length and setup of the marketing funnel, that will provide the optimal sale rate from leads?

The Bottom line

Before diving into the details of different campaigns and tests we did in order to get the results we were aiming for, I am going to spoil it by revealing the results. I believe the process is as interesting and important as the results. So here is the bottom line for our 2019 marketing efforts.

A Diagram showing the spend, number of leads and sales for u-music

In one year of marketing and advertising the school, U-Music invested approx. 20,000 NIS (equivalent to ~ $5,800) in paid advertising. This produced a total 368 leads (avg. CPL of 55 NIS), resulting in a total of 68 sales (avg. cost of around 295 NIS – 18% sales from conversions). Total income from leads for 2019 was 186,900. Average income per student was 2750 NIS – making the ROAS around 9.3 NIS per each NIS spent.

This is pretty simplistic, and doesn’t reflect the hard work and intense planning that was done in order to reach these results. In the next part of this paper, I will address our marketing efforts on a quarterly basis.

Q1 – Warming up 

Getting into this project – my main concern was the creative side. Although, my experience is sufficient to gather if a copy text is good or not, I myself am no copywriter. With the limited budget and time, we could not outsource the content writing. What we ended up doing was combining my experience with U’s intelligence for this task.

I do this a lot with lower budget businesses. I ask them to write a few sentences that describe the service and some general descriptions. I then can use these texts wherever I need them, combining them into different copy texts.

The first course to come into life was a DJ course. This course was for the popular software Traktor, building a set and working with DJ controllers. In terms of audience, we were shooting in the dark for the first few weeks of the campaign. Nevertheless, as presented in the chart above, the cost per lead stabilized and dropped over time, after some optimization. 

The first pilot was a success, and the first course had 7 registrants. Our link click CTR (click through rate) was on the low end. This meant that our ads weren’t as good as they could be. For the time being it was enough in order to get leads in a price that made sense for the business – around 25 NIS (~$7).

Answers to a few of our questions were starting to get clearer. We now had a baseline of CPL for future reference. We figured out that for this specific course, On-Facebook lead generation campaigns are more cost-effective than website leads. Out of 89 leads that came from this campaign, 14 became students, split into two courses in March of 2019. Online advertising got it’s first win for U-Music. I believe the attractive price of this course was a big factor in that win.

Quarterly Bottom Line

Total SpendNumber Of leadsCPLTotal IncomeROAS
3000 NIS8934 NIS15,200 NIS5.0
Results of Q1 advertising showing a good return on the ad spend, but still not the amount we were looking for.

Q2 – Mixing it up

Following the success of the first pilot, it was now time to scale up both the school’s course repertoire, and the media plan to promote them. The first new course to be added was a course for music creation and production with Ableton Live 10. The goal for this quarter was to open at least one Ableton course and another DJ course. At the same time the school was building a long term business and marketing plan.

Marketing video for the new Ableton course

Lengthening the funnel

The initial choice we made to use a “cold” audience might have proved itself for the first batch of lead-generation campaign, but it became very clear early on in Q2 that this will not work for the long term. Again, this was the time for U to work his creative magic, and for me to make some changes to our process.

The first thing we did was to start building different funnels for the different courses. U created new landing pages and improved the existing ones, as well as setting up a video that will portray the school, it’s classes and the general atmosphere of the business. We understood from a few simple tests on the media that for the Ableton course, Facebook’s lead generation campaign wouldn’t be enough since we were aiming for a more specialized audience.

The lead-gen campaign for the DJ course continued, and with the new and old leads U was able to open two new courses later on that year. For the new Ableton course things were a bit more difficult. At this point the video was not yet ready, and we still have to go with “cold” marketing posts for conversions on Facebook.

Conjunto de 10 Ableton Live
Ableton Live 10

We used two different audiences. The first, an interest based audience – targeting people who are interested in nightlife, music production and the Ableton and Cubase software suites. The second was compiled out of visitors to the schools website (remarketing), and lookalike audiences, similar to people who have engaged with the page or converted on the website.

Quarterly Bottom Line

Our efforts to acquire leads for the Ableton course were also very successful. The cost of this course was a bit higher than the DJ course, allowing us to be more generous in media spend.

In total – 19 new students were registered to courses by the end of the quarter. 2 day courses, one evening course and one advanced course started during that time.

* The numbers below are for courses that opened before mid-July. Technically Q3, but the leads for all these courses were acquired during Q2.

Total SpendNumber Of leadsCPLTotal IncomeROAS
6500 NIS7587 NIS46,600 NIS7.15
Results of Q2 show a rise in return on ad spend even with the decrease in total amount of leads.

Q3 – Stabilizing and preparing for bigger things

By the end of Q2, we had a marketing video prepared by U and we started to try and find new audiences. Starting from the top of the funnel, a video views campaign was set in place with viewers shown follow-up conversion ads. Since the avg. price of leads from the previous quarter seemed a bit high, I decided to retry Facebook lead-gen campaign for the Ableton course, as well as the DJ course. At the same time, U begun to invest more in organic social media, sharing more and more videos, stories and posts portraying the schools surroundings, benefits etc.

The results of the experiment were amazing, the price of leads for the Ableton courses that were planned for August-September were more than half the price of the website leads. Although U ended up not being able to open more than one course, these leads were in the system for the courses that opened in 2020. In addition to Facebook, for the first time we created a Google Ads search campaign that started to bring in leads in Q3. Although at that point still not a significant amount, but it will prove very useful in the near future.

In addition to preparing more videos, U was able to open two more DJ courses based on old and new leads that continued to arrive in large numbers and low price. All in all, the schools was now ready to make the next step – create a half-year program, finding a larger space and partnering up with more teachers in order to scale up the schools capacity.

Total SpendNumber Of leadsCPLTotal IncomeROAS
3700 NIS9041 NIS26,600 NIS7.2
Results of Q3 show a large drop in CPL while keeping the ROAS at the same level as in Q2

Q4 – Growth

The last few months of the year were a time to reflect on what U-Music achieved to that point. A business idea that started as a test became a full blown business venture. The brand was growing, both in recognition and in actual business. More and more students were now graduating from the school’s courses, and spreading the word out to friends and family. New business opportunities started to arise, the biggest one of them – expanding the business to a new place.

A nice space was available in an old building, right above the Jerusalem Mahne Yehuda market. One of the fastest growing cultural centers of culinary culture and night life in Israel. By renting this space , U upgraded the facilities of the school. With this new upgrade the school was ready to grow even more in the year to come.

What’s next in marketing

As well as expanding the business, many calls and talks at this time were dedicated to a larger marketing strategy for U-Music. The new branch meant more possibilities, but also more expenses.

The main takeaway from our marketing effort thus far, was that the demand is there, and we will need to be able to fill the demand in a more profitable way.

The next big thing to happen was the creation of a semi-yearly Music Producer program, one of the most extensive programs in Israel. The price for this program was significantly higher than the single courses, allowing us to invest even more in digital marketing.

Our goal for the end of the year was to fill up the Music Producer program starting on January of 2020. At this point, we decided to make two main changes to the marketing tactics. The first was to implement a CRM system, in order to streamline the sales process for existing leads. The second was adding Google Ads to the mix, a much needed tool for when demand starts to grow.

Results of two month’s worth of Google Ads Advertising

The campaign on Facebook also changed its face in order to adjust to the new goals. We decided to target different audiences for different courses, but funneling all leads to one form/landing page. The form and page had details on all the courses and programs of the school, for the clients to pick from.

We were now working with a longer funnel, starting with a video views campaign on Facebook/Instagram and YouTube. The sale process also changed, and now all leads were presented with all the programs and courses of the school, and directed to register to what suits the clients best.

Introductory video for U-Music (Hebrew)

Q4 – Bottom line

This quarter generated roughly the same amount of leads as previous months. Although, adding the “premium product” (music producer program) changed more than just the perception of the school. The profits followed – income was higher than the last 3 quarters combined. The return on ad spend (ROAS) more than doubled. The Music Producer program was full by the end of the year. Additionally, U was able to open an Ableton and a DJ course in January of 2020. All from the growing database of leads we accumulated throughout the year.

Total SpendNumber Of leadsCPLTotal IncomeROAS
5600 NIS8963 NIS98,300 NIS17.5
Results of Q3 show a large drop in CPL while keeping the ROAS at the same level as in Q2

Conclusions

When looking at the bottom line, it’s easy to see how effective the right utilization of digital media can be to ramp up business income. But we do nothing if we learn nothing along the way. In the process of learning and improving the campaign for the school, we managed to get answers to all of the questions we started out with:

  • What would be the CPL (cost per lead) for each of the courses?  
    We were never able to stabilize a regular CPL for each of the courses, unfortunately. Especially since later that year we would consolidate the advertising of all courses to one funnel. We do, however, now have a baseline price that we can measure new campaigns against:
    40-60 NIS for the DJ Course
    80-140 NIS for Ableton
    100-150 NIS for the Music Producer program
  • What would be the sale rate and ROAS (return on ad spend) for leads that we acquired online?
    In general terms we’ve noticed that the quality of the leads grew as we lengthened the funnel. Having the potential leads more informed by creating a good user experience on the website in addition to adding video view campaigns to raise awareness, all contributed to that. When we started out, the lead to sale ratio was around 1:10. Later in the year that improved to around 1:7, and for some courses even better numbers. With the sale process optimized, the ROAS continued to grow through the year. The Music producer program being a more pricey product, helped the ROAS double and more later in the year.
  • How long will the sale process take for these Leads? 
    One important lessons that U learned during this year, was that most of the leads do not buy immediately. They need some convincing and some time to process. A lot of the actual students that registered to courses were from campaigns for a previous course.
    Another good sign was the returning customers. Graduates registering for more courses attested to the quality of the studies and the efficiency of the up-sale process.
  • What is the best way to go on Facebook ads – native lead generation on Facebook, or a website conversion campaign?
    I must admit this is one question that did not have a clear answer. Although the leads for the whole year were split approx. half in half between website leads and Facebook forms leads, it was not always clear which source worked better. Prices seem to be better on Facebook lead-gen campaign, but quality is debatable.
    U did state that the sale process is easier with people that have passed through the website. Naturally, they tend to be more informed and more ready for the sale.
  • Can Google Ads yield leads in a price range that leaves room for profit? What type of campaigns are right to work with on that platform?
    Once we started, it was very clear that Google Ads will be a very important tool going forward. At some times the leads were a little bit more expensive than expected, but the quality of the leads that search for this service is way higher than with social media marketing. Although we did have a remarketing campaign on Google Ads with dynamic banners, and it did convert a few leads, it wasn’t a very prominent part of the campaign.
    We will continue running Google ads search campaign on a monthly budget basis, regardless of the specific courses that are opening.
  • What is the ideal length and setup of the marketing funnel, that will provide the optimal sale rate from leads?
    As I already said, the lengthening of the funnel on both sides was very helpful for acquisition of leads, and also for the sales process. On the top of the funnel, the video helped reach new audiences and pick out people who were interested by viewing 25% of the video for further advertising. On the bottom of the funnel, the amazing work U did on the website and landing pages for the different courses, helped people better understand the offers at hand, making the sale process easier.

Aftermath

2020 came and with it the rough challenge of COVID-19. The courses of January and the program started as planned, but in the midst of the pandemic, the semi-yearly program had to change it’s face to zoom calls and online learning. U didn’t let that discourage him, using the time to develop a larger online presence and making new business connections. These challenging days are still here with us, but we are more equipped to handle them with the tools developed over the past 1.5 years.

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