With costs rising, marketers face choice between cheaper paths through walled gardens or building out their own profiles at a larger cost.
A convergence of disruption, technological advancements, and internet culture has driven a sea change in the way people make purchasing decisions. This in turn forces marketers to adapt, altering the process and costs associated with acquiring customers.
Consumers shift between mobile, desktop, tablet, apps, web, on-demand TV, live streams, digital ads, social media, and a host of other digital formats that weren’t previously part of marketers’ consideration with a fluidity that makes it incredibly difficult to track. It’s harder than ever for marketers to stitch all of this behavior together into a unified picture of a customer; let alone lead them through a linear customer funnel.
It’s not like marketers are without tools to operate in this complicated environment. Approaches like people-based marketing and persona marketing enable marketers to stitch together data from disparate devices to better construct customer profiles. But this isn’t cheap, and as these costs rise so too does the cost of customer acquisition.
“[Customer acquisition] is pretty costly,” said Sanjay Wahi, VP of product management and analytics at the performance marketing engine for travel, Sojern.
Data drives everything for marketers. It’s through the reams of data marketers collect through normal business operations, email, and sales that they are able to gauge what channels perform best for acquiring customers in today’s environment. Data is also a key component in the aforementioned practices of people-based and persona marketing; marketing strategies that embrace the chaotic nature of digital, and focuses on the way individuals behave across devices and channels, as opposed to how any one channel is used by consumers.
People-based is a big opportunity, one that affords marketers the opportunity to make sense of the customer journey again, and thereby understand the costs of acquiring new customers. But for all the data companies have, they do not have it perfectly centralized to the point that a true customer journey can be mapped; at least not to the degree that the so called “walled garden” companies have done.
These walled gardens—the culture-defining tech companies that run the digital world, like Amazon, Facebook, and Google—have highly sophisticated, and deeply integrated data systems in place.
Google, for example, can connect a user from their phone to their email, any and all Google apps, and any web membership or application that allows Google email registration. This is true mastery of first-party data, and Google and its ilk have a near monopolistic hold on the data that flows through their massive networks.
“The walled gardens like Facebook and Google have very rich first-party data at scale… Overall, customer acquisition [costs] could be increasing based on that paradigm,” says Michael Connolly, CEO at the ad tech company Sonobi.
In a world surrounded by walled gardens, the costs of customer acquisition is one of opportunity. Spend all of your budget within walled gardens, or invest in a data infrastructure that rivals them. Depending on the company in question, the milage of either option varies.
“From an advertising and agency perspective, sometimes it’s just easier to go to social or Google. It’s a more predictable outcome,” Connolly says. “That would explain why 92% of the growth we saw in digital went to walled gardens, and not premium publishing brands.”
On the flip side, smaller, growth-minded businesses can avoid some of the costs of marketing technology investment, and shift more budget to a Google or Facebook, where they can reach a high quality audience of potential customers at scale. They won’t own these audiences wholly, but the new business can go toward a more sophisticated data structure that allows for a more even spend between walled gardens and in-house. Regardless of the walled-garden-to-tech-investment ratio, marketers need a bit of both if they want to reach new people in today’s environment.