You’re invited to AW2020, Advertising Week’s digital event, September 29-October 8 to help work through solutions to some of the advertising and marketing industry’s biggest problems. From climbing unemployment to racial inequality and an unclear future, now is the time, more than ever, to think and work together. Register to learn more.
New customer acquisition is more important than ever.
Long before one dollar of media is spent, brands need to decide what type of new customers they want. This means that marketers need to stop treating all new customers equally. Not all customers are the same, and they certainly don’t represent equal value for a brand. With marketing budgets either on pause or cut substantially, it’s essential to prioritize those customers that are most valuable in the long-term.
Many brands do not have the ability to measure true net-new acquisition because they are not using first-party data in their efforts. For most marketers, the default fallback is to assign a CPA metric. This is easy to measure inside specific channels and requires very little thought to monitor and optimize. Unfortunately, this approach assumes all customers are created equal and are therefore worth the same. Before brands can decide what they are willing to pay for a specific type of new customer, they need to do the work to understand their current customers and classify them accordingly.
Now is the time to do that work. Spending the time now to deeply understand your customers and make business decisions around value is crucial. The world will slowly recover. As marketing budgets increase and consumers begin spending again, brands need to focus on their highest-value prospects. In doing so budgets can be optimized, and you can do more with less.
Now is when you should spend more on consumers that matter the most. Thinking about CPA’s in silos can lead you into trouble at every stage of the funnel. CPA’s are only a guide and serve as only a data point. A luxury retailer that sells aspirational items such as belts and scarves is a prime example. What matters most to this retailer are their very best customers, consumers who spend on expensive handbags, couture fashion, etc. What CPA should this retailer focus on? If they don’t differentiate between new customers, they run the risk of feeling great about low CPA’s that result in customers who will only ever buy a belt.
Marketers need to take this time to step back and work with the rest of the organization on what’s important. Smart brands will shift the focus away from traffic volume and generic CPA’s. In order to succeed, become laser-focused on understanding your various customer groups in terms of value. Decide what you are willing to spend on each group separately. Begin to think outside of single channels in how you acquire these various groups. Building an analytically driven plan now will allow efficiencies to drive success as budgets recover. Now is the time, because ad inventory is cheap, and people are consuming more media than ever before. And a post-crisis recovery will come, one way or the other. Will you be ahead of the curve?