I interact with a lot of business owners, from small (~$500k/annually) to very large (~$80m annually). A common theme this year - almost everyone is struggling with growth. Particularly when it comes to paid advertising. We've been able to continue to grow Barbell Apparel's online revenue at ~30% YoY - and that's all planned. We could probably grow a bit faster, but we take the excess profits as dividends instead. It's low stress at this point - but that doesn't mean it's low work. I feel like we've had to be five times as skilled to achieve the same results that were easy 3 years ago. For a very long time - digital advertising was cheap enough, that you could simply buy ads and make up for any mistakes in the rest of your operation. In my estimation, those days are gone, and they aren't coming back. We actually have lower CPAs now than we have at almost any point in the last 5 years - but it was a ton of work to get there. And our marketing organzation is heavily diversified across channels (paid digital, paid influencer, ambassador, organic, owned, etc.) Everything gets tested. Everything gets optimized. That's the what it takes these days. People look at their cost of customer acquisition - and think there's something wrong with facebook, google, etc. but really - that CPA is most likely telling you there is something wrong with your business. And if that's off putting to you, it shouldn't be. If advertising is truly not cost effective anymore - then we're all screwed. But if the problem is in the business itself, that is something within your power to fix. I've audited dozens (maybe hundreds) of businesses at this point - and I almost always find the same or similar problems. Lack of optimization in: the offer, AOV, CLV, funnel strategy, creatives, etc. Once those things get fixed - things tend to fall in line when it comes to CPA, ability to scale, etc. Granted - depending on your company, some of those problems could be very difficult or long term to solve. But you have to start solving them. There's nothing wrong with paid advertising - it's working as well as it ever did. But it's not cheap enough anymore to cover up a bunch of mistakes.
Totally agree. There are some really amazing points here, and you're really highlighting how constant growth is such a long-term game. So many people want overnight results but don't want to take the time or responsibility of looking at what they could improve. Continual analysis, trial and error, and consistency are so important. There are no magic fixes anymore, and if you don't want to waste your money, you need to invest and be prepared to learn.
Oh, you've nailed it. The fact that you're getting lower CPAs might be related to the work you've been putting towards the brand. Isn't it? These days, everything is tougher without a great brand presence and organic reach. Last but not least, having the fundamentals in place is a must for brands. As you said: the offer, value ladder, and many other things to, basically, keep things PROFITABLE. We've recently discussed this with Neal Goyal over a podcast episode.
Hunter Molzen - well said, 100% agreed! I also posted something similar to this few days ago, when it comes to paid ads, most eCom brands focus too much on CPA or ROAS which usually is out of their control, especially when it comes to the paid ads landscape, everything changes too fast. Instead eCom brands should focus their time and attention on areas that can actually control, such as landing page optimisation, improving product offerings, bundling, AOV etc.
What a perspective Hunter Molzen - “If advertising is truly not cost effective anymore - then we're all screwed.” The saturation was always going to happen. Especially when it was that easy at the start. The game is the same - the rules have changed. Great read 👌🏼
CEO at Lightbulb Media | Scaling epic brands with paid ads, copywriting & content that converts 💡
2mo“I feel like we've had to be five times as skilled to achieve the same results that were easy 3 years ago.” 😮💨 As a marketing professional, this is one of the best brand side posts I’ve ever read. Beam it onto the surface of the moon.