Things used to be simple: you have a product and you advertise it for sales. How are things now?

We find that the below excerpt from this NY Times article summarizes the point brilliantly:

For most of the mid-to-late 2010s, the playbook for a direct-to-consumer brand was straightforward: a Shopify site and Facebook ads. Let’s say you spend $15 to manufacture a sweater, pay another $15 to market it through Facebook ads, then sell it for $80 on your Shopify store and pocket $50. The problem was that Facebook, like Amazon, is a landlord who knows how to squeeze blood out of a stone. By early 2020, the same brand was paying $75 per sweater to Facebook and losing money on every transaction. Even for brands that were able to keep down their C.A.C., or cost of acquiring a customer, they often found it was a strategy that didn’t scale up. As they went from spending $500 a day on Facebook ads to $5,000 a day, the digital audiences they were targeting remained roughly the same size, driving up the costs of getting consumers while also challenging their patience. “It’s the easiest time in the world to make something and build a business to 20 million” in annual revenue, says Allbirds’s Zwillinger. “Now, getting beyond that - you need to have great business strategy and great product”.

What is the point you say? It’s actually TWO points.

Point 1: Digital Marketing is still great and “cheap” when compared to traditional but it’s becomes so widely spread that we need to rethink what we deem as “cheap”.

Now the writer above was a bit overly harsh on Facebook, because this is the case across all digital ad channels. There are simple much more brands utilizing it today than 5 years ago while the overall number of people is not growing at the same pace (if at all) and then leads to a higher competition on these people’s attention. This in turn, leads to a price spikes for people seeing an ad and ultimately clicking on it.

There is no solution here. It’s just the way of life today. The takeaway for you is to keep this in mind, long gone are the tiny ad budgets that can help you scale. You need to seriously give your digital ad budget thought and allocate a good investment that will scale your business for success.

Point 2: Ads are multipliers. If your product does great, with ads it will do so even more. If your product is mediocre or underperforming, with ads it will be even worse.

So what to do? Strategize. Take a step back, re-assess your business, your brand strategy, your communications style or maybe your website or even your products. Ads are not always to be blamed. The world has become a much more complex space and you need to educate yourself to be on top of your industry and to really understand what your customers want.

If you’re struggling with the above or with figuring out the right budget, just drop us a message and we’ll get on a free call to assess where you’re at with your business.