Designer Handbags, NOT Performance Marketing!
I’m a panic shopper. Christmas comes the same day in the same month, every year. This should afford me the ability to purchase gifts throughout the year; stocking up on stuff I know my wife would really love. She’s great at this. By the time the holidays roll around she's already bought for everyone, having started as early as summer. Stress-free and simple.
Me, I don't do this. Therefore, outrageous designer bags find their way into my home with frightening regularity. Why? Well, I know what she wants, and with typically 2 days to spare while canvassing the mall, I'm out of options so I go with the best on the list as most of the rest are no longer available.
This year’s addition to the collection, a Prada shoulder bag. Beautiful handbag if you’re into such things. But with a price tag approaching a mortgage payment, I joked with the salesman about the chances this bag is ‘on sale’. With steely eyes, he glared at me, responding, “Sir, this bag NEVER goes on sale”. The reason: It doesn’t have to. People buy whether they can afford it or not.
Pay to Play
It seems I can throw a baseball in a crowd and hit a media buyer seeking ‘performance marketing’ deals. That is, paying for marketing only when a sale or some other desired action occurs. Seems like a good deal; the advertiser is protected from losing their marketing dollars if an audience doesn’t respond to their offer. But do they ever think about what they’re getting for this “risk-less” investment?
Consider affiliate marketing … a short-sighted marketers dream. Where a website will sell a manufacturer’s product, retaining a large % of that sale as compensation. That’s all well and good but how does the product get marketed to bring people to the site? This is where the comparison to Prada Handbags comes into focus.
Owners of audiences that are highly sought after do not offer performance pricing deals. Like designer handbags, the reason is because they don't have to. The inverse is also true - owners of suboptimal audiences MUST discount, putting their bags on sale in order to get marketing dollars. This is why performance deals fizzle very quickly. The depth of audiences that can be accessed via performance deals is very shallow. It's a shell game, bouncing from crappy audience to crappy audience, skimming the top layer for some quick sales before being forced to move on. It's no way to build a business. These are short term wins with little customer loyalty.
Long term success requires a designer bag approach to marketing spend. That is, paying to get your product in front of viable audiences, not taking short cuts for a few quick sales to sub-optimal audiences that are here today/gone tomorrow. Know that reaching audiences perfectly aligned to your offer will NOT be accessed via discount. For these audiences are already being utilized by your competitors who will continue to pay to do so, with or without you taking a piece of their pie.
Final Thoughts
The goal of acquisition marketing should be long term viability over short term sales. I'm amazed at the number of media buyers with whom I engage daily and how they view metrics such as ROAS based on a first-time purchase. Not accounting for lifetime value in evaluating the success of acquisition marketing is astonishing. That may be an indictment of a “win-now”, “quarterly earnings” economy in which we operate. But it also spells doom by NOT filling the funnel with would-be buyers who are more likely to become long-term customers. Rather, short-sighted brands race to trade customers with each other in the shallow performance marketing pool.
This short-sightedness is also a primary driver of ad fraud. The instant that digital marketing trumpeted Cost Per Click pricing, media buyers galore jumped that shark. Focusing mainly on the CPC metric rather than impact on the bottom line - purchases. Purchases that can take months when made by a well-informed customer. And a well-informed customer is typically a loyal customer.
Our best customers understand the importance of marketing to deep audience pools. That means investing marketing budgets in audience sources swimming with potential customers. Those brands have linked their acquisition marketing evaluation to future purchases, and do not shrink from lofty price tags if the audience is ideal.
This year, I’m going to embrace my panic shopping. Because I know I’m going to buy the best of the best, while everyone else spends their money on junk.