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Advertising dollars are rising but no one wants to talk about it.

Managing customer acquisition costs (CAC) has always been under the purview of Chief Marketing Officers (CMO).

No one wants to admit that prices are getting out of hand because that would be admitting that they are doing a bad job.

Regardless, it's happening.

Unless small businesses find other ways to grow, they will all eventually get crushed by incumbents.

Why is advertising getting more expensive?

1. Fixed Channels

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Photo by NordWood Themes / Unsplash

Over the past 20 years, since the modern web (post-Google) exploded, count the number of viable marketing properties for consumer brands.

  1. Google
  2. Facebook
  3. Youtube
  4. Reddit
  5. Instagram
  6. Twitter
  7. Snapchat?
  8. Bing?
  9. Amazon?
  10. New: Tik Tok

Setting aside all the niche blogs and IRC chat rooms, the number of channels have remained relatively stagnant. If you haven't experimented with these channels, here is a good resource to get started.

2. Increasing Bidding Competition

Thanks to platforms like Shopify, WooCommerce and Magento, it has never been easier to start a e-commerce business.

On the flip side, it has been harder to scale one.

With fixed channels and an ever increasing number of bidders, the cost of bids will inevitability rise over time. With global ad spend rapidly increasing, year on year, if you plan on making advertising work, you better have the margin to make it work.

3. Law of Shitty Clickthrough

For every business, growth attribution follows a power law.

I.E. Most of your growth will come from your top 2 channels.

As new marketers, we often spread ourselves too thin. From SMS campaigns to personalized websites, we try almost everything to drive the cost of acquisition down.

Yet, it is often going to be more effective to double-down on channels that have worked in the past until the point of saturation before moving onto the next platform.

Smart marketers have already come onto this fact and have started doubling their efforts and budgets. This means if enough companies have to depend on the same channels, the competition for screen real estate is inevitably going to drive up prices.

What are options are there to grow?

Brian Halligan (CEO of Hubspot) has often touted the mindset shift in marketing.

"Move from a rental position, to an asset creation"

For every dollar spent on Google Adwords, thats money channeled to the search engine to drive the next incremental site visitor.
For every dollar spent on creating your own marketing assets (viral videos, amazing photos, funny infographics), thats assets that you can leverage on in the future.

So as a retailer, what are your assets?

Products-led growth

If you've been around for long enough, you've already built a sizable audience. Either from your mailing list, your social media following or your website domain authority.

The easiest way to grow is then to build and launch new products, and tell your audience about them.

Read more here.