My grandfather-in-law came to Canada from Ireland with nothing and eventually found himself working a poor-soil “rock farm.” Combined with a lack of interest in farming, it made for some tough economic circumstances.
Terrain matters. You don’t always have a choice.
If you’ve actually chosen to make a living in digital marketing, I’m here to reassure you that the sun isn’t setting on this fertile field anytime soon. Despite the fact that the playing field does tilt greatly towards “large digital factory farms” (Big Tech), the “small family farm” enters the PPC fray with a fighting chance to make hay.
I must be fresh out of sports analogies this week. It’s all about growth (team, didn’t I at least refrain from using a beanstalk image?).
Although this is Part 48, I had considered making it the concluding part of this series. After much critical analysis and exposing of platform warts (to go along with helpful tips and timeless reminders), I realize just how bullish I remain on PPC (or more broadly, “biddable media,” or whatever you’d like to call this form of advertising). There is every reason to end this series on a high note. (There are some even more important things to highlight, though, so stay tuned for a different topic in Part 50.)
Ad budgets remain strong. This channel gets results. And the boom in digital culture and remote work (things that have made sense for 20 years, but which were “pulled forward” and made mainstream by the pandemic) have really shifted the terrain in favour of the PPC professional and the bold advertiser who is willing to go all-in for this channel.
At this juncture in PPC history, despite some challenges, the channel is really coming into its own. It should be fertile ground for the foreseeable future (3-5 years is all I can foresee). Here are seven reasons why (naturally, with some caveats):
1. The speed and ease of transacting by phone
For users, the speed of transacting has vastly improved due to improved broadband, improved devices, better operating systems, and more. It’s difficult to understate the importance of larger, faster, more functional phones in driving commerce. Phones are for transacting (rather than getting frustrated and switching devices) nowadays, and indeed the larger phones squeezed out tablets (which are notorious for weekend tire-kicking and *not* necessarily transacting). Voice commands, smart homes, smart cars, and wearables will be an extension of this same trend.
2. Universal website/transaction functionality: less “reinventing the wheel.”
Low conversion rates due to many business owners, websites, site developers, etc. “reinventing the wheel” on core, high-frequency functions like carts, forms, etc. are no longer an issue, thanks to Shopify, WordPress, Woocommerce, and a wide range of apps and tools that just plain work – with much less custom development, and less room for error. (Let’s credit Amazon for being essentially the first to the party on the issue of “ease of checkout,” but now the trend is ubiquitous and applies in many realms.) There is some downside to this in that more customization and control can be advantages for some kinds of business; root-level knowledge of fundamental technologies is helpful to understand the various new layers available. On balance, though, a huge barrier to entry has been lifted. In broader economic terms, barriers to entry that revolved around not fumbling routine and repeated user behavior patterns weren’t productive or helpful barriers.
A major caveat here: the largest organizations (big monopolies or near-monopolies) are almost too good at iterating and perfecting various transaction sequences, rescuing these from the clunkiness associated with fragmented providers who have more trouble attracting top engineering talent, and who have much less access to the firehose of consumer feedback. In that respect, “big is good” for consumers – any Apple user would agree with that. Yet the danger – viewed from the perspective of economic dynamism and fair play amongst mid-sized to larger companies, if not the “pure efficiency” argument in favour of huge-company innovation that may benefit consumers – is that companies like Apple and Google push viable players out of their core businesses. Yet another example of this is in the works as Google moves into restaurant ordering. (Google, Apple, Amazon, etc. can also engage in perpetual price wars, as their hyperprofits can fund business divisions that won’t need to realize a normal rate of profit for a decade, if ever.)
To circle back to the threat to PPC professionals: a big part of our jobs is to help growth companies thrive by advertising and gaining exposure. If those companies are displaced by functionality developed by the same publisher we’re supposed to be showing ads on, we don’t have the same opportunity to help companies grow because they’re in some sense blocked from growing via Google Ads, since Google is deliberately competing with them. The dangers of anticompetitive behavior among the largest monopolists have ripple effects that aren’t easily rationalized by referring purely to “consumer benefit.”
3. The proliferation of low-cost tools and easy payment layers
Costs for overhead like websites, design, third-party tools, databases, etc. continue to trend lower. Related to that, special hoops and insider knowledge to establish merchant accounts, etc., have vanished. Shopify and WooCommerce payment gateway extensions, pay with Amazon/PayPal/Shop Pay, etc. are largely plug and play with only minor customization needed in many instances. And what you can get out of the new low-cost tools is fantastic. With all of these savings, you can turn around and hire / invest in true differentiators. *Important* aspects of design, for example, might be worth a full-scale investment. And why shrink at paying $10,000 for the perfect domain name when everything else costs so little (and now that so many TLD’s like .care and .shop might now be OK with consumers)?
4. More reporting, and better reporting
The power of reporting available to the average business is trending up and will continue trending up. Google Analytics 4 might indeed have more horsepower than many businesses can even harness! But at least power and cost won’t be barriers (that leaves budget for hiring more data science professionals or creating custom integrations via the API). And hooray! We get to sunset useless metrics like bounce rate, just as, in PPC, we sunsetted the misleading “Avg. Pos.” metric. The list of reporting advancements goes on and on – much of it dominated by powerful players such as Google. Brick-and-mortar retailers can now more easily measure the in-store impact of their online spends using modelling provided by Google, for example. In fact, the central role of Google (and Facebook, etc.) in posing as a “single source of truth” is one major caveat I’d flag here. I’ll be coming back to that point in Part 50.
5. Business intelligence stripped down to the essentials
And we can look to the ecosystem to continue to deliver powerful business for smaller businesses, in “right-sized” apps that deliver on-point data without having to build a whole data practice in-house. For example, Segments by Tresl plugs right into Shopify, joining hundreds if not thousands of tools that are worthwhile and newly accessible to a much broader business community than ever before. With this tool, you get only the essentials related to retail businesses – such as the correlates of high lifetime value. For years, such segmentation tools have danced around the issues, leaving too much to the discretion of bewildered analysts. And who the heck actually has an analyst on staff, if they’re a small to midsize company?
6. AI-assisted personalization
AI will usher in an era of deep customization and personalization of ad creative. That being said, “garbage in, garbage out” is a major caveat. The gap in many companies’ marketing execution is now, and will remain, the brain work required to put together intelligent creative inputs. For display images, animated display images, short videos, radio spots, etc., it’s not clear that computers will do the best job of knitting together a finished, compelling message from a lazy dump of elements. Even for text ads, seemingly relatively easy to construct using the Responsive Search Ads architecture, it’s unclear that the best result comes from brute force testing of a wide range of splintered phrases and benefits. But when all is said and done, the AI is going to help.
Given that PPC’s great strength is, indeed, personalization and granularity – in putting just the right offer in front of people largely based on highly specific intent as stated by keywords the user themselves types to express that intent – we have to continue to do better in personalizing ads to every user session, and not just testing to arrive at the “single ad version that seems to do the best for everyone in that pool.” Keep in mind: the nature of the ad auctions themselves have probably gotten us 70% towards the ideal, just by dint of so many motivated advertisers angling to show ads to the most responsive consumers. Will our PPC world’s great strength – hyper-granularity, relevance – someday spill over into radio spots, out-of-home billboard advertising, logo sponsorships on golf hats and hockey game boards, and so on?
7. Logistics and the supply chain no longer a shrouded, magical realm.
Logistics, shipping, and supply are no longer special, opaque skills in the world of retail. The number of Direct-to-Consumer brands springing up in record time is a testament to the fact that far more entrepreneurs today are able to piece together a plan for tapping suppliers, and getting items shipped more easily to more places. The caveat to anyone trying to copy very large companies in their vertical should be: don’t be fooled by some companies offering free shipping. Free shipping can totally blow your profit margin. Plenty of big companies actually charge for shipping, depending on the situation. And Amazon’s practices, despite their business success (“Be Like Amazon,” say my friends, the authors of a book with that title – I’m not so sure) should be openly questioned. My recent “free shipping” order (I choose not to be a Prime member) from Amazon (a book, paper towels, and garbage bags) came in three separate deliveries. How’s that for the old carbon footprint? Did I really need the paper towels to arrive that soon?
Probably the biggest challenge for many new retailers today is just how far can we go towards establishing ethical and environmental standards for our supply chain. Much of this is bottom-up and middle-up. Consumers demand to know more about the sources of their products. Many business owners prefer to challenge their suppliers to adhere to ethical labor and environment practices, or to research suppliers who can deliver on a greener basis. OTOH, many mainstream apparel retailers have largely given up on this, claiming that heavy competition and massive consumer demand won’t allow them to manufacture locally, manufacture/source ethically, etc. These debates will rage on. But consumer demand for healthier and more ethical manufacturing suggests one can do well by forging a middle ground. Ultimately, with our whims and desires for fast fashion in clothing and kitchen cabinets alike, we are all part of the problem at some level.
New blood and new opportunities to thrive
In the aggregate, it seems like almost anyone with a good idea and an appetite for research can pursue an opportunity to start an online business. On one hand, that’s a frightening prospect, because barriers are so low that things can get quite noisy.
Overall, though, it’s a major positive. More failures mean more meaningful successes. Turnover in business leadership – new blood – means a better experience for consumers. Established and languishing brands like Tilley Endurables seem to do fantastically well once they fall into the hands of modern leadership who can update and repackage product lines and begin offering these wares to whole new audiences online. But this ecosystem is not here so that we can save the Tilleys of the world from themselves. It’s also the case that there will be new Tilleys, outdoing Tilley at being Tilley. As puerile as it may sound to progressives, Schumpeter’s “creative destruction” is busy at work in the new online shopping ecosystem.
Maybe you’ll start something great this year or next, or just help a “Tilley” grow their sales tenfold in the next few years! Amid this abundance of opportunity, favorable conditions, cheap tools, etc., some things remain in short supply:
- Linchpins at the owner, founder, CMO, CTO etc. levels (not to downplay the awesomeness of linchpins at every level – they’re valuable at all levels of an organization, I’m just pointing to the fact that the folks who start things up and keep them going have no choice but to exit their lane, since there really are no lane markers for founders and the like!)
- Unremittingly sound strategy
- Pre-existing brands (like Tilley) with strong reputations, positioning, channel relationships, great personnel, and standards in areas like manufacturing, communications, etc.
- Strong company cultures
- Education and erudition that might bring meaning to any venture
- The ability and willingness to adapt to trends, and even pivot to capitalize on fundamental changes in technology and consumer demand.
Or maybe you’ve already gotten started. You have a lot of opportunities to succeed, and fail, and to try again. With lower costs, fewer barriers, and consumer demands shifting enough to displace almost any established retail favorite, many emerging product lines will succeed, as will online stores savvy enough to curate collections and chase a portfolio of consumer demand.
As I consider the current state of flux, I marvel both at fast-moving upstarts and reinvigorated brands alike. When PPC was born, I was already getting ready to write the first book about it. In that book, I noted that we’d already seen digital disruption upend entire industries, like retail stockbrokers. And Amazon was already on everyone’s radar. How many companies’ lunches were eaten by that obvious threat?
The more recent examples that helped me to understand these changes are, fortunately for me, hands-on experience in working directly (or personally knowing) with clients and friends who are disrupting whole markets or disrupting their own company histories. One of them, a friend, researched, had manufactured, and sold globally a medical device that turned into a profitable side hustle inside of a single year.
And I get to meet new and thriving startups all the time, in fintech, apparel, housewares, software, and more. A couple of weeks ago I got to talk with the CEO of a huge traditional gift-related retailer that has gone bankrupt and relaunched with a better plan. In addition to calling us and putting us on the list of contenders to run their PPC account, he made a special point of referring to their important relationship with Shopify. A short time ago, this would have seemed unimaginable.
Even the old must become new in this environment. With a second lease on life, I wouldn’t bet against them.
These are inspiring stories in part because they’re not always huge companies. For many of these young companies, the sky’s the limit… starting from zero market share, but doing their homework on their markets before launching and serving tomorrow’s consumer.
Go!Read Part 49 on May 6, 2021