AdWaste to Profipoly
$200 billion a year, growing at 25-30%. That’s the AdWaste that eats away at brand profits. Caused by completely avoidable wrong acquisition and reacquisition, AdWaste is the biggest of many profit-killers. Big Adtech (henceforth called Badtech) is the primary beneficiary of this largesse. This ‘handout’ has also shifted the marketing industry’s balance of power away from brands and agencies to the likes of Google and Meta. The massive reduction in profits has been caused by an escalating new customer acquisition race which wastes half of budgets has created a polycrisis in marketing: a leaky bucket of customer additions which take up 85-90% of spending and whose lifetime value cannot be fully extracted because they churn and thus force marketers to reacquire them or acquire other new ones via even more adtech spending. Attention recession and data poverty hurt the marketer’s ability to build hotlines and deliver omnichannel personalisation. In other words, marketers are facing the perfect storm: in a slowing market, revenues and profits are being hurt even more because of their inability to escape Badtech’s web.
The time has come for a mindset shift from acquisition-centric marketing to profit-centric marketing; this is a journey every business will need to make because it is the only way to build an enduring, great business. The easy money era of the past years is behind us and will not be coming back anytime soon. Badtech benefited greatly from money transfers from pension funds (via VCs and Pes through new age startups); in the years just gone by, a third to half of capital raised by B2C companies was spent on the likes of Google and Meta. Fuelled by a FOMO (fear of missing out) in the battle for the next new customer, brands and marketers ceded their sovereignty and lost sight of a business’s soul which is to ensure existing customers come back for more and bring along their family and friends. We as consumers lost our privacy and the warmth of brand relationships. We became data points in CDPs (customer data platforms), not distinct individuals in search of brand love and frictionless experiences.
Luckily, help is at hand. A set of innovations and well-planned actions can end AdWaste and supersize brand profits: a 25% shift of budgets away from Badtech can deliver more than a 50% increase in profits, while a 50% shift can more than double profits. This is what I call ProfitXL: a strategy to supersize (eXtra Large as denoted by XL) profits by breaking with badtech, a flipping of the funnel of brand-customer relationships to solve marketing’s polycrisis.
ProfitXL is built around five themes which I have covered extensively over the past three years on my blog: the need for one-way push channels to become two-way conversational pathways thus bridging the chasm between acquisition and conversion, the transition from point solutions on the brand’s properties (website and app) to a unified martech stack, the identification of Best customers and creating differentiated experiences for them, getting close to zero CAC (customer acquisition cost) for new customers, and measuring growth based not on paid marketing spends but on repeat purchases from existing customers and revenues from referrals. This is ProfitXL’s SHUVAM framework: Story, Hotlines, Unistack, Velvet Rope Marketing (VRM), Acquisition (done right), and a new set of Metrics to measure progress. SHUVAM is the path for exponential forever profitable growth. If followed rigorously, it can help a brand create the ultimate endgame and moat in a business – a profits monopoly (“profipoly”).
The ProfitXL mindset and SHUVAM strategy will help marketer’s increase revenues, reduce spends and improve shopper experiences. After almost two decades of digging the AdWaste hole, marketers can climb the profits mountain and aspire to reach the profipoly pinnacle.