How to wean your ecomm brand off paid ads
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“Don’t build your house on rented land.”
It’s an old marketing adage that’s finding new relevance for DTC founders and marketers who rely on paid social for a huge chunk of their revenue.
Paid social is a double-edged sword. Many ecomm brands have seen growth through Facebook and Instagram ads. But the data linked to paid social—which is questionable—has also become a security blanket for brands who wish that buyer’s journeys were linear, clean, and predictable.
We’ve known for a long time that paid social wouldn’t last as a cheap, viable acquisition strategy. In 2017-2018, Digitally Native Vertical Brands (DNVBs)—many ecomm brands—started to feel the consequences of rising ad costs due to increased competition from large venture-backed brands and better tools for digital ad deployment.
But believe it or not, we’ve been seeing this downward trend since the first banner ad showed up on HotWired. That ad saw a clickthrough rate of 78%. But in 2020, the average clickthrough rate for a Facebook ad across all industries was just 0.9%.
We can’t escape the truth: People don’t want to see ads online. They want to scroll their social feeds to see what their friends are doing. They want to watch the video they set out to watch. They want to do anything else but see your ad.
Now, most DTC brands know that channel diversification is smart. They build robust email lists they can control and grow. They invest in SEO basics and content marketing. They experiment with the fundamentals of their business model to stand out in a saturated market.
But are they really doing everything they can to mitigate against the upcoming sea-change in digital ad delivery?
Digital ad delivery is experiencing a reckoning
First, here’s the latest scoop: Apple and Google are making changes that will affect “personalized” targeting.
For Apple, this means something called “App Tracking Transparency”. Moving forward, every app will need to request permission to track your data. You’ll see a pop up on your phone that will ask whether or not you want that app to use your data for whatever reason, including ads. This is a massive change from the traditional opt out model.
Google is removing support for third-party cookie tracking on its Chrome web browser. They’ll be replacing cookies with a mechanism called Federated Learning of Cohorts (FLoC), which groups people together based on similar interests. The goal is to hide people in a crowd for better privacy.
What do marketers think of upcoming changes to audience targeting?
Amber Naslund, a content consultant for LinkedIn with more than 20 years of marketing experience, says the changes were overdue. “Personalization is something we all talked about as digital marketers as the second coming of Christ,” she says. “We all thought we were going to be able to hyper-personalize everything and it would be amazing. Turns out—it's just creepy.”
Sam Brealey, a marketing consultant, also welcomes the change. “I want to move the conversation with my clients from A/B test tinkering to putting in the effort to understand their target customers and the market,” he says. “When it comes to your target audience, let’s go back to understanding what they find funny, understanding their cultures, then create good creative from a sound brief. Approach channels with neutrality until you understand your target audience enough to be where they are.”
So how does ecomm rely less on paid social?
The first step to weaning your brand off paid social is to realize that most of the data wasn’t that great in the first place.
“Get comfortable with the fact that the data we have right now to measure digital is inaccurate and not an indicator of buying intent,” says Sam. “Creating multi-touch attribution models sounds really complex and good, but it's not—you still end up with a narrow view of just digital.”
Here are some signals you may be missing out on by focusing too much on ads data:
- Offline purchases
- Market size
- Awareness level
- Geographic quirks
- New distribution models
- New pricing models
Many DTC brands spend some time in the beginning conducting market research to establish their funnel, which makes sense. But if they begin to see success with paid social, they may rely too heavily on social metrics as a poor replacement for ongoing market research.
“In pre-digital days,” says Amber Naslund, “we relied on market research to make decisions. We were looking at historical data, all of which was a blend of qualitative and quantitative, to inform our future decisions. Then digital came along and promised us an oasis of data. Now most of the clients I work with are drowning in data they don’t know what to do with.”
Adopt a mindset of channel agnosticism and tactic neutrality
If you’re trying to rely less on paid social, you may want to start with a blank slate and ask yourself some fundamental questions.
- How many people would want to buy what I have to offer?
- How aware are those people that I exist?
- Where do they get their information?
- How would they prefer to buy my product?
- How much are they used to paying for products like mine?
These questions are the building blocks of your custom funnel.
Your strategy should focus on two to three channels, which may or may not include paid social. Based on market research, you’ll need to:
- Make informed “leaps of faith” on channels that will build awareness and channels that lead to purchases. Set expectations for each channel.
- Understand metrics that matter for each channel. If TV is one of your preferred channels, you may need to keep an eye on branded keyword searches and organic website traffic as an indirect metric.
- Study your conversion data in broad strokes rather than granularity, and double down on the channels that are working.
After some time, you’ll start to see how many people are aware of your business and how many people are converting. That’s your signal to start filling the top of your funnel to grow.
“It sounds so basic,” Sam says, “but so many brands don’t ask these fundamental questions. Instead they’re focusing on doodads and asking whether they should do more PPC.”
Marketing is also about identifying and eliminating points of failure
“You can have the best marketing in the world, but if your product sucks, that’s a point of failure,” says Amber Naslund. “When we're looking at data, we get way too granular with clicks and impressions and conversions—and we ignore the bigger picture of our business strategy.”
Never stop investigating what your customers are saying about you. Divert time spent on paid social data analysis to deep dives on the following channels:
- Amazon reviews
- Product Hunt (if relevant)
If your customers aren’t satisfied with your product, budget spent on paid social is a waste. You may see some short-term success, but customers who converted will talk—and if they’re not satisfied, your paid social campaigns will have exacerbated your problems.
Outstanding marketers don’t “stick to marketing”—they examine their business as a whole, identify weaknesses, and step up to help address those weaknesses even if they fall outside their purview.
When you listen to your customers, you may discover a community
Community building for brands is a hot topic right now.
After more than a year indoors, we’re all craving a sense of community. But we don’t typically form community around brands—we form them around a shared purpose.
When people do form community around a brand, it’s more likely that they formed it on their own without the brand’s intervention. Brands with great communities see results because they invested in customer listening efforts rather than push tactics.
You can also see a pattern in brand communities that thrive. Brands who may want to invest more in community share these characteristics:
- The product solves an existential problem. The deeper, the more potential for community.
- The product can tap into nerd fandom.
- The brand’s customers formed the community, and the brand is just responding.
That last point is important—brands who build the best communities are taking cues from their customers and riding the wave. Before you invest in an organic community strategy, spend some time listening—a lot of time.
“Organic growth takes longer, but it’s a stickier mechanism over time,” Amber Naslund says. “Your community are the people who put their hand up and said, ‘I want to be part of what you're doing.’ It’s your job to cultivate that and to take care of them and to let them know that you want to invest in them.”
Brand marketing for wide—and sometimes free—reach
You may have heard the news: Airbnb slashed its performance marketing budget in March 2020. Specifically, they cut online bidding and search marketing by $541 million.
Brian Chesky, Airbnb co-founder and chief executive, said, “2020 occurred, our business drops by 80 per cent in eight weeks, and we pulled back all marketing, including performance marketing. But something remarkable happened. Even before we started resuming our marketing spend, our traffic levels came back to 95 per cent of the traffic levels of 2019 without any marketing spend.”
If you’re rolling your eyes, we understand—Airbnb was already in a position to cut their performance marketing spend because they’re a leader in their category. When brands reach a certain size, they don’t need to rely on PPC because so many people are already aware of their offering.
Still, Airbnb’s aggressive move away from performance marketing to brand marketing raises an important question—can ecomm brands cut their paid social budgets earlier than they think possible?
Brand marketing makes some marketers uncomfortable because it’s difficult to measure. Here’s what brand marketing generally includes:
- Leadership Twitter accounts
- Creator marketing
- Speaking engagements
- Online events
- Public relations and media
So what’s the antidote to fretting over the ROI of each brand channel? Let go of the granular details, conduct ongoing market research, and track only two or three metrics that matter to your business:
✅ Branded search terms
✅ Website traffic
❌ Social engagement
❌ Clickthrough rate
Paying attention to what matters and discarding the rest will feel like a relief. Double down on market research, understand your customers, and make long-term brand investments that will pay off over time—and you’ve got the makings of a strategy that can weather the storm of platform shifts that threaten most ecomm businesses today.