I have an idea! The consumer has a need that I can satisfy. How much money can I make?
After defining a business model, creating a marketing plan and understanding who our communication should be aimed at, how can we estimate our potential market?
Starting from the profile of the customer that we have created with our Business Model Canvas, we will be able to understand how many potential customers we will find in the reference market through some simple tools that Facebook and Google provide.
Facebook sells our data? We can use it too.
Let’s say we want to promote a site that sells industrial batteries in Asia (true story) and that the profile of the client we want to reach is: men and women between 30 and 65 years who speak English and who are interested in business, renewable energy, and Telcom.
It seems it would be complicated to identify our potential customers in a huge market, right?
Fortunately today – and this will happen more and more in the future – almost all of us are on Facebook and on this platform we communicate much more data about our interests, location, age, and so on than we imagine.
So we can use Facebook to estimate the size of our potential market segment and we can do it completely free.
How? Let’s see together, step by step, using the Facebook Audience Insights you find at this address: https://www.facebook.com/ads/audience-insights/
We choose an audience, for example, “All on Facebook” and begin to define our target. We can choose the geographical position, indicating country, region, and city, resulting in a very limited area in terms of square kilometers. Obviously, the more our budget is limited and if we cannot afford a bigger ad spend, the search field will have to be smaller.
But there is more because we can also see how many people live in this place, how many have been there recently, how many have passed through there as travelers and how many intend to go there. It is information that Facebook draws directly through the user profile and through our connections, evaluating how much time we spend in a certain position and what movements we have made recently. Not only that, but Facebook also receives information from third-party data – such as credit card transactions, medical records, supermarket point cards and so on – about our offline behavior.
Now let’s go back to our customer. By interviewing him, I discovered that the countries that we should consider were:
- Hong Kong
The avatar we created was Manager, interested in Telcom, renewable energy and Lithium-Ion batteries. Clearly, we have also emphasized other traits that we used to create the user experience and the tone of voice.
On Facebook, we looked for men and women, managers, aged 30 to 55, who spoke English and were interested in Lithium-Ion batteries, renewable energy, and telecom.
We have discovered many things, but the ones that interest us, in this case, are quantitative information.
There are between 2 and 2.5 million people who match our target characteristics. You can use this data in the future to calculate the budget.
Big Brother from America watches us.
Does it seem strange that we are under invisible control so much? Just think -Google got in trouble just because there were tracking offline user data.
Google, in fact, is increasingly aiming to track user behavior, even when they are not online, for example, while shopping in physical stores. Google collects information primarily using data from:
- applications like YouTube and Google Maps
- credit and debit card transactions.
Specifically, the company stated that it has access to approximately 70% of transactions in the United States. The company then shares this information with marketers to show the results obtained from online ads. Then:
- ads are viewed online by users through the company’s various channels (YouTube, Google SERP, AdWords)
- people make purchases related to ads, both online and offline
This new position monitoring service linked to credit card transactions has naturally raised many privacy concerns.
Of course, Google has stated that it protects all customer data and does not collect or provide web marketers with identification information, such as credit card names or numbers, but only so-called “massive” data that it clearly uses in its Advertising Pay per Click platform, Google Adwords (known today as Google Ads).
Returning to the definition of our market and the Facebook Audience Insights, we now have a rough estimate of our potential market. You certainly will not want to stop here! We continue our market analysis. Let’s analyze it through another powerful free tool that everyone can benefit from using if they do it the right way.
Is Everyone on Facebook?
Almost. You’ll find the others on Google.
While on Facebook we can find out how many people there are with certain characteristics, we don’t really know what they need. That’s why we cross-analyze our data with Google Tools.
I’m talking about Google Keyword Planner, the Big G tool for analyzing and planning keywords. Although this tool is designed for the planning and management of advertising campaigns, we will take inspiration from the best growth hackers, and utilize it for a preliminary phase of our business.
If you have not already done so, register an account for yourself on AdWords. You need to do this to use the Google tool through which we will answer our two fateful questions:
- What is the potential market size for our product?
- How much of that potential market can we conquer?
The tools we will use in this case will be the Google Keyword Planner and a simple excel sheet to record the data we will obtain from this analysis.
Generally, this tool is used for advertising, as well as for the construction of SEO strategies, because it allows us to find out precisely what the users’ real research focus is. In fact, customers tell Google exactly what they are looking for in the form of keywords.
Everything we type in the search bar is a keyword and there are potentially hundreds of ways that people search for a single type of product, perhaps hundreds just for your specific product.
Let me emphasize: there are probably hundreds of keywords that people use in searches for your product/service.
To calculate the size of our market, we will use the volume of searches for all those keywords that identify our product. Google will calculate this number for us.
The first step, therefore, is to identify the relevant and related keywords, keeping in mind all the variations that Google suggests to us that seem to correspond to our product/service.
If you then want to push yourself past national borders to create an international business, you will have to carefully evaluate research for the reference language. This means, in most cases, to rely on a translator who can guide you in choosing the correct keywords, preferably a native speaker and possibly from the specific country.
Just to give you an example, the most used English term to search for flights is “cheap flights”. This is a term searched on Google millions of times a month. In Italian, we could translate this literally with “voli economici”. But if you have looked for an “economic flight” in Italian, you have probably used the more popular Italian equivalent of this keyword, which is “voli low-cost”.
If, in choosing their key words, Ryanair used “voli economici” instead of “voli low-cost”, they would have lost millions of Italian users every month.
When comparing search volumes across multiple countries, Google’s Global Market Finder is a good place to start.
However, before embarking on expanding into a new international market, you should identify whether opportunities exist within these markets and whether or not your company can compete there.
To understand what the relevant keywords are, therefore, let’s start by thinking about the research that our customers might do to find us, trying to be as specific as possible about our particular product. If we remain too generic, we will run the risk of obtaining a potential market so large that it is useless from a practical point of view.
To find the right keywords, we can steal from the SEO method. The secret is to divide the types of questions that users usually do on search engines.
So take a piece of paper or spreadsheet and divide it into three parts. These are the names of the three parts: Information Queries, Navigation Queries and Transactional Queries.
For the Informational Query column, try to imagine the questions that users would ask search engines to find information. For example: How? Who? What? Where? Etc.
If you sell pasta making machines, the Queries could be: how do you make fresh pasta? How does a pasta-making machine work?
In the Navigation Query column, enter all the keywords that a user could type when searching for a specific product. Continuing with the previous example: pasta making machine, pasta making machine [brand name], for example PastaExpress, if this were the name of a brand.
In the Transactional Query column, enter keywords that users could write if they want to purchase the product. For example, online pasta machine, or pasta machine shop.
Insert the Keywords into the tool and discover the monthly volume of searches. I will not go into the details of using the instrument because this could change, but the technique remains the same.
The result will be a fairly reliable estimate of the number of potential customers, or the size of the market for your product.
We could add a series of considerations to this strategy for the calculation of the potential market. For starters, Google searches account for around 80% of online searches. But to these, we should add 20% to represent research that will be done on the other search engines to our approximation of our market.
In China, Baidu is the most popular search engine, while Yandex is the most used in Russia and in Japan Yahoo Japan is the most important. Baidu and Yandex, of course, also have their own keyword research tool.
Not all searches come from a single customer. In fact, 50% of searches are duplicate searches by a single person, given that each person makes more than one search query. We should therefore roughly halve our result. Google, of course, does not include many other search channels, like those offline in print.
However, if we do not want to complicate our process, which has so far been so smooth, we can say that the result obtained by the search by keywords will be the approximate size of our potential market. We can compare this to the numerical data from Facebook’s Audience Insight.
Finally, we could also use Google Trends as an additional tool to check if the volume of research on our product/service is growing or decreasing, giving us an even clearer idea of how our market is moving.