Marketers’ Mistake
In the pre-digital world, it was very difficult and expensive for brands to build 1:1 relationships with customers. Data collection was hard and communication had to be via post. So, few B2C companies did that. The Internet changed everything because it gave a digital identity to every customer: an email address and/or a mobile number. Now, it became possible to send messages either as broadcasts or targeted individually. This also incentivised marketers to collect data about customers. The more data one had, the more customised the messaging could be. This has led to the rise of martech – tools and technologies to enable engagement with existing customers. The endgame: omnichannel personalisation.
This contrasts with adtech where there is no personally identifiable information (PII). That is why other identifiers like cookies and device IDs are needed to connect activity across sites and sessions for non-logged in users. Adtech thus is perfect for new customer acquisition. In the early days of the Internet, media platforms served as the intermediaries between brands and their future customers. As websites proliferated, the gatekeepers changed to the search engines and then the social media platforms which garnered the attention. This shifted the balance of power to companies like Google and Facebook, who in turn grew their footprint and data hoard. Cut to today, and the duo have amassed massive power to the extent that almost 90% of the incremental ad spend goes to them.
This is where I believe marketers made a big and costly mistake. Seduced by the ease of spending on Google and Facebook, and the excitement of continuously acquiring new customers, they missed deepening relationships with existing customers. It is not just marketers but even CEOs who are at fault. The question that gets asked is: how many new customers did we acquire? There is little discussion about retention and revenue expansion from existing customers. (This is true for B2C and B2B brands.) In a competitive market, the focus shifts to landgrab and leads to an arms race of spending investor money or retained profits to show perpetual growth of website traffic or app installs. The rise of ad revenues of Google and Facebook testify to the marketers’ folly.
By not building deep relationships with existing customers and by bombarding them with irrelevant messages, marketers have trained their customers to ignore their communications, thus reducing the efficacy of the only method of bringing existing customers back to their website or app for transactions. Once customers start ignoring the messages, the marketer has little or no choice but to spend 10X more on re-acquiring that same customer via the tech giants. With everyone doing the same, the only winners are the attention sellers (Google and Facebook), who in turn create even more powerful data hoses by giving consumers even more free utilities. The irony is that as marketers did not pay attention to their customer needs, they are paying even more dearly to the attention intermediaries to reach their own ex-customers.
This has been the big blunder that marketers made: they did not value the attention of their customers. Instead of building a hotline, they cut the line. Now, the digital people are fighting back. They want their privacy. This is forcing the tech giants and device makers to act, and changing the rules of marketing as we know it. It is also creating a chance for marketers to correct their past mistake of ignoring their existing customers. Marketing is thus getting disrupted and marketers have an opportunity to simplify it.
