Performance marketing costs are skyrocketing. From Facebook to Google to Twitter, the cost to acquire new customer has risen substantially over the 18 months. Some estimates put the cost increase at as much as 100% year-over-year.
Especially in commerce where margins are typically razor thin, this increase in acquisition cost has made marketing strategy more difficult. In the not so distant past, a team could simply rely on a well-run Facebook campaign for growth.
But now, company after company has been interviewed saying that while Facebook used to control the lion share of the marketing budget, the economics simply do not make sense anymore.
Therein lies the rub – paid marketing favors early movers and high margin products, but eventually hits diminishing returns. When a new medium is created costs are low and consumers are more open to ads. As the medium matures, competition increases, which drives up costs. Also, consumers become increasingly blind to the advertisements because the publishers increase the frequency to increase their bottom line. As time goes, consumers simply become adept at filtering organic vs paid content.
Over the next 5-10 years, successful companies are going to combat this by building marketing teams that more closely resemble media companies. Hiring journalist, researchers, videographers, and photographers to make creative original content will help companies build a voice and attract owned attention.
It will help them get mentioned in the press, attract interviews on TV and podcasts, build better rankings in search, and be associated with a specific problem or topic. There are already a few companies that are doing this extremely well. Glossier, HODINKEE, and Barstool Sports, to name a few, are companies of different shapes that have approached selling from an angle of creation.
Paid media is never going away and will continue to play a role in the marketing mix even as this trend evolves. The additional benefit of adopting an approach like this is paid media will now have access to richer assets. Quality blog posts, tutorials, and video will be at team disposal to promote on various paid channels. And with increase quality comes increased engagement and performance and also the flexibility to move to nascent channels as they come into vogue.