HOW TO… solve the inverse relationship between scale and cost

In the first part of The FanFinders Guide to Marketing, we cover how brands in baby and parenting can fight rising acquisition costs when they scale.

When it comes to plans for scaling, the default go-to for many, in our industry and beyond, remains the likes of Google and Facebook. This is commonly understood – perhaps more so in the US – and it’s difficult to get away from the ‘big guys’.

However, if we consider more traditional methods of reaching consumers via space in magazines, web banners and essentially other people’s inventory, the contrast to now is stark.

You can forget bulk-buying in advance and getting discounts for series bookings or larger commitments.

The programmatic picture

In programmatic marketing, the more scale you want, the more it’s going to cost you per person, all the way up.

Let’s say you want 1000 customers and it costs you £5. Then, you want 5,000 customers in the next period; each of those customers is going to cost you say 2x what they cost before, because you have to compete and bid for space.

The pandemic has only stimulated this competition. How many companies are now advertising online? They are bidding and competing for the same people, because everyone is now in the digital space and not focused on the high street.

What this all means for your funnel, which encompasses your reach, leads, conversion to customer – and your metrics could be anything from advert views, clicks to landing pages, email opens and clicks, is that regardless of which stage you’re entering, it’s going to cost you more money as you scale.

The traditional media buying system has been reversed.

With how the ‘big guys’ are setup, it will not be long until that inverse relationship pushes your budgets completely out of sync.

If your objective is to scale a lead-generation or customer acquisition program over a sustained period, that’s where partner networks can help.

Scaling with partner networks

When it comes to any form of performance marketing and advertising, the crux is to find the most efficient way to do something, based on how much you’re spending and conversion rate.

For any objectives, the maths are the same.

How much are you paying per customer? What scale are you getting? At what cost is it converting?

And, if you’re a brand who wants reach and engagement, this could be how many people are opening your emails or percentage of views that turn into clicks.

Whatever your costs may be, at some point in that funnel those costs will multiply with scale and you don’t want to end up in a race to the bottom on ROI.

It also takes a serious amount of time and resources to run scalable campaigns and social.

With partner networks and affiliates, you can fix your costs and add flexibility. This could depend on different metrics such as customer quality, life-time value, average basket size or average order value.

By fixing your costs, you can pay people who provide more value, more money. Or pay weaker performers less money.

And you can also negotiate on those fixed rates – which is a leverage that doesn’t exist with the ‘big guys’.

At FanFinders, we insert ourselves at various different points of the funnel.

We’ve all seen those nice diagrams showing the various stages; and we’re involved from the top with 1st party lead generation all the way down to delivering new customers or subscribers, all with ‘guaranteed cost per’, which is designed to de-risk partner marketing programs.

Diversification

Looking at different ways to support your scaling objectives will be crucial.

This is especially true around events like Black Friday and Christmas, where dealing with the Duopoly could be double the price due to competition and relevant algorithms than in Q1-Q3.

Check out our other guide entries on how to engage customers before they’re your customers, how to bring new families into your funnel at the right time and how to create content with impact.

A longer version of this post can be seen in our column in the February issue of Nursery Today.

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