Why direct response advertising is winning this year

Sabri Suby

Sabri is the founder of Australia’s fastest growing digital marketing agency, King Kong, and author of international bestseller, ‘Sell Like Crazy’. The book covers all facets of digital marketing and illustrates the path to success with real-life case studies where Sabri has used the exact same selling system to supercharge their business.

In response to the COVID-19 crisis, brands around the globe are going into hibernation and waiting out the ongoing storm. CMOs have dramatically slashed their budgets across every single form of media, digital included.  

As the fear takes hold, purse strings tighten. No more cute ‘branding’ or ‘awareness’ campaigns. No more ‘Look, we’re filling the top of the funnel with sunshine and rainbows’.  

Everyone from Snapchat to Facebook and Google have seen drops in advertising spend. In fact, almost every social platform has reported a big drop in revenue from the big brand players as soon as the crisis hit.  

Facebook CFO, David Wehner, admitted: “We experienced a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020.”  

Decreased costs, increased eyeballs  

As with any dramatic shift in the market, there are opportunities for marketers if you know where to look. While ad spend is down, social traffic is higher than it’s ever been before. Data from The New York Times shows just how high the dial has turned, with traffic up across almost all social media channels.  

So eyeballs are up, advertising spend is down. It doesn’t take a genius to realise that this means a massive opportunity. Ads have not been as cheap as they currently are in a very, very long time. CPMs are through the floor, meaning that you get more real estate for your dollar, and you can buy a bigger block of land for 50 per cent, 60 per cent or even 70 per cent of what it was costing you two months ago.  

And as traditional advertisers pull their fluffier brand-building ads and cute ‘awareness’ campaigns, one form of marketing has gone from the digital marketing underdog to its star player: Direct response marketing.  

As opposed to more long-term brand-building methods, direct response drives consumers to take immediate action, such as download an app, purchase an online course, or buy a product.

Direct response has swooped in and picked out the opportunities discarded by the big advertisers, and they’re feasting on the rewards. Heck, even your average, lazy direct-response marketer will run circles around most traditional branding advertisers.  

Don’t just take my word for it: Morgan Stanley analysts believe the approximately $40 billion app install market - a huge direct response sector - was “likely the most material contributor [to Facebook’s revenue] this quarter”.  

Google has said “direct response advertising had substantial year-on-year growth through the entire quarter”, while brand advertising had started to slow “by mid-March as the coronavirus pandemic forced lockdowns around the world.”  

Snap’s revenue came in at US$462 million for last quarter, up more than 44 per cent from the first quarter of 2019. Analysts believe Snapchat is better protected from the effects of COVID-19 thanks to the strength of its direct response advertisers.  

While the big brand advertisers have stopped spending, scrupulous direct-response advertisers have used their quarantine time wisely by investing in even more ads.  

What does this mean for marketers?  

It’s economics 101: As demand in fluffy brand building ads drops, supply increases across the board, resulting in a price drop for those still willing to invest.  

This presents the perfect storm of opportunity for those who know how to make the most of direct response advertising. It’s not about taking advantage of a crisis, it’s about capitalising on a drop in price for advertising your brand and getting new customers.  

Even if you don’t have an app or an online course to sell, all marketers can create some kind of product that leads with value: A report, a webinar, a cheat sheet, a video series, or a huge discount on a service.  

It’s these kinds of high value offers that will allow you to aggressively build your database, and put yourself in the best position for when the crisis finally does pass.  

You can sit around staring at problems, waiting for this to all blow over… or you can search for opportunities and take action. Choose the latter.

Tags: digital marketing, digital advertising

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