THE AD SPACE
The first wave caught us all off-guard - personally and professionally. March 22, 2020, the country initiated its first full lockdown - limited movement of people and parcels to only essentials; and we were in the midst of scaling an energy drink brand and we couldn't help but notice the irony. In the weeks that followed, it became apparent that all non-essential e-commerce brands had to throw in the towel, temporarily, until COVID-19 decided to show some leniency.
But, for the brands that came under the essentials category, it was the beginning of a 2-month long revenue surplus.
Now, high intent customers were shopping in a less crowded ad space, and the results were phenomenal.
Then, as things began to ease, and the flow of people and parcels became less restricted, between the first and the second wave of the COVID-19 virus, a whole host of businesses flocked online. Businesses that had hitherto paid little attention to their online presence couldn't ignore it any further. Websites were built with a keen eye on a customer's journey with the final objective of a legitimate sale or lead. Customer behaviour was tracked and re-targeted keeping this final objective in mind. The dramatic US elections also took place. And our fear of the virus was slowly replaced with subpar mask-wearing etiquette.
The resultant effect on the digital advertising world? Well, it overcrowded, and the algorithm made that apparent.
The country with the lowest advertising cost started to seem expensive. You now had a digital advertising world where a large marble conglomerate was bidding for a customer's attention, while a snacking company and a 100-year old jewellery company were too.
This second wave has been nothing short of scary. We're right back to where we were exactly a year ago. Some non-essential brands have stopped advertising, the ad space is relatively less crowded, essential brands continue to do well.
THE AGENCY
Where do consultancies like TYS Performance Marketing Consultants LLP and other agencies - both big and small - find themselves in the midst of a world that is effectively burning? Well, it's been bitter-sweet.
Of course, the above generalises the experience within reasonable limits. But, there is something we haven't addressed or rather, need to address in far more detail.
WHAT WE REALLY NEED TO ADDRESS
Mental Health.
For all the objectivity of the numbers we churn, we're subjective and emotion-driven humans at the end of it. We all either know someone who has lost their life to this virus or then has directly lost someone. It's all too close for comfort and has been since the pandemic started. This nerve-wracking pandemic means that overall team morale is low even as consultancies scale, productivity isn't at its optimal, and deadlines aren't always met. Yes, service levels do fall in the face of unforeseeable circumstances, something that the whole world is dealing with today.
As a consultancy how do you navigate this? Well, empathy and compassion is the key, in addition to making sure resources are freely available to your team and their dependants for when they want or need it. Empathy for those who are directly and indirectly affected by the pandemic, compassion for those who once affected cannot perform and outperform their pre-pandemic selves.
And this empathy and compassion are best reflected in a company's policies that guide every team member. The following should be normalised -
These are just 3 substantial suggestions, but the efficacy of these lies first in how forthcoming a company is about organising the above, in addition to how approachable the company is about keeping an open forum for conversation that increases the above list from 3 to many.
Our service teams aren't "disposable" assets but rather growth drivers that need to be invested in as much as we invest in our clients. Genuine growth opportunities with positive work environments are what keeps a team robust. So, treat your team so well that they never leave, but teach your team well enough that they tomorrow have the conviction to do something of their own, something that abides by the working principles you as a company imbibed, to begin with.
]]>In a nutshell, Diwali is a whirlwind of buyers emptying their pockets and marketers ensuring that those pockets are emptied only at their stores, either online or offline. And with ever-increasing competition, where every brand now has the "ultimate" curated Diwali gift box, with a dhamaka and pataka of a discount, costs of acquiring these customers has gotten higher than ever before, allowing only one very specific type of business to succeed.
E-commerce businesses can be broken down into three rough categories -
(a) Small businesses, which are generally not funded, and bootstrap their way up, with limited performance marketing spends, which don't exceed more than ₹1000 per day;
(b) Large businesses, which could or could not be funded, which may or may not have a large offline presence, but care specifically more about their bottom line and profitability, and are generally built on generation wealth. They can spend upto ₹10,000 per day;
(c) Valuation businesses, which are heavily funded by venture capital money or a large pool of individual inventors, where customer acquisition is their top priority, even if it comes at the cost of their profitability. They can spend more than ₹10,000 per day comfortably, with a 1x ROI (return on advertising spend) or lower.
Generally, the ad space is characterised by a finite buying audience that is growing at a pace slower than the pace at which newer brands and businesses are entering the ad space. And generally, for brands running ads on Facebook/Instagram or Google, the higher the spends, the higher the impressions (i.e. the instances in which a customer sees a brand's ads) as a consequence of their higher their bidding power, which then has an adverse effect on these very metrics for smaller, bootstrapped businesses or those concerned more with profitability.
And with Diwali, most brands - especially valuation businesses - exponentially increase their spends to outbid their direct competition. These businesses can afford to do as little as a 1x return on their ad spends, at a controlled burn rate of their marketing budgets, with the hypothesis that acquiring a customer now is more valuable at a higher cost of acquisition keeping that customers lifetime value in mind, over time. Over time, as this customer, or a group of customers acquired now keep ordering that product, that cost of acquisition diminishes, tending towards zero.
Theoretically, yes, the above holds true, but maintaining a customer repeat rate of 30% or higher is difficult, and involves some form of advertising, which of course costs money.
But, instead of getting caught in this rut of competing with the big money spenders, how do we bid higher on lower spends?
From what we've seen so far, it comes down to (a) your unique product offering/proposition; and (b) how well do you engage with your database of current customers, if you currently have one.
Unique product offerings when communicated effectively in ad creatives generally imply higher click through rates when a potential customer does see your ad. Higher click through rates communicates to your advertising distribution platforms that you're highly engaged with, therefore, increasing your bidding power, which translates into higher impressions per ₹1 spent.
And when it comes to capitalising on your current customer database, email and SMS marketing does the trick. These alternatives to retargeting ads are as cheap as ₹1 per email, and even lesser when it comes to SMS marketing. With these two avenues, your can AB test everything from communication, to the time of day these communications are sent, right up to various call to actions, over various campaigns.
Is Diwali going to be similar next year? A high probability "yes" is the most apt answer, given the current trends. By next year, the number of brands competing for this finite buying audience is only going to be higher, increasing the cost of acquisition further still.
Perhaps a technological curve - some new sort of marketing avenue aside from Facebook, Instagram, Google, and Amazon - could salvage the season?
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