1999/2000 was the absolute peak of the outbound marketing era because small startups raised hundreds of millions of dollars and then spent that money on outbound advertising (TV, print, billboards) thinking that the more you spent on outbound marketing, the faster you would grow. This proved to be a completely false assumption, and the era of outbound marketing ended, including a gigantic crash of the stock market (only surpassed by the most recent financial crisis) and the loss of many jobs in the startup and Internet industries.
For those of you who do not know the Pets.com Sock Puppet, it was the mascot of a startup Pets.com that was trying to sell pet supplies online. Not a bad business (in fact, people are making money in that business today), but their strategy was based on how you built a brand in 1950, not 2000. The Sock Puppet starred in numerous TV ads, including a Superbowl ad, and became quite famous... So famous that the company started selling toys based on the sock puppet. But none of that helped Pets.com build a profitable business. In fact, in their first year of operations, they spent $11 million on advertising to gain $600,000 in revenue.
Big brands used to be built on outbound marketing. But then inventions like the remote control, cable TV, and the DVR made it more possible for people to control what they view, and ignore advertisements. The Internet and other new technologies take this to the extreme. Today, the outbound marketing model is broken, as Pets.com proved. The next 50 years are the age of inbound marketing. If Pets.com had built their brand differently, the Sock Puppet might not be collecting unemployment today.
How are you building your brand? What do you think marketers can learn from the Pets.com example?
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Last week a friend stopped me in my tracks with this question: "Should I feel dirty when I buy advertising?"
He assumed I was going to say, "Yes."
After all, I work at HubSpot, an inbound marketing software company with a view of traditional advertising similar to the one Whaton professor Eric Clemons spelled out in TechCrunch last week: "Pushing a message at a potential customer when it has not been requested and when the consumer is not in the midst of something else on the net will fail as a major revenue source for most internet sites."
But my friend was wrong. I don't think advertising is inherently dirty; I think it's the traditional philosophy of advertising that's dirty.
Why Traditional Advertising Philosophy Is Dirty
Traditional advertising uses large sums of money to force a message upon an uninterested audience. Television advertising before DVRs and remote controls is the best example.
This approach doesn't work anymore. Force is no longer a viable marketing concept. If you use it, you're wasting your customers' time and your company's money.
You should feel dirty.
The practice of advertising, however, is evolving. Instead of interrupting potential customers when they're not interested, smart advertisers are running campaigns that provide useful information to potential customers.
AdWords is a great example. HubSpot buys AdWords ads for our brand and for "inbound marketing" because they're relevant. If somebody searches for "HubSpot," they're obviously looking for us. If somebody types in "inbound marketing," they're obviously looking for information about a topic we know something about.
How Inbound Marketers Should Use Advertising
So how should inbound marketers incorporate advertising into their marketing mix?
Here are my three rules:
(1) Don't Depend on Advertising - It will usually be more expensive than other inbound marketing channels. More importantly, advertising isn't a scalable way to build your business. Your costs increase with the size of the audience you're trying to reach.
(2) Make Sure Your Ads Are Useful - If you do use advertising, make sure it's useful. Don't interrupt people, provide them with something that can help them do their job better.
(3) Make Sure Your Advertising Campaign Is Cost-Effective - Know how it compares to your other channels. Don't pour money into an ad campaign where customer acquisitions cost 10 times more than your alternative channels. (You should be doing closed loop marketing so you can track how well each of your channels converts.)
Beyond these rules, you should listen to Doc Searls. In a post last week supporting Clemons' TechCrunch article, Doc reminded us of advice he and his co-authors gave in The Cluetrain Manifesto:
74. We are immune to advertising. Just forget it.
75. If you want us to talk to you, tell us something. Make it something interesting for a change.
76. We've got some ideas for you too: some new tools we need, some better service. Stuff we'd be willing to pay for. Got a minute?
Good advice for inbound marketers.
What do you think? How do you think inbound marketers should do advertising?
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Episode #22 - January 9, 2009
If you're on Facebook, you're probably using it to connect with friends, create groups and build a following for your business.
Here's a little secret: You should also be using Facebook's pay-per-click (PPC) advertising service.
It's an awesome deal.
Since Facebook ads are charged on a PPC basis and very few people actually click on the ads, you don't end up paying much.
However, lots of people who don't click on the ads see them, and since Facebook allows you to target the ads to very specific demographics, the impact of your ads ends up being far broader than what you actually pay for.
Here at HubSpot we run Facebook ads targeted at marketers. The CPM (cost per thousand impressions) works out to about $.50. CPMs for traditional targeted B-to-B advertising run between $25 and $50. So we're getting as much as a 99% discount. Pretty good.
In the video below I walk through all the steps you need for setting up your own Facebook ad campaign.
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"R.I.P Good Times"
That was the message from Silicon Valley venture capital firm Sequoia Capital last week. In a slide show it presented to its portfolio company CEOs, it documented the roots of our current economic problems, the outlook for recovery and advised caution.
For marketers, the most chilling piece of the Sequoia presentation is a slide on the advertising market. They show the total U.S. market beginning to shrink and growth of online advertising beginning to slow.
Looking at this slide, you might think companies are beginning cut costs and scale back marketing.
Don't get sucked into that trap.
Sequoia's advertising numbers say more about ADVERTISING than they do about MARKETING. Companies are not marketing LESS, they're just finding ways to market BETTER.
If you pull a Chicken Little, assume the sky is falling and retreat from marketing, you will be devoured by competition that figures out how to market more efficiently.
At HubSpot we're making our marketing more efficient with a more rigid focus on inbound marketing.
Specifically, we're doing three things:
(1) Creating More, Better Content -- The economy isn't going to slow down our content production -- it's just going to force us to get more rigorous about assessing the content we create. We're going to do a better job of creating content that engages people, helps us get found, and interests qualified customers. We're also going to rethink the way we organize our content.
(2) Increasing our Focus on Search Engine Optimization -- At HubSpot, we spend tons of time thinking about search engine optimization. In the months ahead we're going to be spending even more time on SEO. Google is still the #1 place to be found by potential customers, and in a tight economy organic search results are by far the most efficient way of reaching Google users. We're in the process of starting a new effort to optimize lower-level site and blog pages for long-tail keywords related to our business.
(3) Getting Smarter About Social Media -- A slowing economy means we need to focus on social media more then ever. Instead of paying for distribution of our content or advertising, we need to share our products and content with people in our network and let them gain traction organically. We're also developing a more systematic company-wide approach to social media.
Notice that none of these strategies cost us anything more than time. In fact, to the extent they're replacing paid outbound marketing campaigns, they're saving us a lot of money.
We see the current economic instability as an inflection point -- one where the weak companies will slowly starve themselves, and the successful companies will reassess their operations and make them more efficient then ever.
Are you adjusting your marketing strategy in response to the tightening economy? Tell us how in the comments or in a blog article linking to this post. Next Monday we'll pick our favorite answer and send the winner a HubSpot t-shirt.
Photo: pbo31
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