Are you wasting 70% of your ad spend?

Introduction

One of the most critical challenges facing growth-oriented companies, especially in Direct to Consumer sales, is how to allocate your marketing budget for sustainable success.

Many marketing managers we speak with have fallen into the trap of over-investing in short-term sales channels and neglecting long-term brand building.As a performance agency, we understand first-hand that the quick wins are tempting. But numerous studies, including seminal research by Binet and Field, reveal that brands thriving over decades strategically balance both.

Binet and Field analyzed the marketing budgets of highly successful brands over 30 years. Their key finding is that brands delivering the most consistent growth and resilience allocated on average 60% of their budget to brand building efforts and 40% to direct response for immediate sales.

Our clients have also seen results by shifting their budgets and activities to better reflect each of the awareness levels of awareness (TOFU), consideration (MOFU), and conversion (BOFU). 

Full-Funnel Client Success Story 1:  From Banned Account to Brand-Building Success

When a leading credit repair info-marketing company faced obstacles growing through ads, they knew they needed an experienced agency to guide them through compliance headaches and help them scale their spend.

They weren’t breaking even on their ad campaigns despite spending thousands of dollars per month on Facebook and Instagram, but that was complicated by an even bigger challenge: ad disapprovals and account bans. Because this brand focused on credit repair, they faced immense hurdles to staying compliant with the terms of service on ad platforms. And by the time they came to us, they had completely lost their account on Facebook and had stopped advertising altogether.

Over the first handful of months together, we continued to scale their advertising efforts, testing new hooks, formats, and audiences. Each new test enforcing (or disproving ) hypotheses, leading to creative and media buying efficiency. 

It can take anywhere from 8-20 touchpoints for someone to convert. And while the predominant percentage of ad spend was directed toward cold traffic, with the goal of getting customers to buy, we knew it could be beneficial to place educational content in front of these prospects as well.

Every prospective customer is at a different point in their buyer’s journey. It may take more time or more touchpoints for some to buy compared to others, and the more we can respect that, the more profitable brands will be over time. 

Google Performance Max identified that certain blog posts on this client’s site were gaining traction organically, so we decided to create campaigns around those posts and other top of funnel (TOFU) content. 

In our initial tests, the top of funnel content consisted of:

🔹 Blog posts with lead magnet opt-ins on the page

🔹 Blog posts featuring an offer at the end for the free trial

🔹 Squeeze pages offering a lead magnet

🔹 Video view campaigns based on the best blog posts

We also leveraged customer testimonials, boosted user-generated content (UGC), and utilized webinars and challenges to grow their list of leads and nurture them into buyers, all while the client continued to grow their podcast, YouTube channel, and social media accounts.

Compared to before, the brand building push decreased overall ROAS by 6%. This would normally be seen as a bad result when viewed in isolation. But, in light of the bigger picture, it’s clear that it’s not at all bad. 

That’s because even though we shifted the ad budget to the top of the funnel—increasing it by 55%… we increased the leads from Facebook by 40%…resulting in 11,113 leads generated… an incredible increase of over 2,221 more leads than before the brand-building push! These leads are now in their email list, where they can be nurtured and remarketed to until they purchase.  

Despite shifting the budget to top of funnel campaigns (that other media buyers claim “don’t work”), this client still saw an additional $1.4 million dollars in revenue in just one quarter. This was across all their ad channels, including a 16X ROAS on Google. And therein lies the secret measure for brand building advertising on Meta… Google Ads performance gets better. 

What we’ve seen is that many of your buyers learn about your brand on Meta, but they search for it on Google. 

Full-Funnel Client Success Story 2: International Non-Profit Scales Using “Brand Building” Educational Ads

In 2022, a leading cleft palate non-profit wanted to expand their new donor acquisition efforts. Their existing campaigns via direct mail and email were doing well, but their time to ROI was long–sometimes up to five years! They knew that Meta’s Facebook Ad platform could become a viable digital acquisition platform, but hadn’t yet run any ads.

Because they had never run ads on Facebook (Meta) before, they weren’t sure how much they could shorten the 5-year runway to ROI, but were open to testing. We immediately got to work, establishing their account and integrating online and offline reporting for better accuracy and reporting.

Our client’s ask wasn’t an easy one: Balance acquiring new donors with meeting minimum revenue per month

The media buyer on the account says of the dual ask, “If we were just doing a straight donations play, we could be bringing in donations constantly. But we need to get new donors in the door to nurture long-term.”

In our tests, what we learned was that direct-to-donation ads were expensive and didn’t work well. The media buyer says, “there was nothing super enticing about, ‘hey, why don’t you donate some money to us?’” 

So we proposed a solution we’d seen work for other brands where cold traffic wasn’t enough: brand building advertising. 

The strategy to lower costs but acquire new donors was simple:

Get more people to the website through traffic ads, but serve them educational content and landing pages which educated and warmed them up before being asked to donate. 

We knew this would work for two reasons:

🔹 For this client, it’s easier and cheaper to get donations from those who are familiar with their mission and have done it before

🔹 This client was already familiar with longer-term nurturing campaigns and had resources available 

So we set out to create ads and landing pages which nurtured potential donors before they were asked to make a purchase, such as educational landing pages, success stories, and blog posts. 

Testing Alternative Engagement Paths

But we also tried something even more interesting in the form of activities. In one test, ads were sent to a campaign to send a handmade card in lieu of money. Completing the process and sending the card not only helped further the nonprofit’s mission of helping kids with cleft palates, it also got leads familiar with the charity and its work. Retargeting ads to these warm contacts have been far more effective.

Aligning Ads with other Campaign Efforts

We also talked with the client about what their other teams were doing with messaging,  and ensured that our campaigns aligned with what they were doing internally. Now, their emails and our ads have congruent messaging for a smoother user experience. 

Adding New Platforms

For most clients, Facebook advertising is just the beginning of our work together. We’ve since doubled their YT budget and begun TikTok ads to supplement their organic TikTok efforts. We also introduced them to a unique IP-based direct mail solution that will improve the effectiveness of their direct mail campaigns. 

The results from the switch to top-of-funnel traffic ads to educational content have been promising:

🔹 CTR increased from .5% to 7% 

🔹 CPC decreased from $6 to $0.24 (24 cents!)

This shift in budget and ad goals toward educational and brand-building has helped us incrementally bring down the cost per new donor.

Now, we’re fine-tuning the balance of making sure we’re getting new donors and making sure we’re meeting the revenue goals while scaling up.

These two case studies are just the start of the results we’ve seen with our clients at Tier 11. 

Four Warning Signs it’s Time to Shift Your Budget: 

There are common trends we see when we audit brands who are seeing a slowdown in results. 

To see if they’re present in your marketing, ask your team honestly: 

1️⃣ Are our profit margins getting squeezed as we pump more of our budget into paid ads?

2️⃣ Do campaigns start to lose steam after the initial burst of response?

3️⃣ Have we neglected owned channels like your website, email nurturing, and content creation in favor of paid ads?

4️⃣ Do customers seem to lack brand loyalty? Do they buy once and then never buy again?

These are all symptoms of an over-reliance on direct response, performance marketing that’s too focused on the bottom-of-funnel. 

But don’t just take our word for it: brands like LEGO, Nike, and Coca-Cola swear by long-term brand building as the bedrock for stable growth.

On the flip side, cautionary tales abound of brands that crumbled when they solely chased short-term results. RadioShack and Toys R Us are the unfortunate examples that come to mind. When you only focus on the transaction, you lose sight of the lifetime relationships with your buyers.

So ask yourself – are you shooting in the dark, or are you sowing seeds today that will blossom into a thriving customer base for decades? 

The good news is, it’s not an either-or choice. With the right balance of long and short-term strategies, you can have the best of both worlds.

Three Tips for Balancing Your Spend Across the Awareness Levels

Here are Tier 11’s top 3 tips to balance your short-term and long-term marketing strategies:

Audit your current advertising budget

Where are your dollars going? Are you currently closer to a 80/20 or even a 90/10 split favoring direct response? If so, then chances are you are already hitting, or are about to hit, the “spending ceiling” when it comes to advertising. When this happens, your ability to scale will stall, your costs per acquisition will rise, and new creatives stop working. 

Gradually work towards 60/40 over the next fiscal year

It takes patience, but the rewards compound as you shift some of your spend from performance-only bottom-of-funnel campaigns to middle and top-of-funnel campaigns and marketing.

Align incentives towards a balanced approach

If you’re working with an agency for your full-funnel advertising, consider moving away from pure performance fees to blended or retainer models. If you only have an internal team, consider shifting the metrics you use to measure success, and the timeframe you give your team to achieve them. 

Ready to see how we can help? Book a call today.