Move Your Marketing Budget Away From Advertising!

September 4, 2018 Matt Fish

What percentage of your marketing budget is dedicated to advertising? If you’re like most other businesses out there, chances are it’s been the focus of your brand’s strategy for a while. Unfortunately for you, this strategy is no longer effective with today’s tech savvy consumer. With unlimited information at their fingertips, consumers no longer want you to sell them a product. They want to figure out what they need and where they’ll buy it — without your help.

To put it bluntly, this means that using advertising as your main growth strategy is setting yourself up for failure.


Why advertising isn't effective anymore

Customers don't trust ads

When was the last time you bought something from an ad?

If you’re anything like me, the answer is probably never. When I see an ad, my automatic response is that the information being presented isn’t completely true. Businesses are always going to do whatever they can to get you to buy, and everyone knows they’re going to present a very one sided view of their product. 

Nearly 7 out of 10 customers don't trust ads.

I’m not alone with this line of thinking, either. Nearly 7 in 10 customers say they don’t trust advertisements, meaning that most of your marketing efforts are falling on deaf ears. As a result, it’s going to be very difficult to maximize the return on your investment.

Customers don't see ads

Another problem for your advertising strategy is the rise in adblockers, and it’s not going away anytime soon. Over 30% of customers are now using adblockers which means they’re not even seeing your ads, regardless of whether they’d trust them or not! This essentially means that you’re not getting the full value of the advertising you’re paying for.

30% of customers are already blocking ads, and this number continues to climb.

If you want your customers to actually see the messages you want to share, advertising can’t be a core part of your strategy. It’s way too easy for customers to completely ignore you, pushing you even further away from the growth you want.

Ads are getting more expensive by the minute

Another worrying trend if you’re buying ads (besides the diminishing returns) is their rapidly increasing price. Over the past few years the cost of digital ads have skyrocketed at 5 times the inflation rate. This is largely because of the ever-increasing competition in the ecommerce space.

Digital ad costs are rising at 5x the rate of inflation.

Because of these rising costs, you aren’t seeing the same return on investment you would have seen a couple of years ago, or even a couple months ago. This means you and your brand are stuck in the illusion of growth, leaving you with the impossible task of constantly having to invest more capital into ads in order to get the same results. 

Instead of sinking money into ads, use retention to supercharge your business!
Learn how retention is the key to profitability with our ultimate guide to customer retention.

People don't want to be sold to

Have you ever heard the saying “you can lead a horse to water, but you can’t make him drink?” This also applies to shoppers making purchasing decisions. You can promote the benefits of your product as much as you want, but at the end of the day they won’t think about buying it until they decide for themselves that it’s actually what they want.

In a time where customers have more information at their disposal than ever before, telling them the perks of your product has never been less valuable. Instead, customers want to discover products on their own, and feel like they made a good decision to buy a specific product. No one wants to purchase something because they were told to.


What you should be doing instead

At this point you might be wondering, if advertising is as futile as you say, what’s the alternative for my business? Thankfully, there are a number of things you can start doing right now to drastically improve your marketing strategy.

Incentivize your brand advocates

A huge opportunity that many businesses neglect is using your current customers as an acquisition tool. Too often brands think that the best way to generate leads is buying expensive ads, when that couldn’t be further from the truth!

In reality, your most effective channel of acquiring new shoppers is customer referrals. 92% of customers said they trusted referrals from someone they know, which is a far cry from the 69% of customers who distrust ads. By building your relationships with customers on trust, you can make sure that they want to engage with you and share it with their friends, too!

A great way to encourage customers to share their brand experiences with friends is by introducing a referral program to your store. Referrals allow you to incentivize your current customers by offering discounts or points in exchange for recommending your brand to someone else. This means that referrals are the key to building a community in a sustainable, long term way.

Move Budget From Ads Run Gum

A company that’s seen amazing results with a referral program is Run Gum. By offering customers the chance to give their friends $5 off a pack of gum while receiving the same benefit themselves, they provide the necessary motivation for customers to get their friends to also become loyal Run Gum customers. In addition, this reward lowered the barrier for new customers wanting to try the product. For a product as niche as caffeinated gum,this was incredibly impactful and important.

By focusing on referrals, Run Gum was able to move beyond advertisements and build an even better customer acquisition strategy — all with the resources they already had.

Focus on retention

While you can never completely remove acquisition from your marketing strategy, it should never be the end of the story. In order to see your business succeed long term, you need make sure you’re retaining the customers you acquire!

Customer retention rates are what separate run-of-the-mill businesses from industry leaders. Even though studies show that a 5% increase in retention can can lead to a whopping 95% increase in profit, the average business is still investing most of their budget into  acquisition channels. By neglecting their current customers and focusing on unsustainable strategies, brands end up fighting an unnecessary uphill battle.

You can avoid this struggle by focusing on ways to keep customers who already love your products happy! When customers feel a deep emotional connection to your brand, they’re willing to make more purchases. As a result, repeat customers are responsible for a massive percentage of your sales. Finding ways to keep them engaged with your brand community is essential for the success of your business.

Move Budget From Ads Inkbox

One of the simplest, yet most effective ways to encourage repeat sales is by introducing a rewards program, like inkbox has done. By giving customers rewards for making purchases, you create an emotional connection with them and create a reciprocal relationship. This reciprocal relationship means customers leave every interaction with your company feeling cared for and rewarded, so they continue to support the brand that supports them.

In just the first month after they launched the program, inkbox saw an 80% increase in the number of repeat purchases. Clearly, customers at inkbox saw the value in maintaining their loyalty to the brand, and felt the company cared for them. With competition in ecommerce growing everyday, a loyal customer has never been so valuable.

Interested in seeing how rewards can transform your business?
Our guide to launching a rewards program gives you everything you need to start rewarding your customers today!

Value-add marketing

One of the best ways for you to move away from advertising towards a more sustainable marketing strategy is through value-add marketing. Beyond obvious benefits such as improved SEO and organic traffic from the content you’re creating, the other benefit is you’re giving customers a reason to make visiting your site a regular occurence.

Instead of only visiting your store when they think they want to buy something, your customers will now see your site as a source of quality information and content that they can trust. By sharing valuable information with customers, you are able to build an emotional connection with them. This emotional connection builds switching barriers, and allows you to keep your customers loyal for years to come.

Move Budget From Ads muscle and strengthIf you’re looking for a company that approaches value add marketing right, look no further than Muscle & Strength. Through their blog content and video tutorials, they offer a wealth of information about fitness, giving their customers a reason to visit their site every week. If you’re someone who’s purchased protein or supplements from them in the past, this additional content gives you the perfect excuse to visit their store more than a couple of times a year. Now, you have a reason to visit the site every week for the most up to date information on working out.

It's time to replace transactional relationships with emotional ones

With the rising costs of ads, the best time to switch your marketing focus is right now. Ads no longer deliver the results you need to grow your business - that lies in successfully building a brand community. Advertising might get you some quick wins at the start, but as your business grows advertising becomes an Achilles heel for your brand. By putting your customers first and focusing on creating lasting, emotional relationships with them, you guarantee that they'll stay loyal to you and your brand for many years to come.

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