My thoughts on brand marketing vs. direct marketing – misconceptions about branding, and why direct marketing is your best bet for driving sales fast.
Where should this startup focus in its first year??
That was the question.
After I sold my first e-commerce business, Design Public, I started advising other startups.
I remember one startup in particular: a direct-to-consumer home textile brand. The founders had graduated from Harvard Business School. They had raised money from top-tier VCs.
The advisory board was a business world Who’s Who. A senior VP from Williams Sonoma. A Goldman Sachs partner. The founder of a popular flash-sale site. A guy who ran an agency that did work for Nike.
(Yes, and me too—though I’m more of a Who’s Not Who.)
The first quarterly board meeting took place in January 2013. We convened at a back table at the always-in New York restaurant Balthazar.
Everyone chomped on Nicoise salads. The founders led us through the most beautiful slide deck I had ever seen.
Our agenda: where the company should focus over the next year.
One by one we offered up our advice:
- The agency guy loved the idea of some identity and branding work ($20K).
- The flash-sale founder advocated ads in a big home-design magazine ($10K per page) and sponsorship of a design event ($20K). He said both would “get the brand out there.”
- The Williams Sonoma VP thought it would be a score to land the first marketing hire, a brand manager from Pottery Barn.
- The Goldman dude just hit on the founder the whole time.
Oh, and everyone loved the idea of hiring a PR agency ($8K/month retainer). Getting mentioned in design media and Techcrunch was “priceless,” right?
Meanwhile, I’m there at the end of the table, feeding my face, feeling pretty insignificant.
Heck, all I ever did was run a piddly drop-ship retailer!
So when it was my turn to speak I muttered: “You know, if it were my company, I’d take all that money and run some Adwords campaigns.”
No real reaction from anyone. Some polite smiles. Some nods. Then the check and the end of the meeting.
Fast forward nine months. Third-quarter board meeting.
Revenue was about where it had been nine months before (i.e., at zero).
The startup had done everything we’d discussed at that previous meeting. The identity project. The killer website design. The full-page magazine ads. The events. The hire.
And now it was short on cash.
The other board members could have cared less. They talked about how the positioning must be off and crap like that.
But the founders—the people with a company on the line—zeroed in on me: “So about those Adwords campaigns. How would you do those again?”
Your First Job Isn’t Brand; It’s Demand
It’s funny how fast brand considerations go out the window when you aren’t generating any revenue.
A lot of founders (especially the MBAs) come out of the gates looking to “build a brand.”
Within a year they drop that idea like a frickin’ hot potato and log into their Adwords accounts for the first time.
So let me save you some time: unless you run Ford or Prada, your online shop is not a “brand.” And you don’t have the resources to build one.
What you should be 100% focused when you want to grow a profitable lifestyle business is not getting people to know about you, it’s getting them to buy from you.
Brand Marketing vs. Direct Response
There are two main categories of marketing tools in your toolbox: brand or image marketing and direct-response marketing.
Brand marketing’s goal is awareness…making people aware that your company exists, that it stands for something. It’s the vast majority of the advertising you see every day.
It is often attention-getting, creative, and evocative.
Contrast this with direct response marketing. The goal of direct response is to elicit an action. To make someone raise a hand, vote, opt-in, buy, or visit.
Good examples of direct response? Most Adwords ad campaigns that drive web traffic to product pages.
Those little side ads in the New York Times with 1-800 numbers. The guy on the street corner here in Times Square handing out coupons to a comedy club.
There are real advantages to building a brand via brand marketing.
You might someday fetch a higher valuation…
You might lower your cost of acquisition because you are “top of mind” for most consumers…
But it is not a good choice for most lifestyle business entrepreneurs, for three reasons:
- It’s expensive and hard to build a brand. How expensive? Well Bonobos has raised $130m and they are still working on it. How hard? Well, it is almost impossible to build a brand online only. Smart dudes like Bryon Sharp show convincingly that to scale up a big brand, you need on- and offline touchpoints with the customer. It’s part of why Bonobos and Warby are opening brick-and-mortar stores. And so, unless you have vast amounts of VC capital, you probably lack the time and money required for effective brand building.
- You can’t measure brand marketing’s effectiveness. How effective is this D&G fragrance ad? I have no fricking idea, and neither do Mr. Dolce or Mr. Gabbana. With brand marketing you have no idea what an ROI is. We have no good scale to measure the immediate financial impact of “awareness.” Almost by definition, entrepreneurs have limited time and money. Good marketing is about allocating those resources to the highest ROI activity. You should avoid things you cannot measure.
- It doesn’t supply your lifeblood: cash. If you’re running a small company, cash flow keeps you operating. And yet brand marketing generates no immediate cash. It doesn’t make an offer or sell, so there is no “money in, money out” relationship.
Direct-response should be your go-to.
Contrary to brand marketing, direct response does two things and does them very well:
- It sells. It presents an offer to the customer and asks her to take action. Business guru Peter Drucker says that the single goal of every business is to create a customer. Nothing creates that customer more quickly than presenting a potential customer with an offer.
- You can measure it. You set up an Adwords campaign today, you will be able to measure the results of it tomorrow. You can see how much you spent on the ad and measure the response (clicks, opt-ins, purchases, revenue). If your profits are greater than your costs, you win.Here’s another way to think about it. Direct response is an investment for your business. You invest in campaigns because you know they will return a certain amount over the next week, month, or year.
Conversely, brand marketing is an expense: with no way to calculate an ROI, it’s like pissing in the wind. (If you are a guy. I mean, I think that’s how it works. Moving on…)
Brand vs. Brand Marketing
[bctt tweet=”It is important to distinguish between brand and brand marketing.”]
I work with a lot of B2C fashion and design brands, most recently at Karmaloop. And I get it.
They trigger an emotional connection with their customers. These emotional triggers are why their customers buy.
Here’s the thing though…
Let’s not confuse the brand with brand marketing or doing dumb shit to “build your brand.”
Ryan Barr, the founder of Whipping Post, thinks a lot about his brand. He came up with standards that extend across all customer touch points.
That’s all brand stuff.
But when it comes time to spend money on marketing, Whipping Post isn’t doing brand marketing. They are not producing commercials or beautiful, esoteric ads.
Instead, everything is direct response. Their emails have measurable calls to action. Facebook ads all have measurable calls to action. Ditto with their Adwords campaigns.
The marketing we see is beautiful and on-brand. But at the end of the day, it’s direct response marketing, not brand marketing.
We see so much brand marketing around us that the idea of “building a brand” gets driven into our thick skulls. It seems cool and aspirational. And it would be fun to sit around and dream up commercials like this.
It’s a good “nice-to-have.”
What’s a “must-have?” Customers. Most entrepreneurs like you aspire to run profitable lifestyle businesses. Here’s the evidence.
[bctt tweet=”Your primary goal is to drum up demand and create customers. Without them, you wouldn’t exist.”]
And the quickest way to create customers is via direct response marketing.
Go for the sale, now.
PS: The headline of this article is a spin on something NFL Coach Jim Mora said at a press conference…
Here’s the story. A reporter asks Coach Mora about his 4-6 team making the playoffs. He loses it and responds: “Playoffs? Don’t talk about — playoffs? You kidding me? Playoffs? I just hope we can win [another] game!”
Well here’s your version: “Your brand?! Don’t talk about—brand?! You kidding me? Brand? I just hope you can get a sale!”