The Real Problem
For the past decade, cookies and various other tracking methods enabled the adtech industry to grow. As our digital lives have grown, the blowback is now coming as the desire for privacy rises. Browsing, apps and emails are all going to get impacted in this privacy-first world. What should digital marketers do? To answer these questions, it is important to look at the real soup that brands have gotten themselves into because of lazy marketing over the past 10-20 years.
Google and Facebook generated $250 billion in revenue in 2020. Where does this money come from? Businesses, spending on targeting past, present and future customers. Let us understand this better.
Because businesses have not built deep relationships with their customers, their customers do not listen to them. Businesses have either not captured adequate data from their customers or do not even know who their customers are. As a result, what do they do? Spend money where the eyeballs are – Google and Facebook. Both have also accumulated plenty of detailed data on individuals thus enabling sharper targeting. Even after the recent changes by Google and Apple, the reality is that the only entities that will emerge stronger are the ones who have the attention, first-party data and targeting technologies – Google and Facebook. Brands seem helpless, but are they really?
Brands attract customers, and then instead of building deeper two-way relationships, they do what? Let many of them go! Best customers are not given differentiated experiences, and others are flooded with generic push messages which get ignored. And then? Brands are back to doing what they know best – spending money with Google and Facebook for new customer acquisition! Little wonder then that Google and Facebook have erected the toll gates on the brand-customer pathway. It is only because brands have let them do it.
At least $100 billion of the money spent by brands on Google and Facebook can be freed up by businesses if they make building direct relationships with their customers a priority. Businesses can invest this money for building better experiences for their Best, rewarding the Rest for their attention, and smarter targeting for the Next.
The key point is this: unless brands prioritise existing customer growth and retention and back it up with a budget reallocation, they will be permanently trapped in the acquisition “doom loop” and always be vulnerable to the changes inflicted by Google and Facebook. The big mistake brands have made is to let these two giants get in between them and their customers. It is time to reclaim the direct relationship and exit the arms race of ever-increasing new customer acquisition costs. This is the key to simplifying marketing.