There’s no denying that the cost to advertise on major digital platforms like Facebook and Google continues to increase as they become more and more saturated and as advertisers generally target the same audience (millennials). Alternative digital platforms (like Snapchat, Pinterest and TikTok) don’t offer the same scale and performance (yet), while other channels (like podcast ads, TV and others) pose serious challenges when it comes to attribution, making them unattractive to brands with economic pressure to drive immediate, measurable results. Many early-stage or cash-constrained brands don’t even have room in their budget to test alternatives.
Still, too many brands and advertisers are throwing their hands up in despair, thinking that the time where the cost of advertising on Facebook and Google becomes prohibitive is near. It’s not - the fact is, most advertisers focus mostly (or solely) on bottom-funnel direct response advertising.
How can brands expand their paid media strategies to decrease their overall cost to acquire customers?
By expanding paid media strategies to incorporate top-funnel awareness campaigns, advertisers can grow their audiences, decreasing their overall cost to acquire customers. This is especially true for growing and/or cash-constrained brands that don’t have a large monthly budget to put toward paid media.
Brands that aren’t focused on growing their audience face challenges of scale - they can only reach so many customers that will be interested in the brand, and as they approach the upper limit, they face diminishing returns on their spend.
Additionally, direct response campaigns (when done properly) are highly targeted - advertisers are looking to convey a very specific message to a very specific type of customer. The more targeted these campaigns are, the more platforms will charge for impressions or clicks. Plus, it’s rare for any brand to have a target audience all to itself - with competitors targeting the same audiences, the cost to reach them goes up.
Expanding your audience will eventually make your direct response campaigns more efficient. Not only is it more efficient to acquire impressions with broader targeting parameters than to acquire transactions at the direct response level, but you can then efficiently retarget users who’ve shown interest in your brand and products with direct response ads.
Understandably, the term “brand awareness” tends to frighten marketers under pressure to generate revenue in a constrained timeframe, and awareness campaigns generate poor ROI and cost per acquisition (CPA) when compared to direct response campaigns.
But these marketers should be looking at different metrics. To measure the success and efficacy of awareness campaigns, metrics like reach, impressions and cost per impression or click (CPM or CPC) are far more appropriate. Overall sales, too, should be looked at over a longer timeframe, regardless of channel.
Not only do many brands judge their awareness campaigns by inappropriate metrics, but they also make the mistake of separating CAC by channel, platform or even campaign. CAC should be looked at holistically, as a singular figure across all elements of the business.
Consumer behavior is not linear. Customers require many touchpoints on their journey to purchase, often doubling back. Looking at each channel individually can lead to false conclusions - some channels aren’t meant to directly drive profit, but rather move customers down the funnel into the channels that do result in purchases. The problem is that analytics and attribution aren’t always powerful enough to show direct connections.
Still, businesses must consider how channels, platforms or even campaigns within the same platform support each other to influence a customer’s journey. As it relates to paid media, businesses must consider how top-funnel efforts (which, individually, would show a higher CAC) expand the audience and move interested users down the funnel.
Ultimately, the digital advertising sandbox is only crowded in the direct-response corner. There’s much more space to play; it just requires patience - which is too often in short supply.
If you’re not growing your audience or supplementing direct response campaigns with the things that get customers to the stage where those campaigns work more efficiently, then heavy competition and high cost should come as no surprise.
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Daniel is Hawke Media's head of Media Buying, overseeing all paid media, from digital to traditional. He's a basketball junkie, food explorer, avid reader, aspiring sake connoisseur and loves to pontificate about life and the human psyche.