Fundamental to the future of your business is how many prospective customers there might be for your product or service. Understanding this early on is key to plotting your path to growth. Indeed, it tells you how much you could grow. It informs your strategic decisions, marketing efforts, and everything in between.
Digital marketing agencies are well-placed to help build that understanding by seeing how many people there are online demonstrating behaviours that suggest they could be prospective customers. There are many tools available for us to use to do this, which we use every day in a bid to use data wherever we can to inform our decision-making.
Before you begin, think of your audience in two ways: your proactive market and your reactive market. Your proactive market will be proactively looking for your product or service and, in theory, will be easier to sell to as they are already searching for what you have to offer. Your reactive market is people browsing social media, websites, emails, or YouTube, who might not be thinking about purchasing from you just yet.
Let’s Start With Your Proactive Market
The first place to start is the Google Keyword Planner. This tool leans into all of the data Google has on search volumes on specific keywords. By spending some time researching relevant keywords and grouping them into groups, you can understand how many people are searching for specific products or services your business sells, how much it is likely to cost per click (CPC), and what the search volume trend looks like across a 12 month period giving you key insight into seasonality. Google Trends is another great tool for seasonality by looking at search demand in relative terms.
What you’re looking for is enough search volume to deliver substantial results and a CPC that means your conversion rate doesn’t need to be unrealistic to drive the conversions required to generate a profit from this activity. If you have a middling search volume, your CPC is going to need to be more aggressive relative to the average in order to acquire sufficient traffic to drive the sales to help you grow. NB. Whatever your search volume, adding Bing Ads to the mix can add roughly 10% more to your search volumes, depending on geography.
Try to be as granular as you can when grouping keywords, as this will allow you to determine the appetite for different areas of your business, and therefore, you can plan accordingly.
Capturing this search demand can be planned through either Pay Per Click (PPC) ads or through Search Engine Optimization (SEO) - but knowing what keywords you want to target and their search demand will help you decide what you need to do to acquire that traffic.
Next, We Need To Assess Your Reactive Market
These people may overlap with your proactive market but should be a much larger option. We need to look at tools such as the audience insights report in Facebook Ads Manager to understand how big the audience could be of relevant people to your product or service. This is likely to range into the millions, but you can try lots of different audiences to gain more granular insights. As well as audience sizes based on interested topics, you will be able to get demographic and geographic insights into who your audience is, which you can verify against target customer personas if you have them. If you don’t, this data might help you create some!
There are a few considerations to think about when deciding which platforms you want to be using for your reactive market. The demographics of each platform will be subtly different but could make a key difference in the effectiveness of your advertising. Are you using the right platform with a relevant, native message to the right audience? What are the costs associated with advertising on each platform? How do these costs stack up against your product economics?
If you want any help with going through this process for your business, we would be happy to help. We run this activity as part of our onboarding process for new clients but also as one-off projects too. We ran an event for start-ups in January 2023 to help them understand their target markets, and can do the same for your business.
Tools To Help You Understand Your Market Opportunity
Google Trends: A free tool from Google that allows you to analyse the popularity of top search queries in Google Search across various regions and languages. You can enter a keyword and see how its popularity has changed over time. This can give you a sense of whether interest in your product or service is growing, stable, or declining, which can help you estimate the size and trajectory of your market.
Google Keyword Planner: This tool is designed to help advertisers plan their Google Ads campaigns, but it can also provide valuable insights about the keywords people use when searching for products or services similar to yours. It offers data on search volumes and competition levels and even suggests bid estimates for each keyword. This can give you an idea of how many people are searching for your product or service and how strong the competition is in your market.
Facebook Ads Manager: Facebook's advertising platform includes a tool that provides estimates of the size of the audience you could reach with your ads. By inputting the demographic characteristics and interests that align with your target customer, you can see how many Facebook users fit that profile. Given Facebook's vast user base, this can provide a good estimate of the size of your potential market.
LinkedIn Ads Campaign Manager: Particularly useful for B2B businesses, LinkedIn's ad platform allows you to see the potential reach of your ad campaigns based on various targeting options like job titles, industries, company sizes, skills, and more. This can help you understand the size of your potential market within the professional sphere.
SEMrush: This is a comprehensive tool for SEO and online marketing professionals. It offers features like keyword research, site audit, traffic analytics, competitive analysis, and more. By looking at the volume of searches for particular keywords and assessing the competition, you can gauge the size and competitiveness of your market.
Statista: Statista is a portal that aggregates statistics and studies from over 22,500 verified sources. This can provide valuable data on market trends, industry growth, consumer behaviour, and more. It covers a wide range of industries and markets, which can be incredibly helpful for sizing up your market opportunity.
IBISWorld: This is a paid service that provides in-depth industry reports. These reports contain key statistics and analyses on market characteristics, operating conditions, current and forecast performance, and more. While it's a more expensive option, the depth of the data can provide a comprehensive view of your market.
Census Bureau or National Statistics Sites: These government-run websites provide a wealth of demographic data, including population, age distribution, income levels, and more. This data can be very useful in determining the size of your potential market, particularly if your product or service is aimed at a specific demographic.