I was skeptical of marketing and looked down on people who used it. “If only people would choose products through rational criteria, marketers wouldn’t exist”.
I’ve spent a bit of time learning about marketing and advertising in order to cure myself of my affliction. The first part of this article will be a defense of marketing to the engineer-brained. The second part will be an overview of the various kinds of marketing that I’ve personally studied and tested.
What is marketing? Marketing is good distribution. What that means is presenting things in a way that appeals to a given audience.
Unfortunately, marketing has a bad reputation. You think of pushy sales people, bad TV ads, and massive internet spam. You think of luxury brands, liquor billboards, and telemarketing.
Marketing is a tool to encourage people to care about your product. What this implies is that if you don’t do marketing then people won’t care about your product. Yes, you may get lucky, or someone else may do the marketing for you, but generally you need to do some marketing in order for the world to hear about your better product.
Marketing is generally effective. The best proof for this is that marketing is heavily used by businesses that make money. While I have no doubt that in particular cases marketing may be ineffective, the concept as a whole has proven to be extremely lucrative, and therefore can be assumed to be effective.
Imagine the inverse. You make a product 2x better than the market leader. If you don’t do any marketing, will you win? You won’t because while your product may be better, nobody knows about it.
Of course, marketing is a broad concept. Talking to people is marketing! Running demonstrations is marketing! Building a blog is marketing! Helping your customers is marketing!
Marketing is not necessarily good, as I’m sure you’ve noticed. Marketing tends to draw grifters who use marketing to sell you crap. For better or worse, marketing is a neutral tool. You can use it to ensure that your great product gets the success it deserves, or to push crap that won’t actually solve the problem you claim it will.
The general promise of marketing, however, is to give you something you want. I’d like to separate this into two parts. Marketing may be selling you a product because of the functionality, or it may be selling it to you because of the story.
Good products don’t appear out of the aether and drop into the store. There’s a cutthroat competition for every single product that makes it onto store shelves, or onto the first page of search results. Viewing this competition as a waste of resources is something I had previously done. Why don’t we just have products that are good enough? Why are there a million products, each incrementally better with differing features? Wouldn’t it be more efficient and satisfying if there was only one product available in a given category? Fundamentally people decide what should be purchased. The drive to create better products which is spurred by the free market does result in products which people are more likely to pay for and which make their lives better. If people didn’t demand it, it wouldn’t exist.
A thornier issue is that of non-functionality based purchasing. This was something that I fought with for a long time. Modern marketing is built upon the idea that you’re not only selling a product, but you’re also selling the ideas and feelings associated with that product. I think this disturbs you and me because it suggests a model of humans which is hackable and highly suggestible. I don’t think this is strictly incorrect, but I also don’t think this is as bad as you may think.
Marketers aren’t doing some evil mastermind manipulations. They’re mostly playing judo around people’s pre-existing ideas, desires, and insecurities. It’s not possible to sell something to someone that they just straight up don’t want. What marketing is really about is engineering a way to convince people already looking for a solution that your product is best for them.
People are quite rational in their purchasing habits, it’s just that their preferences may not be yours. Consider Beats headphones. They’re quite mediocre, except for their enchantment with the mystical power of Dr. Dre. Why would someone buy sub-optimal headphones at a high price? Buying them to associate themselves with Dr. Dre seems to be an odd reason to overpay. The twist is - what if they don’t care about headphone quality? What if they don’t care how the music will sound? What if they care more about looking cool? Let’s take a pause to consider that there’s nothing wrong with preferring to look cool instead of having perfect audio quality.
Luxury branded things may appear to be irrational things to buy. Why purchase a handbag from a well known brand like Hermes when you could have gotten a better deal on a similarly crafted bag from a lesser known company? You’re purchasing the social positioning of being someone who owns a luxury bag - of course people are free to perceive that how they’d like. You’re making a bet that joining that particular social club will improve your life. On top of that, maybe you have a ton of money and you’re looking for certainty that you’ll get quality. Without any effort or research on your part, you can be confident that your luxury purchases will meet a certain baseline of quality.
Hard liquor is another great example. Vodka is a fantastic good to study marketing through since most brands are almost completely identical. It’s a natural marketing experiment. Each brand creates an image associated with the vodka and the consumer can choose to be associated with it. People will pay for the privilege of participating in and showing a story that they vibe with. Do you drink Svedka because you’re a party animal? Or do you drink Ketel One since you want to party with your banker bros? You’re purely buying into the story, which is absolutely worth something in and of itself.
Empathy is important here - just because you may not want something doesn’t mean that someone else shouldn’t.
Ok, you say, marketing may work on those chumps, but not on me. I buy products based on rational understanding of their benefits and drawbacks. Sure, I say, but look at why you chose those products. More likely than not they were marketed towards you somehow. When good marketing is targeted towards you it doesn’t feel like marketing, it feels like someone solving your problem.
A great example of this is DigitalOcean. Their marketing is their extensive documentation of various technical topics. I use them as a hosting provider. Why? I needed some help with Git and their documentation popped up. I went on to check out their hosting and found they had a wonderfully documented Wordpress setup process. They provided me with value, which implied they would provide similar value for their paid products. A marketer would say they had a great content marketing strategy.
Stripe Press is another form of this. Stripe is a payment processor, otherwise known as the most boring business known to mankind. So why are Stripe and the Collison brothers so popular? They’ve associated themselves with the concept of growth. Stripe Press and Works In Progress appeal to the people who could potentially become customers of Stripe. They’ve provided free value to a specific group of people and in exchange they’re gaining good will and customers.
Lil Nas X got his music into people’s hands by creating meme videos on Twitter and overlaying his own music. He gave people value in the form of funny videos and this enabled his music to spread much faster than if he hadn’t marketed it at all.
It’s not that you’re unaffected by marketing, it’s just that you’re not noticing the marketing that’s affecting you. You may say, well I do deep research on products, searching far and wide to understand what the specs are between various Aliexpress electronics lab products. In this case, yes, you win, you’ve successfully avoided being marketed towards. I would bring to your attention, however, whether you do that for every product you interact with? Sometimes marketing doesn’t work or isn’t very good, but that’s generally not the case.
You may say “well I don’t like it that marketing takes advantage of people’s social/irrational desires”. Fair enough, that part can get exploitative. In general, products sold do tend to resolve the issues people have, if only temporarily. Buying a new car will make you happier if only for a little bit.
You may say that this is a waste and people should spend their time making themselves happier using insert technique. They could do that, but by what mechanism will you transform society in order to get people to stop seeking short term fixes? For better or worse, people will seek to solve their issues through quick fixes and products will give them a quick fix. What’s funny is that if you come up with a social technology that will eliminate people’s drive to buy products you’ll still have to market it.
I chose to look deeply into a few forms of marketing in order to understand the field better.
Email Marketing
Email marketing is something we’re all familiar with, if also a bit tired of. It pains me to say that the incessant pop ups prompting you to give your email work really quite well. For better or worse, prompting users to give their email to a site is very effective, and with the promise of content or discount, the success rate skyrockets. For better or worse the average popup will have a success rate of 11% at capturing emails.
Email lists are incredibly powerful. Email rounds to ~free and is guaranteed to be sent to people who are at least slightly interested in what you have to say. For the discerning marketer there’s a massive opportunity to build an audience without paid advertising.
Once you’ve captured the email of a potential or past customer there are two ways you can utilize them.
First, there are email flows, which are email sequences that are sent based on the customer’s behavior. As you can imagine, there’s big alpha in marketing directly to a customer depending on what they’ve previously done. You can segment the email list based on whether they’ve purchased anything, how long ago they’ve signed up, what their email open rates are, what purchases have previously been. You can then define the exact flow, or set of emails, that they will receive. The flow can actually get quite detailed, with many nested conditionals (image shown below).
By communicating effectively with the customer and understanding who they are, the email list can effectively increase revenue without meaningfully affecting costs. A decent rule of thumb is that a well crafted email marketing system can result in 20% more revenue for an ecommerce store.
The most popular email flow, for good reason since it has exceptionally high success rates, is the abandoned checkout flow. In case you’re unfamiliar, if a customer abandons a cart during checkout the store will send an email reminding the customer about the products they were looking at, usually with a small discount attached. This can encourage around 10% of recipients to complete their purchase.
The new customer flow is similarly important, since this is the set of emails that a customer will see after signing up for the email list. With this flow, they’ll be introduced to the business, given the full story of why they should care, and then introduced to the most popular product lines, after which they’ll be shunted into the appropriate following flows based on their behavior.
There are other email flows that are popular. The VIP flow targets people who are high spenders and offers them exclusive events, deals, or early access to product releases.
The second form of email marketing is campaigns. These are emails based on time, and not behavior – and are comparable to your conception of an ad campaign. You send out a few timely emails about a new product release, without regard to the current status of the customer. While still essential for communication, they don’t quite have the power of flows, yet are much easier to construct.
SMS Marketing
Text messages are something that everyone will check. SMS marketing is more powerful than email marketing because you’re guaranteed to get eyeballs on your content. The other side of that coin is that it’s exceptionally dangerous for the exact same reason. SMS marketing, unlike the other forms of marketing, is regulated heavily by the government. This is the reason why you can unsubscribe from every automated SMS message by texting back “STOP”. If a company texts you without your express consent, you’re free to file suit and likely win. With such a tough playing field, why would anyone try to market through SMS?
The average open rate for text message marketing is 98%. Not only that, but these are people who expressly signed up for text messages, so you’re guaranteed at least some level of interest.
If you manage to dodge the laser beams involved in growing an SMS marketing list, you’ll be able to enjoy extremely high engagement and build a responsive audience with campaigns and flows like in email marketing.
Supergoop is a big winner of the SMS marketing game. Their SMS marketing campaign have had an ROI of 29x and each marketing SMS converts at around 11%.
Their intro flow - the Sun 101 series educates potential customers about skin sun damage and sunscreens. This, of course, builds the consumers trust in the company. Supergoop also uses abandoned cart flows, which send a text when a user leaves a cart. The SMS reminder has a 20% higher conversion rate compared to an email.
A key part of their strategy is that they absolutely don’t spam. They only message their list twice a week. The result? Their average revenue per text subscriber is double that of their email subscriber.
SEO
If you’re doing content marketing on the internet, search engine optimization (SEO) is essential. In short, you’re trying to rank higher on search results than your competitors. In order to optimize your site for search engines, you need to understand how they’re ranked. The more sites link to you the higher you’ll rank. The catch is that not all links are the same. A link from CNN is worth far more than a link from a blog started yesterday since it’s seen as more trustworthy. The number of links the site linking you has influences their power in boosting your site.
The fundamental concept is that you build really great content and then try to get people to link back to you - this is why they’re called backlinks. The most efficient way to build backlinks is through guest posting. You contact the owner of a reputable site and offer to write an article for their site. In exchange they’ll link your site from theirs, which will boost your ranking. Frequently, they’ll ask for some money, depending on how trustworthy their site is. You’re not obligated to pay for backlinks of course, but waiting for people to naturally find your site will take a bit.
There are deeper aspects to SEO of course, but creating great content and building links is 80% of it. You can create long articles that rank highly for uncompetitive queries. You can pepper important keywords throughout your content. You can put the important parts of your article at the very bottom, forcing users to scroll through the entire page, thus artificially boosting rankings (looking at you, recipe sites).
Great examples of SEO being used well are Grammarly or Nerdwallet. These companies provided tons of great online content that was useful to people. This meant that their sites ranked much higher on Google, which brings viewers, who can then potentially become customers if the product is useful to them.
Paid Internet Advertising
The old bugbear of the internet. The thing everyone hates. Well, let me just get this out of the way real quick. Paid internet ads work. Maybe not everywhere, or for everyone, but it does fundamentally make people money. Google, Facebook, and the like are fundamentally advertising companies and one look at their stock price shows that the concept is fundamentally sound (sorry Tim Hwang).
I’ve tested both Facebook and Google ads, and both were pretty decent at getting me leads. For better or worse (likely for better) the era of hardcore tracking is over, and I could no longer target my ads to a terrifyingly specific audience. As a funny side note, signing up for the ad service was an absolutely terrible user experience.
I actually don’t have that much to say about paid advertising since I didn’t do too much of it (it gets expensive). I wasn’t skilled enough to generate a profit off of it, I blew right by the rule of thumb that the Customer Acquisition Cost should be ⅓ of Customer Revenue.
Tracking pixels is an interesting technique that I learned about though. An ad or site will have a 1x1 pixel transparent image. When a user clicks on the given ad or site, the pixel will be downloaded and the server will note who downloaded that image. Using that information the user can be retargeted for more advertising of a similar type. If you click on a mattress ad, you’ll likely see more ads for mattresses even across platforms.
Copywriting
I have a lot to say here. I think it’ll be part 2 to this article.
