Push for Profits
Marketing’s second wave – performance marketing – transferred power and profits from brands to the Big Adtech platforms. In the eternal quest for digital customers, brands outbid each other on auction platforms. Rising customer acquisition cost (CAC) hurts profitability. Adtech is a leaky bucket and a trap from which brands find it hard to escape. While a sub-industry has emerged to optimise the return on ad spend (ROAS), the answer lies elsewhere – in building deep relationships with existing customers so as to obviate the need for incessant new acquisition.
Martech – the third wave – focused on retention, engagement, and growth. But its impact has been limited because marketers still lavish their focus and budgets on adtech and acquisition. As a result, the impact of martech has been muted. It has also not been able to solve the frictions marketers face – attention recession, red journeys in the conversion process, and dormancy and churn. As a result, martech has not been able to impact profitability.
Martech done right is the real solution for brands to regain control of their P&Ls. So far, all marketers could see were unsolvable frictions in the existing customer funnels limiting their gains from marketing’s third wave. A range of new ideas and innovations is about to usher in change and enable marketers to cross the final frontier to exponential forever profitable growth. This is the fourth wave of profipoly marketing.
Here are excerpts from some of my recent writings.
Mystery of the Missing Profits [LINK]: “The Land of Digital promised untold riches for brands. The dreamy vision of eCommerce painted a world without walls, where businesses, no matter their size, could seamlessly transition from local storefronts to global powerhouses. The digital paradigm shift promised the allure of not just vast audiences but also a chance to cultivate intimate relationships with customers. Data analytics tools aggregated every customer action and promised insights into consumers’ desires, habits, and preferences, implying a future where every online shopping experience would feel tailored and unique. The very architecture of online platforms, from their algorithms to user interfaces, was built with the promise of propelling businesses to new heights, buoyed by the promise of limitless reach and scale. With infinite scale would then come exponential profit growth. This was the hope. The reality has turned out to be very different. As the dust settled, the complexity of building digital businesses has become apparent. It’s not that the promises were hollow, but rather that the practicalities of the vast digital market had nuances that weren’t initially apparent. The once blue ocean turned shark-infested as businesses flooded the digital space. The consequence? A heightened race for consumer attention, leading to an escalated marketing arms race. Discounts, once an occasional incentive, became an omnipresent necessity. Flash sales, promotional events, and loyalty programs were no longer value-added strategies but essential tools for survival… Even as digital/B2C/D2C/ecommerce companies are growing rapidly, their profits are not keeping pace. Every B2C/D2C CEO must be thinking: “I’ve integrated every digital facet—from an optimised website and app to a seamless omnichannel experience and prompt delivery. What’s missing in this equation? Why aren’t the profits pouring in?” Even traditional retailers who have invested in digital transformation initiatives would be asking themselves the same question: “Where are the returns on my investment?” The short answer: Elsewhere. The profits are on the balance sheets of the ads sellers, arms sellers, and access sellers. They are just not with the actual sellers!”
eFolly to Profipoly [LINK]: “Lured by the promise of scale and novelty, marketers fall into the all-too-easy trap of constantly seeking new customers. They focus their strategies on the top of the sales funnel and become consumed by the deceptive delight of an ever-expanding customer base. However, in this relentless chase, an essential component of their business falls by the wayside — their existing customers. The quest for new acquisition consumes such a significant share of resources that it eclipses the more sustainable and arguably more profitable segment — existing customers. These are the customers who have already demonstrated their trust and loyalty towards the brand, and who are ignored in favour of new ones. This focus on new customers creates an attention deficit for existing customers, gradually eroding the potential for repeated purchases, brand loyalty, and advocacy. Instead of using these existing relationships as a catalyst for sustainable growth, marketers find themselves in a bidding war for the new, with spirally increasing spending to replenish a leaking customer bucket.”
Solving eCommerce’s Fifth Funnel Friction [LINK]: “[Friction] exists in various forms and has a significant, often underestimated, impact on profits. These frictions have created inefficiencies and roadblocks in online and offline businesses, impeding customer engagement and diluting brand value. ‘Funnel frictions’ in customer journeys are the silent assassin of profits. From unidentified customers slipping through the cracks to inefficient ad spending, these frictions create hurdles in establishing profitable relationships with consumers. They lead to disjointed customer experiences, increased costs, lower conversion rates, and ultimately, eroded profits. The ability to identify and address these frictions, therefore, is not just about improving customer experiences but also about securing a brand’s bottom line.”
So, how is the fourth wave – profipoly marketing – different?
