Article

Simplify Your Marketing World

Advertising Consumer Behavior Marketing

by Sam Tomlinson

March 5, 2023

The US economy is teetering on the edge of a recession, with mounting layoffs, falling consumer confidence & global credit markets seizing. 

We are in the midst of an interrelated series of transitions:

• COVID-19 has transitioned from pandemic to endemic – with consumer behavior slowly re-establishing an equilibrium. Some tendencies from the pandemic will remain; others will fall by the wayside; still others will evolve to meet our new needs. 
• The global economy is transitioning from expansion to contraction while loose fiscal policies (interest rates, debt-financed spending) are tightening – all with no immediate signs of a pivot. Money is more expensive than at any point since the Great Recession (2007-08). 
• Multiple contraction has already occurred; earnings contraction is likely to follow suit – equity markets will go lower, resulting in significant paper wealth destruction. 
• Declines in public equities will roll over to private equities – expect tighter due diligence, more down rounds (venture) and lower valuations on private businesses. Raising money will be more difficult for most businesses. 
• The digital ecosystem is going from largely unregulated to increasingly regulated – and no one is quite sure what that means, but it will have a massive impact on everything that touches tech (which is basically everything). 

The impacts of these shifts are being felt everywhere – especially (and perhaps, most acutely) in the marketing, technology, start-up & direct-to-consumer (D2C) spaces. CEOs & CFOs are scrambling to batten down their financial hatches – which means CMOs (and VPs of Marketing / VPs of Growth / etc.) are being given a new mandate: 

Shift from aggressive growth to responsible growth – and do it yesterday.

For most of us, this means one thing: drive a positive contribution margin on first purchase (D2C) or sale (B2B/B2C).  

Executing against that mandate is exponentially more difficult than saying it – but in the first three emails, I want to share the framework I’m using to think about it:

• Create The Blueprint
• Set The Foundation
• Build A Growth Flywheel

But, I’m going to share it out of order – for one specific reason: almost everyone I talk to – from CEOs + CMOs to SMB owners – are doing too much. There’s no time, energy or capacity left to do the work that this shift requires. Each day this continues unabated is zero-sum: the resources spent are gone. The time lost is not coming back. 

We must start by stopping the bleeding – and this inaugural issue is dedicated to exactly that. 

Simplification: Do Less So You Can Do It Better.

I firmly believe most brands are trying to do too much – too many service lines, too many SKUs, too many distribution channels, too many ad platforms – just too much. At some point in the last few years, we overextended our capacities (and our budgets) in a frenzied pursuit of growth at all costs. 

Part of that was necessity (a once-in-a-century pandemic + corresponding economic realignment). Part of that is loose financial conditions (low rates, easy money); part of that is just the nature of a tech-first economy, where “shiny object syndrome” is a way of life – new things are introduced (seemingly) daily, and we’re constantly feeling the pressure to be everywhere, all the time. 

Each of these things sets off a vicious spiral, progressively leading us to do more: launch more products/services and activate more marketing channels and place more on our plates and stretch our resources to the absolute limit and spend way too much to do it. 

Now the bill has come due. To pay it, “and” must be replaced with “or”. 

Or, better still, ruthlessly eliminated.

Just as the “macro” pendulum has swung back, so too must your “micro” pendulum. 

Yesterday, diversity was a growth driver; today, it’s an anchor that will drag down your brand’s financial health. The cold, hard economic reality of this is simple: more channels and tactics and SKUs and service lines equals lower margins, higher costs and more complexity. None of that is conducive to profitable growth, especially in a rising-rate, recession-pending environment. 

For 2023, make “do less so you can do it better” your mantra. Identify the core things you must do, and obsess about executing them as close to perfect as you possibly can.

Fundamentally, simplification is a two-variable equation: business priorities + acquisition channels. If you’re like most brands, both have gotten out-of-hand. Reining them back in probably feels daunting and futile – but it is possible.

 Let’s get to it. 

If this exercise is to succeed, it must begin with your brand/organization itself. If you are not clear + focused on what you are offering to the market, you will succumb to the temptation to do too much on the acquisition side. This is the Sunk Cost Spiral: once a brand has invested in the product/service, the brand then feels compelled to invest in the acquisition channels to move it. And once acquisition is successful, then (so goes the reasoning) surely we should invest in doing more of it, and so on and so forth.

This is the spiral that must be stamped out like a kitchen fire.  

Solving the first half of the equation requires us to identify the core offers/service lines/SKUs that:

• Appeal to a sufficiently large cohort of your primary target audience
• Can be reliably fulfilled by your existing resources + infrastructure
• Deliver a positive contribution margin on first purchase
• Lead to net-present Lifetime Value (LTV) expansion in the short run (first 30/60/90 days post-purchase) via subscriptions, re-sells, up-sells or cross-sells. 

To do this, I use a matrix: 

Anything that doesn’t check off all four boxes must either be eliminated or modified so it does (I’ll get into strategies to modify offerings to meet these criteria in future editions – it’s far too big a topic to do justice here). 

This is a painful exercise. It hurts on a deep, visceral level to shutter service lines or abandon SKUs that you’ve spent months, years, maybe even decades developing + bringing to market. But before you can build something remarkable, you must have the space to do it. This is the short-term pain required for long-term gains. 

Seriously, do not pass “go” until you’ve completed the above exercise. Once you have, get rid of everything that didn’t pass the test. These are distractions + money pits that detract from your core business. They are luxuries most brands (especially smaller brands) cannot afford.

Let’s move onto the 2nd half: Acquisition Channels. 

Here’s the reality: most brands I speak with are trying to scale Meta Ads and crack the code on TikTok and build influencer partnerships and launch brand collaborations and maintain Google Ads and manage email and start-up SMS and invest in CRO and definitely up their content marketing / SEO. It’s more and, and, and. 

We are sacrificing mastery on the altar of diversity, when we should be doing the opposite. 

A Senior Marketing Leader I spoke with recently expressed this in the clearest terms I could possibly hope to: “We have been doing too many things on too many channels with too little clarity, discipline and accountability. We were pushed to deploy money without clarity on our core message or creative concepts or even figuring out what success looks like. And we went forth and we spent. And now, looking back, it’s painful – especially since we have little to show for it.” 

That person isn’t alone. This is one of many stories I’ve heard, from CMOs and CEOs and Directors and VPs and SMB owners.

How do we solve this? Three steps: 

• Cut ruthlessly. 
• Be brilliant at the basics.
• Reach the sky before going wide. 

Cut Ruthlessly:

For a larger organization (>$25M in TTM sales), your traffic should be driven by a relatively balanced set of sources: paid traffic, organic traffic, referrals/affiliates/PR + email/SMS. This is normal. And in most cases, those brands have “fringe” channels / platforms that are under-resourced + relatively non-productive. In easy times, those small bets can continue unabated – a $100k experiment on Pinterest or TikTok or LinkedIn for a $100M brand is miniscule in the grand scheme of things. 

Today, however – things aren’t so simple. My advice in these situations is this: either commit fully or not at all. If you genuinely believe an “experimental” channel holds sufficient promise to justify investment in today’s environment, then it is your imperative to fund it to the level required to not just dabble, but to dominate. In my experience, that is at least $50,000 per month in spend, plus dedicated support from your team (either in-house or agency). If you don’t believe the channel has enough promise to justify that investment, then pull it all + allocate those resources to a channel where you have that degree of confidence.

For a smaller brand (<$10M in TTM sales), achieving + maintaining the traffic balance of a larger company is rarely economical. Instead, the majority of traffic tends to come from paid traffic, alongside some email/SMS that skews heavily toward existing customers. The mistake these brands make is diversifying too soon + trying to compete with the larger brands before they’re fit to play, let alone fit to win. 

My advice to <$10M brands is always the same: focus your attention on one of Google Ads, Amazon Ads or Meta Ads. Don’t look anywhere else until you’ve reached the point where you can consistently + reliably spend $50,000/mo (that’s $600k/yr) on your chosen platform at a performance level that makes sense for your business. 

Pick your platform (Google, Meta, Amazon). Cut the rest. Do not allow anyone to pile on more channels, more opportunities, more tactics than what your core, competitive leveragable outsized opportunity is. Ruthlessly eliminate everything else. 

Be Brilliant At The Basics:

Now that you’ve quashed the temptations of trying to compete on far too many platforms or master far too many tactics, the real work can begin – nailing the fundamentals required to master the one platform you’ve selected. 

There are no hacks or silver bullets to this. There’s just the work. To borrow a phrase from Jalen Hurts (QB of the Eagles), “keep the main thing the main thing.” – and the main thing for every CMO/CEO/SMB owner is being brilliant at the basics:  

• Offer
• Audience
• Messaging
• Angle
• Lander
• Post-Conversion Experience

Issue #3 has a deep dive on each of these. But for now, remember: you are doing less so you can do it better. You are eliminating services/SKUs and channels and tactics to create the space and resources to focus on executing each of these brilliantly well. This is ruthless prioritization. 

Success requires rapid iteration, tight feedback loops, humility (you’re going to be wrong, a lot) and persistence. This is a different kind of hard than cutting service lines/SKUs; if that’s acute pain, this is a test of endurance. Keep to it and the gains will come, and as they do, they will compound. 

Reach The Sky Before Going Wide:

The key is to not interrupt the compounding by introducing new channels or tactics. This is the mistake most marketers make: they do the hard work, nail the basics above for a given service/SKU, and begin to reap the rewards of those efforts. Buoyed by that success, they immediately try to replicate it elsewhere (on another platform or with another SKU/service). 

Instead, focus on scaling what’s working on the platform where it’s working. Push the winning concept to the point of diminishing returns (“reach the sky”). Only once you’ve hit diminishing returns do you then rinse & repeat with the next offer/angle (“go wide”), all while staying on the same platform. 

This flies in the face of much of the advice you’ve heard over the past years – but here’s the simple reality: each of these three platforms (Google, Meta, Amazon) has a sufficiently large audience to scale a viable business well beyond $25M (and likely, well beyond $100M).

The bottom line here is simple: until you have one platform operating at a predictable level of efficiency and scale (>$50k/mo), diversification is a net-negative 99% of the time. It will cost you more – both in terms of efficiency losses (not just on ad returns, but also lower team efficiency, less focus, etc.) and opportunity costs (each minute spent on another platform is a minute you can’t spend building your foundational platform) – and bring you less. That is not something you can afford if you’re going to survive the economic winter that is coming. 

I will end with a simple imperative: Instead of going wide, reach for the sky. Ruthlessly, relentlessly cut what is not core – service lines, SKUs, channels, tactics. Create the space you need today to build the business you need to thrive tomorrow. 

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