I’ve decided to put the source of my biggest frustration on paper. Namely hearing the same phrase from businesses, big and small – “we have to advertise on google and Facebook even if the financial returns are bad, because we just have to!” The explanations vary – what else could we do, we don’t have conversions from the channel but it drives “Direct” and “Organic” conversions, our competitors are doing it, so we have to as well! The list goes on.

This is a recent one.

Putting the argument on whether these ads violate Google’s double serving policy aside, this is an expensive tactic, given the competition and the search volume. I’m imagining the brand spending $$$ to acquire a customer who is already their customer (i.e. in-store buyer). The digital marketing manager reports the impressions to their boss – look how many people saw our ad! – and everyone is happy. They can afford it. But can you?

Before I go into questioning the “universal law of digital marketing”, let’s see if any company massively succeeded by pumping a lot of money into digital marketing without initially worrying much about the costs. Of course – the Alma Mater Rocket Internet is a great example. There is the good, the great, the bad and the ugly. But success stories from Zalando to Lazada to Lamoda to Namshi to Hellofood/foodpanda show that the method has works worked.

Why [work]ed? Because it was mainly successful between 2010-2014, before or during the early days of “mobile first”; before the epidemic of the ever decreasing CTRs and increasing CPCs; when retargeting was still a novelty and people were still wondering “how did they know that I am interested in this”; before the “ad blindness” spread around the world; when there was a huge gap between the average AdWords specialist and a good one (there’s still greater gap between a good one and a great one, so if you are lucky to have a great one – make them happy and never ever let them go; otherwise, if you are not so lucky, then consider tapping into international market. There is no point in you paying a premium sourcing talent from your [expensive] country when you can find great specialists elsewhere in the world.

These days are long gone… So now what?

Let me first confess a crime against the digital marketing community. Not so long ago we were working with an online retailer with a very high customer acquisition costs (CAC) and a very low repurchase rate. What I told them is that if you did everything you could and you still can’t fix your CAC and repurchase rate, then you should pause the all the channels, and go to the actual places where your target audience usually visit, and give them real money equivalent to your CAC spend, then ask them to spend on your website. Why is it a good idea? Because you reach your exact audience- not “probabilistically” your audience based on their browsing habits – and, most importantly, you start with a tightly knit and interconnected community. Think about it –Tinder and Facebook both spread from college campuses, Twitter from SXSW, and Lululemon from the yoga tribe . Over and over again viral products tend to start in smaller, closed networks. If no one  is doing it, then you’ll be that purple cow by offering novelty and the unexpected. . And it would cost you as much as your “carpet bombing” (serving ads to everyone and everywhere) via Google or Facebook.

Any other options than turning into a “street vendor”? Yes!

  • Define and understand what’s working for you and what does not. By define I mean forget vanity metrics – Facebook likes and ad impressions will not buy you a dinner – only financial returns count. By understand I mean for an early stage business, know how much it costs you to acquire each customer, how much revenue/profit they bring over their lifetime, how many customers repurchase from you and how many churn. For larger scale businesses, know yourself or get someone who knows the difference between attribution models (linear, last click, time decay and such).If you have both a website and an app, understand the difference in attribution (SDK vs. cookie) and measure and report correctly. If you can’t track everything – offline marketing, influencer campaigns, tracking issues – get to know statistical methods (e.g. regression model), to understand if the channel really drives “Organic” and “Direct” growth.
  • Understand your users and spare them the pain of a bad customer journey

Here’s the hierarchy of users’ online needs – not the other way around!

Source: Craig Sullivan @ Google Conversions 2018

Start your tomorrow with improving the speed of your website. Do not put your users through a horror story.

Ask yourself the billion-dollar question – if 50% of users who came to my website did not have the intention to buy, but 1% bought, then what happened to the rest? Invest 20% of your time in bringing new users to your website, and 80% of your time in converting those with the intention to buy to actual sales

Good SEO still works
  • And going where your customers are – not literally but precision geo-targeting (not 1-mile radius that anyone can  do. but down to 1 building/venue – then yes! you need to know the necessary hacks). Tapping into the power of interconnected networks – don’t give away random “free XX% vouchers off your first purchase” to anyone  – instead, give it to the friends of your current customers (but make it attractive – people would rarely bother with $5)
  • If you are managing teams, don’t isolate digital marketing, product & UI/UX, BI, brand . They can not just see each other during weekly meetings only where they point fingers and stare at their phones.  Your entire digital marketing team must know product, BI and understand your brand like no one else – this is 2018, not 2011 anymore.

Enough… Out of 1000 words I want you to remember just 1 thing:

Should you advertise on Facebook and Google? – YES! Should you make the financial returns on your marketing spent your ultimate goal? – DEFINITELY YES!!

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Thanks for reading The Low Down by Momentum Works. This article is contributed by our partner, Unmarketd, an analytics and technology driven online marketing consultancy. It is built and run by geeks and experienced venture builders, based primarily out of Dubai, UAE.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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