For consumers, digital advertising has exponentially enhanced the purchasing environment. With just a few clicks, shoppers can make well-informed buying decisions without ever needing to leave the comfort of their couch. However, for marketers, the dependency on these digital advertising platforms is increasing at an unsustainable rate. This has recently been emphasized in Google and Facebook’s response to the Australian government’s ‘News Media and Digital Platforms Mandatory Bargaining Code’.
With Australian consumers routinely looking to Google or Facebook, the Australian government has stepped in to understand how much market power these two companies have. Yet ask any marketer and they’ll be able to tell you that media consolidation has been a concern for a lot longer, but in order to be omnipresent it’s something we have to navigate.
The challenge, however, is the cost to be omnipresent, isn’t cheap. As a matter of fact, with the costs of doing business with Google, Amazon, and Facebook on what feels like a never-ending incline, maintaining this presence is simply unsustainable over the long haul. But there are ways, strategies if you will, that can turn your digital advertising from a cost center into a profit center. Let’s explore three of them…
1. Actively seek acquisition channels where there’s an opportunity to create leverage.
There is an undeniable truth: the cost of acquiring high lifetime value customers at a scalable cost is increasingly difficult. High fraud rates, outrageous trading desk fees, limited data views, and hard-to-decipher metrics further cloud the data deluge, and this necessitates a new solution. When you rely on traditional (read: expensive) paid channels for your digital strategy, you will inevitably see less than half of every marketing dollar invested becoming working media. But alas, a silver lining: Performance channels (read: affiliate marketing) offering marketers a pay-for-outcome alternative that drives the operating leverage imperative to survival.
2. Measure beyond conversion and understand the touchpoints that influence the customer journey and how they impact lifetime value.
Digital analytics generally define a conversion as the successful finish of a set goal. In many cases, this is the completion of a sale. However, while macro conversions (read: a sale) are important in their own right—they only tell part of the story. If the goal is to find opportunities to drive/fuel additional profits, a strong understanding of the total value of your digital investment (read: better measurements), is critical. By paying attention to the micro-conversions (think: blog views, image views, content downloads and form fills), there is a unique opportunity to get a glimpse into key points of the consumer journey. Paying attention to measurement of the micro conversions enables proper nurturing that can support the consumer’s quest for additional education as they are ushered through the journey. And since the connection between customer lifetime value to profit is so strong, having knowledge of how your customer interacts with your business whether directly or indirectly—throughout their buying journey—is the cornerstone of driving long-term revenue.
3. Practice profit-driven marketing by optimizing spend based on profits generated, not cost to acquire.
When spend takes on a profit-driven approach, it turns the tables on traditional marketing and essentially transforms it from a cost center into a true profit center. This approach allows the cadre of marketers to shift their mindset: to rethink traditional strategies including KPIs, working budgets, and even the customer journey. They are essentially looking at the same old challenges, just in a reimagined way. Think of it this way: would you spend $100 just to make $50? No way! But would you spend $100 to make $50 three times a month every month for the next year? Sign me up! And while CAC is important, and you need to be mindful of it as a brand, it can’t drive you out of business. You need to ensure you have profit-driven marketing techniques that lend to client retention and ultimately lifetime value to fuel profits. It’s all about shifting mindsets and tackling efficiencies from a different perspective.
If you are concerned about the potential impact of media consolidation on your marketing efficiency, it may make sense to look at partner marketing as a hedge. While partner marketing is not a panacea, it does enable many brands to look beyond the major media companies for new sources of growth. As you consider options for diversifying your 2021 media strategy, partnership may be worth a look.