Read Fospha's latest insights on marketing trends, predictions and opportunities for 2020.
I presented on a webinar on Wednesday 29th April alongside AVADO’s Mark Creighton and MiQ’s Mike Gray called ‘Exploring marketing’s ‘new normal’: the answers lie with data’. The focus was on how data can help us navigate the new world of marketing during the Coronavirus pandemic. I thought it might be helpful to summarise some of Fospha’s perspectives here.
It felt strange preparing for this in the middle of what is first and foremost a global humanitarian crisis and I am well aware that some of the points won’t be relevant for many businesses who simply cannot afford to be spending anything at the moment, nor for many marketers who are not currently working.
I was also reminded of a quotation from Vladimir Lenin that my chairman recently shared with me:
“There are decades where nothing happens; and there are weeks where decades happen.”
It’s practically impossible to try to capture everything that has changed for marketers over the last six weeks, so I’ve tried to focus on just a few of insights that I hope can be translated into practical tips.
In the webinar, we touched on some market challenges that already existed before the pandemic but have since been magnified and now seem particularly relevant.
Understanding the complexity of the customer journey isn’t a new challenge for marketers, albeit one that has seemed to increase every year since the explosion of digital, reaching fever pitch in a post GDPR/CCPA world of limiting customer data availability.
The reality is that it’s too complex for humans to process the customer journey as much more than a simple funnel, rather than the reality: a tangled spider’s web of inter-channel dependencies, views, clicks, good and bad activity and spend.
This is something we actually model for our clients and whilst it’s the least actionable data insight imaginable, they tend to like it, not least because it means they’re able to show their CEOs and CFOs just how difficult their jobs have become.
Marketers aren’t helped by the fact that each channel and ad platform in the mix will tend to claim 100% responsibility for driving a conversion at only a fraction of what it actually cost to acquire the customer. So, if they count the conversions claimed by each of their channels, they’re often reporting significantly inflated numbers. This makes it extremely difficult for marketers to really understand what’s really working and what’s not in their marketing mix.
These challenges were already causing massive pains for marketers: huge amounts of wasted spend, missed opportunities to do something different in new and undervalued channels and wasting a huge amount of time trying to make sense of these enormous silos of data, therefore impeding their ability to make good decisions, quickly. The consequence of these was summarised by Mary Meeker in the 2019 Internet Trends report last year when she dedicated a full page to the assertion that the ‘Cost of acquisition can’t continue to outstrip Customer Lifetime Value’.
Through this historical context, we can start to get a sense of why these problems are magnified by the challenge of the current situation. Even at the very best of times, many CMOs struggle to justify budget requests and channel allocations to CFOs and CEOs and have found it difficult to use their data as a tool to react quickly to changes and know which are the right levers to pull when the goals change as a result.
The scale of the changes right now has brought all of this into very sharp relief and unfortunately, we’re seeing that in many cases, CFOs are still considering marketing to be a cost centre that can be reduced rather than a revenue driver to fuel the recovery.
The extent and suddenness of the changes has been extraordinary, with news just over the last couple of weeks that Facebook and Google could lose over $44 billion in ad revenue in 2020 because of Coronavirus and Twitter estimated to have seen a drop of 30% in revenues since the start of the pandemic.
The peculiarity here is that it’s happening at a time when usage has never been higher, with the amount of time people are spending online in the new reality. We are therefore seeing a total reversal of the trend over the past few years, where an increase in demand for the supply of customers Google, Facebook etc. can offer has driven prices consistently higher. In the last few weeks, we’re seeing more supply (users and usage) than ever before but coupled with an unprecedented drop in demand for their attention.
This appears to lend weight to the assertion from Mark Ritson earlier this month in a Marketing Week article that ‘the best marketers will be upping, not cutting, their budgets’, as recessionary periods offer opportunities to brands to grow market share, particularly if they are prepared to think about the long term.
He referenced a study of advertising by Roland Vaile during the great depression in 1929 that found that US brands that increased spend during that period fared much better on the other side than the ones who reduced spend.
It’s a sentiment that has clearly been embraced by P&G, the world’s largest advertiser, whose CFO announced in mid-April that they’d be doubling down on brand visibility and that ‘this wasn’t the time to retrench’. Again, it’s worth noting that they have seen demand for their products increase in the past couple of months, so clearly there is context here that isn’t applicable universally… but where it is, P&G are usually worth watching and copying.
If it needed lending further weight, we are seeing the same opportunity present itself in our clients’ data: across channels and industries, since the start of the pandemic, there has been a 56% reduction in the cost per 1000 impressions at the same time as a +15% increase in the average engagement of site visitors. The conclusion is that there is more affordable inventory out there than a month ago and a more engaged audience of potential customers.
Deeper measurement of engagement has been top of the list for our clients over the past month. In the context of Mark Ritson’s comment that there is opportunity for marketers who are prepared to think long-term, it’s encouraging to see clients focusing on a metric that is more associated with long-term brand value.
Another significant contribution to the current marketing challenge is the fact that lots of organisations have optimised all their activities to short-term digital ROI, so aren’t well-equipped to react when the unit economics suddenly don’t stack up anymore. The more that marketers can measure and focus on the longer-term metrics, the more opportunity they might find during this period.
The final topic of the webinar was experimentation.
We’ve observed a temptation to write off this whole period as such an unprecedented and freak occurrence that any attempt to study customer behaviour will be worthless in the long run. Some of the best brands in the world will often just ‘shut things off’ for an AB test and there are great anecdotal examples of such tests over time, sometimes accidental tests. Last year, Adidas mistakenly shut off their brand Paid Search in Latin America, and no one noticed because there was no drop in sales or revenue. This prompted a global rethink on their approach to paid media marketing. For most marketers treading water with their CPAs, there is little appetite or time to take these risks in the normal day-to-day.
Yet many marketers have had these changes forced upon them with significant budget reductions over the past couple of months and we’ve seen great examples of clients finding real silver linings to what is otherwise a horrible situation, by really diving into the data and ramping up experimentation:
E.g. 1 – An international retailer can now study differences between countries based on the extent to which they have been impacted by the pandemic, and tailor their marketing accordingly.
E.g. 2 – With stores shutting globally, D2C retailers who have offline stores are in some places finally able to understand how online marketing spend affects offline conversions.
E.g. 3 – One client was forced by cashflow necessity to drop marketing budget by more than 50% in March. Since then, they had more than a 15% increase in new visitors and 10% increase in conversion rate, driven largely by seeing for the first time the channels that were contributing enough in the first place and massively ramping testing and optimisation of free channels like email.
To summarise, not all businesses can afford the luxury of experimentation, and whilst this isn’t going to be applicable to everyone… if you can afford to:
- There may be new channels or ones that you previously wrote off because you couldn’t make them work cost-effectively that are worth looking at again as CPMs and CPCs drop
- Visitor engagement should be and is already for some a more valuable metric in a world of cheaper inventory requiring a quality measure alongside just volume, as well as a requirement to plan longer-term
- If you can, ramping your testing and experimentation will likely uncover things that can help you in the long term
If you’d like to listen to the webinar in full, you can do so here.