Twenty years ago, businesses that wanted to grow had a few different options. There were of course traditional channels like TV, radio, and billboards, but other channels like local newspapers, local magazines, and ads in the yellow pages. Surprisingly, as technology has evolved, it feels like our choices have narrowed, and not grown, with Facebook and Google becoming the two dominant channels for businesses to grow.
At first, this seemed like a great tradeoff. The convenience and simplicity of focusing on two channels was a boom for many businesses. Additionally, both of these platforms have been growing exponentially in their ability to reach your target customer. Further, these platforms invented a convenient new KPI known as the “Cost per conversion” which made it really easy to know if they’re “working” or not. But as we’re seeing, there was another huge tradeoff that resulted from this migration away from print and yellow pages.
Facebook and Google operate in what’s known as a real time bidding environment. So, basic economic theory indicates that overtime, the cost to reach your target customer in these platforms will ultimately impede then maximize, acceptable percentage of your company’s profits as you compete with your various competitors. Both of these companies only have a finite amount of ad space they can sell, which further accelerates competition. One example of this is in the Accident & Injury segment of Law. The cost per click within Google Ads has been reported as upwards of $87! This means, these companies are paying $87 for each new website visitors coming from Google Ads. Now, these law firms have likely done some math to indicate that a certain percentage of these visitors will engage their services, and subsequently, a percentage of this group will ultimately lead to a winnable court case. But if you assume that only 5% of their website visitors from Google retain their services and perhaps only 25% of these cases are won, this means the law firm is paying nearly $7,000 for each winnable case! Google might report a cost per conversion of $1,740 (if indeed only 5% retain the law firms services), which provides what appears to be a very clean and simple decision metric.
This leads to the second major issue with this approach. The cost per conversion is one of the worst metrics ever invented, and has singlehandedly set the discipline of marketing backwards. The reason is that customers rarely, if ever, convert in one click or one ad view. There is a journey to conversion. Think about the last time you made a major purchase decision. Did you see one ad and buy from the first company you saw? Perhaps there are some low involvement purchases that could fit this bill, but for the vast majority of purchase decisions, there is a long and winding journey people go through before ultimately deciding to make a purchase.
It starts with a consumer need. This need may stem from factors out of your control, like perhaps a car breaking down prompts the need for a new car given the cost of repairs. Or an injury prompts the need to see an orthopedist. The need may also stem out of advertising. Sometimes, people don’t know they need you until they see what you have to offer. From there, people will generally look for businesses they are comfortable with. The way to ensure people consider you is the reward for building your brand. If you haven’t built your brand, people likely won’t think of you. Then, from there, they will do research, visit websites, read reviews, talk to friends, and much more before making a purchase decision. When you focus on cost per conversion for any single marketing channel, you are completely disregarding the entirety of this journey that your customers go through. After all, no one has ever walked into a car dealership and said, “I’m here because I saw your TV ad yesterday!”. Yet, auto manufacturers spend hundreds of millions of dollars a year on TV advertising “prime” themselves for this customer journey and to ensure they are top of mind. In other words, they invest in building their brand because they’ve seen this investment pays out.
Google and Facebook can be helpful on this journey, but if you depend solely on them, you’re going to end up spending more. Investing in brand building includes awareness advertising, consistent enhancements to website content, and a consistent strategy across channels to ensure your key message comes through. The more that you can build your brand with diverse channels, the less dependent you will be on Facebook and Google. The other benefit is that if you have a stronger brand, you will see improved performance in Facebook and Google. You might not have to bid as high if people are searching for your company name, or if they’re more likely to notice your ad.
At Awarity, we pride ourselves in helping you build your brand more cost effectively than any other marketing channel. With Targeted Banner Ads and Streaming TV commercials, we can pinpoint your target customer, and even with a limited budget, provide meaningful brand building. Many of our clients note that over time, their organic search traffic grows, meaning they are less dependent on Google Ads to generate web traffic. And many also cite improved response to other paid channels. If you’re ever curious on how we might help you, please reach out and schedule time or request a custom proposal on our website. The article below provides more detail on the power of brand building.
https://sparktoro.com/blog/when-choosing-marketing-channels-visualize-the-curve/
