Many companies are freezing or cutting marketing budgets right now. Even the big guys like Google are reducing spend and freezing hiring.
In times of crisis, marketing is often the first place leaders turn when looking to scale back. Marketing is seen as a nice-to-have, and when it comes down to funding the essential functions of the business versus spending on advertising, the essential functions will win out every time.
But we’d argue that Google’s move might be a bit short-sighted. Yes, they’re experiencing major disruption right now—just like the rest of us. But a company like Google has the resources to continue to invest in marketing, even during a downturn. The key is for businesses to invest wisely in their marketing.
Smart marketing investment was the topic of our most recent Campfire Chat. We invited Mark Oedekoven, VP of Marketing for Annie’s Publishing, to share why his team hasn’t scaled back across the board, and how those strategic marketing investments are garnering pretty impressive results.
Where to Focus Your Efforts
Of course, there is no such thing as a one-size-fits-all marketing strategy. What works for one business or those in a particular industry might not work for its competitors or organizations in another field.
However, we can make a few generalizations about this particular time of disruption. The thing that’s so unique about the coronavirus is that its effects are universal. Whether you sell cars or baby clothes or SaaS solutions for businesses, you’re facing the same hurdles as everyone else.
And consumers, regardless of your target market, are behaving in some similar ways. Many people and organizations are concerned about finances and are starting to tighten the purse strings. Similarly, everyone is adhering to social distancing measures, meaning we’re all spending a lot more time at home and online.
This allows us to make one recommendation to all businesses about where to direct your marketing spend: No matter what space you’re in, now is the time to think about digital advertising.
The Triple Whammy Opportunity
How can we say that with such confidence? It’s because of something we’ve termed the Triple Whammy Opportunity.
There are a few universal truths we’re seeing in all areas of business. Because of stay-at-home orders, people are spending more time online. We’re on business Zoom calls all day and Netflix all night. Businesses have an entirely captive audience online.
At the same time, people are scared. Many businesses are scaling back, worried about Q2 numbers and just how long the effects of the pandemic will continue to influence their bottom lines.
The fight-or-flight response is hard-wired in humans, so it’s natural that when faced with a threat in business, some choose to retreat. But while your competitor pulls back, if you choose to stay and fight, there’s a potential to claim more market share.
The final piece of the puzzle is that ad rates have plummeted. Google and Facebook both reported major drops in advertising. But the silver lining, as the New York Times notes here, is that with fewer advertisers comes a significant reduction in ad prices—Facebook’s ad prices are at an all-time low.
This creates a perfect storm for those who are willing to stick around in the digital ad space. Your competitors are losing market share, you can get ads for a song, and you have a captive audience glued to the other side of the screen.
Annie’s Publishing: A Success Story
Mark Oedekoven of Annie’s Publishing joined us at our last Campfire Chat to serve as a real-life example of a business that’s seized upon this Triple Whammy Opportunity.
Annie’s business is three-fold: They have a publishing arm, which produces crafting magazines. They also have a retail business, where they sell craft kits and patterns. Finally, they have a subscription business, with crafting club memberships and books.
Oedekoven and his team noted immediately that the cost of advertising was dropping on the major social platforms. Because their business was familiar with the digital advertising space, they saw this golden opportunity and pounced.
Their cost per impression on ads has fallen considerably. They’re seeing a lower auction bid, higher ad rankings, and more impressions on the ads they are running.
And their efforts are paying off. A year-over-year comparison reveals that their website traffic has nearly doubled.
With the boost in web traffic has come a major uptick in orders. And their cost per acquisition has halved, while orders have skyrocketed and ad prices have dropped.
This is a time of year where the crafting business typically sees a downturn, but Annie’s business is through the roof. And it’s not just dedicated crafters returning to Annie’s now that they’re spending a lot more time inside: Annie’s has acquired nearly six times as many new customers as they typically would during these months.
How to Make Digital Ads Work for You
Oedekoven’s story provided some major inspiration for others at the Campfire Chat. He and the team at Annie’s were already well-versed in the world of digital advertising and had spent a lot of time in months and years past testing tactics, honing in on the right audience, and developing an approach that works for them.
But what if you’re not as familiar with the ins and outs of digital advertising? Mark shared these tips for getting started.
Find the Right Platform
Because Annie’s is a B2C, they’ve focused primarily on Facebook, and by extension Instagram. But if you’re a B2B, LinkedIn might be a better fit. Do some research into what your competitors have historically done, and do a little digging for yourself.
Search for relevant accounts, businesses, or areas of interest on each social platform, and see if there’s an active audience engaging with that content. If so, you might have found the right advertising home for your business.
Once you’ve decided what platform to focus on, it’s time to decide how much you want to spend there. There is a certain threshold to hit if you want to get your money’s worth on digital ads. For Facebook, Oedekoven has found that if you’re going to get a one percent click rate and expect a five percent conversion rate, you can do the math from there.
To start to learn at any volume, how much do you have to spend? Work backwards from those targets (which are reasonable guideposts for Facebook, by the way) in order to understand where you should set your budget.
Segmentation Is Key
One of the things that’s great about digital advertising is that you can be incredibly specific about who you target with your messaging. Facebook allows you to display ads to return customers, go after new audiences who are similar to existing customers, or try targeting an entirely new segment based on demographics you select.
The Annie’s team used a varied approach. They show their advertising to existing customers and new, lookalike audiences. Traditionally, they’ve focused on one percent lookalike but recently moved up to five percent.
Oedekoven notes that testing is key here. They’ve tried many combinations of different offers to various audiences, and it’s only in testing with a meaningful sample size that patterns can emerge and you can begin to target future ad campaigns strategically.
Consider the Customer Journey
When you’re targeting audiences both old and new, it pays to have messaging that’s specific to different stages of the customer journey. Those who are encountering your business for the first time will need to see a different type of marketing message from those who are already loyal customers.
Digital advertising allows you to create different types of advertising to speak to your audience throughout their journey. Boost your organic content to catch the eyes of new prospects. You can also target your hot prospects with middle-of-the-funnel offers, then provide hard-sell messaging to those who have expressed continued interest.
As Oedekoven points out, Facebook’s algorithm recommends that you put four ads out there every time you place something. Facebook will then run the variations on the ads, and you can track the response to each specific ad. You can also try different approaches and see what gets the most play. The algorithm quickly helps you identify what’s successful and what’s not.
Be Willing to Change Things Up
The digital world moves fast. The final tip when it comes to digital advertising is to switch up your messaging constantly. The team at Annie’s changes out their ad sets about every two weeks.
This is especially important in this current moment. The goalposts for returning to normal life are constantly moving, so you want to be sure your advertising messaging is always up-to-date and sensitive to the latest shifts in our global reality.
We’ve said it before and we’ll say it again: Now is not the time to retreat. Yes, it’s scary out there, but businesses that stabilize and then identify opportunities are the ones that will find success in the end.
The way that Annie’s Publishing has managed to capitalize on digital advertising opportunities is just one example of what businesses can do not only to stay afloat, but thrive during a period of great uncertainty. Take data that you have on your customers and your business, and harness that information to make smart, reasoned decisions.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.