The Challenges of Reaching and Acquiring Customers Online

We will learn to:

• Describe three methods to acquire new customers: paid, owned, and earned media.
• Highlight important paid media channels and explain when they might be most useful.
• Explain the purposes for which paid media is best suited.
• Understand the strategic considerations behind the creative choices in advertising.
• Analyze a digital marketing budget.

You learned how to develop a comprehensive digital marketing plan, one that will provide you with a deliberate and thought-out strategy for marketing your product or service to customers.

But this leads to a critical question. How should you execute on that strategy to acquire new customers?

As we will learn, acquiring customers involves influencing people at different stages of their decision journey. Remember that this decision journey is often represented by the marketing funnel, which we introduced before.

We will see that companies use different types of digital media to influence people at different stages of the funnel. With the advent of digital technologies, companies have more options than ever before when it comes to influencing these potential customers.

And as we learned, digital technologies also provide companies with much greater insight in data at each stage of the customer journey. This means that companies can target their ads more effectively. And they can more accurately link marketing touchpoints to various metrics.

These insights offer new opportunities for companies to test and learn to hone their customer acquisition strategy.

But the growing number of media options also means that acquiring customers has become a more complex and overwhelming process than ever before.

This means that to succeed, you will need to be just as thoughtful and deliberate about your customer acquisition strategy as you were about the marketing plan you created. And as you will learn, you should ensure that your marketing plan is the very blueprint you use to drive that strategy.

We will introduce various methods you can use to acquire new customers. You will gain a better understanding of the specific benefits of each method and the context in which they can be most useful.

You will learn how to align these methods with your objectives, target audience, and value proposition and balance them in a way that successfully drives new business for your company.

Consider a new product or service you recently purchased. Perhaps this purchase was even from a brand with which you were not previously familiar.

There is more than one way to answer this question. It is likely that you were influenced by an advertisement—whether on TV, social media, or some other channel. Or, you may have discovered a product based on the recommendation of a friend or family member. Finally, you could have encountered a product while searching for something on an internet search engine.

Each of these examples revolves around some form of communication, either between brands and consumers, or among consumers themselves. We will explore how brands and consumers can influence the customer journey.

Paid, Owned, and Earned Media

Before the emergence of digital marketing, companies were mostly limited to one method for influencing and acquiring customers by reaching out to them, often by advertising their products or services in channels such as television or newspapers.

This method is often referred to as outbound marketing or, for our purpose, paid media because the company is paying money out of its marketing budget to showcase its product or service in media, where consumers are likely to encounter them.

But with the advent of digital, the options for acquiring customers have broadened. Rather than companies reaching out to customers, they can also position themselves so that customers come to them.

This is often referred to as inbound marketing. And it involves the use of what we will refer to as owned media. The name reflects the fact that companies use their own assets—like their websites, social media accounts, blogs, newsletters, and other content—to provide relevant information to their target customers. They then use techniques like search engine optimization (SEO) to make it easy for these customers to find that content.

Finally, digital technologies have created an enormous opportunity for consumers to learn about new products and services from each other. In this approach, companies acquire new customers through interactions among existing customers and potential ones.

In these scenarios, customers may advocate for a company’s product or service, perhaps by tweeting about a phenomenal service experience or sharing a video on TikTok using a product they love. While word-of-mouth advocacy has always existed, social media has made this method of acquiring new customers more powerful than ever before.

Because a company doesn’t need to invest its own resources to generate this kind of organic publicity, it is often referred to as earned media.

These three types of media—paid, owned, and earned—often have synergy.

For example:

• When a company discovers someone promoting their products for free and decides to enlist them as a paid influencer, a combination of earned and paid media is at work.
• When a company creates and distributes a piece of media on its own channels, and followers begin sharing it with others, a combination of owned and earned media is at play.
• When a company hosts its own content on a platform but then pays to give the content a boost, a mix of owned and paid media is at work.

There are a host of media channels a company can choose for paid, owned, and earned media. For instance, you can pay to advertise on platforms like Google, Instagram, TikTok, Amazon, The New York Times, and more.

The number of options has increased significantly, making it even more challenging for a digital marketer to decide where to allocate resources.

If you're feeling overwhelmed, that is understandable. There’s quite a bit for marketers to manage and balance if they want to use the growing number of options comprehensively.

But don’t worry. We will break down these categories and spend considerable time becoming better acquainted with each of them individually, as well as with those areas of synergy.

Next, let’s turn again to the case of OOFOS and take another look at its marketing budget.

OOFOS must decide how to balance its marketing budget across paid, owned, and earned media. In 2021, 40% of OOFOS’s revenue came from direct-to-consumer (DTC) transactions, 35% from brick-and-mortar retail partners, 15% from Amazon Marketplace, and 10% from international markets. Gross margin across these channels also varied: 60% in DTC, 52% in retail, 50% in Amazon, and 40% in international markets.

As a reminder, here are the choices that OOFOS ultimately decided to make with regards to its marketing plan:

You will have the opportunity to revisit these choices, later, once you have learned more about each of the three methods of customer acquisition.

Determining which paid media channels best serve your objectives, target audience, and value proposition can be tricky. We will, first, keep our focus on paid media, before moving to customer acquisition through owned and earned media in the upcoming articles.

The Paid Media Landscape

In the digital era, the paid media landscape has become increasingly complex and fragmented. It consists of many different subtypes, each with their own advantages and disadvantages, as well as different uses for different goals.

Here is just a small sample of the many paid media channels that marketers make use of, with some examples and important players.

Here is Bianca Reed, whom you met in the last module, on how Rain’s role has evolved in recent years considering this increasingly fragmented paid media landscape.

Bianca Reed, Rain the Growth Agency, Former VP Client Services and Inclusion Marketing:

The role of our agency has significantly changed in the last five or 10 years because the media landscape has evolved quite a bit.

Historically, we were primarily focused on video, but in the last five to ten years, we’ve expanded to become fully integrated, working across all channels and platforms.

Every day, there’s a new platform being released that adds complexity—like Disney Plus now offering ads.

Our job involves several key responsibilities:

1. Staying Knowledgeable: We need to be as deeply informed as possible about emerging and existing media platforms.
2. Audience Relevance: Understanding how quickly our clients' target audience will adopt these platforms and how they will engage with them. Just because a platform is new, cool, or exciting doesn’t necessarily mean it’s relevant for a specific audience.
3. Driving KPIs and Goals: Helping clients identify the best platforms and strategies to meet their performance objectives.

As consumer choices for media consumption expand—what to watch and how to engage with media—our role is to guide clients in navigating these options effectively.

We focus on helping clients achieve growth through:

• Choosing the right media platforms,
• Developing content strategies,
• Crafting creative, and
• Leveraging analytics.

Let’s break down the paid media landscape in more detail.

The expansion of paid media channels in recent years has introduced a wealth of opportunities for companies, but it also brings complexity. Paid media advertising can be broadly categorized into two main types:

1. Search Engine Marketing (SEM) or Paid Search:

• Definition: Ads triggered by specific search queries entered by consumers actively looking for products or brands.
• Example: A consumer searches for "recovery shoes," and OOFOS pays for their ad to appear at the top of the search results, linking to their website.
• Key Advantage: Targets consumers with high purchase intent.

2. Display Ads:

• Definition: Ads targeted at consumers who may be interested in your product but are not actively searching for it.
• Examples:
  • Text Ads: Appearing on web pages.
  • Image Ads: Displayed on platforms like Instagram.
  • Video Ads: Shown on platforms like YouTube.
• Native Advertising:
  • Blends into the content of the platform and serves as informative content.
  • Example: Adobe’s article in the New York Times' T Brand Studio on VR technologies, subtly showcasing their digital insights product.
• Paid Social: Display ads specifically on social media platforms like Instagram or Facebook.
• Digital Audio Ads: Ads on podcasts or digital audio channels, which OOFOS is beginning to explore.
• OTT (Over-The-Top):
  • Ads on digital streaming services like Hulu or Amazon Prime.
  • Connected TV (CTV): A subset of OTT involving streaming on devices like Smart TVs, Roku, or gaming consoles. Offers better consumer targeting and measurement compared to traditional TV.
• Linear TV: Traditional television advertising, still relevant as part of a broader strategy.

Importance of Integration:

• Offline and online channels should be viewed as complementary.
• For example, CTV and OTT combine the reach of traditional TV with the targeting and analytics of digital advertising.

By understanding the unique benefits of these media types, companies can strategically allocate their resources to maximize impact and efficiency in their customer acquisition strategies.

We will learn more about how OOFOS, in partnership with Rain, is thinking about allocating its budget across various channels. To help us with that goal, let’s delve more deeply in the upcoming articles into the various paid media options to explore how you can best leverage them.