Nicolas Darveau-Garneau, Chief Evangelist, Google
The biggest trees on the planet are the enormous sequoias of Northern California. They’re the skyscrapers of the natural world, stretching up more than 300 feet. They are not impeccable specimens — their trunks are prone to splitting and lower branches fall away — but despite these flaws they keep growing and growing.
At the other end of the spectrum are the diminutive bonsai. These trees are flawless, pruned with precision, but tiny. As a result, they are beautiful, but grow very little. The difference between sequoias and bonsai provide a useful analogy for the world of advertising.
Some advertisers treat their advertising campaigns like bonsai. They seek perfection, investing their time looking for things to trim. These campaigns perform well when measured with efficiency metrics like return on investment (ROI), but they are small.
Other advertisers think of their campaigns as sequoias. They want to go big and drive maximum profitable growth. It’s OK if some of the elements are not perfectly optimized — they can put up with some dying branches and a split trunk as long as they are growing profitably. To determine which strategy is right for a given marketing team, there are three operative questions.
- Is the marketing team’s KPI based on growth (e.g., maximize profits) or efficiency (e.g., increase ROI)?
- Is the performance advertising budget flexible or fixed?
- Are shoppers’ searches for the brand growing faster or slower than for competitors?
For marketers that answered the latter to two or more of these questions, odds are they’re growing a bonsai. Here’s how those teams can shift to a plan primed for growth.
Successful advertising plans start with a controlled environment
For the bonsai artist, it may feel daunting to start growing a sequoia. but there are steps marketers can take to do it safely.
Firstly, teams must identify a small region in which to base the experiment. It’s a lot easier to measure the variables and results within a confined area, and it’s a lot less expensive to start with a lone sequoia rather than an entire forest.
Secondly, marketers should commit to a fixed period of time. New plans need time to take root and change will not happen overnight. Six months should be long enough to provide a clear set of results that will allow them to judge success.
Now comes the hard part. Most advertisers are conditioned to always look for ways to cut and save. But what if, for once, in a controlled environment and for a limited time, they decided to dial everything up? This means: Try to make as much money as possible from advertising in the one region; don’t try to save money, just try to make it.
Achieving that requires investing in a full-funnel strategy with the objective of significantly increasing conversions at the current ROI. This should include all main performance advertising products (e.g. search, shopping, display, etc.), as well as products that increase brand consideration and brand awareness. Don’t underestimate the elements of the plan that may be throttling growth — for example, Google recently worked with a sophisticated search advertiser that, according to our internal data, increased profits by 50% simply by switching their search strategy from Exact Match to Broad Match.
Finally, some tactics may not be profitable when evaluated on their own, so it’s best to measure success holistically, based on overall profitability, rather than based on the profitability of each tactic.
How to use bonsai skills to trim a sequoia
Growing a sequoia does not mean endless spending. Once the marketing team has maximized the profits of its investments in a region, the next step is to trim the investment and remove the ugly branches.
First steps are to sort the results of performance campaigns by ROI, and then sort brand activations by cost per brand search lift. The candidates for removal will be the performance campaigns with the lowest ROI and the brand activations with the highest cost per brand search lift.
However, before reaching for the axe, marketers should consider testing the impact that chopping away will have on the overall health of the sequoia. A/B holdout tests are a good solution here — e.g., removing a video campaign for some customers in the region and assessing the impact on overall profits. This will help the team to identify and remove the campaigns that are clearly unprofitable.
Scaling the sequoia approach
Once advertisers have grown and trimmed a sequoia, they can start scaling the strategy, but there are a few considerations to bear in mind.
For example, what is the appropriate pace of expansion for the plan? If the goal is to minimize risk, marketers should scale slowly by seeding and optimizing one region at a time. Alternatively, if they want to drive maximum profits as quickly as possible, they should plant sequoias everywhere and optimize more widely later.
Another tip: Don’t starve the sequoia by enforcing a fixed marketing budget. Budgeting should be flexible to respond to real-time customer demand and maximize profits. Leveraging tools like automation, which provide the easiest way to scale an online advertising strategy while also maintaining the flexibility to adapt to local demand, is another sequoia-strategy move.
Efficiency is a noble ambition, but in an unpredictable market advertisers must compete for any and all available profitable growth. By following these steps marketing teams will be able to develop a better picture of the addressable market for their brand’s products and services, and from there they can make an informed decision about which branches to chop, and which to hang their hats on.