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So we’re now a couple of weeks into 2020 and every year, we here in digital marketing make grand predictions for the year ahead. But I am always amazed at how many marketing experts don’t really see what is charging over the horizon towards us. Be it Artificial Intelligence or Omni Channel marketing, each year the predictions are out, and some by quite a considerable margin.

Quite often, these changes that we as marketing professionals get excited about really don’t transform fortunes in the manner they hope for.

Too many times over the past 10 years the results we have achieved for our clients are claimed by others as the result of a new tool, techniques or channel. Yet, when checking the claims against the client’s analytics account, we find that the claimed results took place on a few days, often it was hot weather or other factors and other days experienced no change at all.

For marketing professionals, all this hype doesn’t help deliver real results. The real explosions in sales growth comes from understanding real digital marketing strategies. 

However, there is a growing problem online – it’s that genuine people just like you have been misled or even mis-sold by all sorts of people with promises of shiny new projects or products that don’t deliver results online.

It’s all around you, from accounting packages like Quickbooks showing you how easy it will be to run your online business, to hosting companies promising instant websites, to Google and Facebook offering you “easy” sales. Even your local web designer and marketing agencies are in on the trick, even if they don’t know it. Everyone is taught to fake it until you make it, but you’re the person receiving the fake service and they always make it. You have a vision in mind of this beautiful life, and they play to it to sell you the dream. If you only last a year, someone got your money for a year. Scale this up and it becomes big business.

It’s not just big businesses playing you either. Recently on a flight into LA, the lady in front of me spent most of the trip hashing together a wedding invitation. It was terrible, broke virtually all the graphic norms, used too many fonts, poor layout and the list goes on. I nearly said to her, ‘Do you want me to explain to you how to use photoshop? She would have been better using a template from VistaPrint. As we taxi to the terminal, she’s on her cellphone to the client explaining how she had her graphic designer craft a beautiful wedding invitation. What? She just outright lied to her client and then went on about how much the designer had cost. The truth is, we live in a world where many are just faking their service to you and have little idea how to get you sales. Spend any time in a restaurant in LA and you’ll soon hear it all around you.

If you want the truth and want to do something about it, you have to know the rules. Try playing 3 card poker in a casino without knowing the rules and you’ll quickly learn why Las Vegas hotels are so big and luxurious.

So understanding the reality of running an online business is paramount if you want success. It starts with the Power Curve. It’s a bit like the 80:20 rule you may have heard of, where 80% of your sales come from 20% of your clients for example. But, on the internet the 80:20 rule is hyped up. Prior to 2012, the internet was a peer to peer economy where small business sold to individuals – very much in the Etsy / Ebay vein. These people were technical types who played about with web design and started selling anything, and it worked too. But growing beyond a small, one-man operation wasn’t easy. Most would get to $250,000 turnover and hit a brick wall. It was as if they were all operating on a flat line and achieving growth required a huge shift. We help many businesses get past the flat line and into a world of growth. Most of our early clients are now brand leaders or have sold out for millions.

We discovered that if we got you into the top Google positions, demand was near unlimited. Equally, we found something alarming. We would explain to many what the problem they were facing was and how we could solve it with our services. However many people declined our services. The reasons varied; no money, narrow-minded, thought they knew it all, I could go on. We later found out that 42% of them would no longer be in business just 1 year later. That was shocking.

It seemed to us that if you fixed the traffic, were bold with your bidding and reinvested like mad, you became a winner. But there was a dark side – if you were conservative in your approach, tried to do it yourself or even logically used your web design agency to help you, then you struggled to make any profit and never really grew. It didn’t help that most web agencies viewed marketing as a profit add on to cover the losses they made building your website rather than a core service to help businesses succeed. Then, there were the start-up businesses – the genuine people struggling to make it with limited funds and often smaller ambitions. Too often, they went bust. The situation in 2019 didn’t improve with Amazon now taking 37% of all US ecommerce traffic. Everyone else now fights over a much smaller pot.

Attaining my fair share in 2020

McKinsey, the global consulting firm has a neat graphic for the power law (power curve) online.

Those in the yellow zone take most of the profit in any sector, whilst the majority in the grey zone struggle to make any profit. Those unfortunate few in the red lose money. 

The upshot is that 4% of business take 96% of sales / profit on the internet. Unless you can move into the 4%, it is going to be a long, hard struggle.

Just think about this for a moment. You just want your fair share of sales, but that fair share only exists if you’re in the top 4% of your product niche or market.

McKinsey have a nice little quote ‘If Jeff Bezos walks into a bar, the average wealth of all others in the room would soar to more than $100 million, even though their wallets remain just as slim’.

You have to be in the top 4% in your market, no matter if you sell via Google, Facebook or Amazon. Ebay and Etsy are still peer to peer platforms where the rules are different but the problem here is that the commissions and fees are so high that, on average, half of your gross profit will disappear, so you have to move volume.

The truth is that you have to be with the winners. When most clients join us, they don’t have huge resources. However, our successful clients realize that they are going to have to go through a period of reinvestment in their advertising. By steadily increasing your sales and reinvesting, you move along the flat power curve into the 4% zone and, ultimately, higher profitability.

The beach head investor

The key to joining the top 4% is becoming an advertising investor. After all, if you invest systematically you can obtain a return of 1000%. You’re getting 5% in the bank if you’re lucky, but by using ads for every $1 you invest, you can get a return of $10. That’s the power of advertising.

Our approach is similar to landing on a beach – we secure a beach head. In our case, that means taking the majority of impressions and clicks for specific products and thus the sales/orders. We identify products and services where you have the greatest chance of achieving success and gaining market share. The revenue from these sales is reinvested in the next tier of products. Our beach head expands inland and your revenues grow exponentially.

Too often, advertisers have thousands of products on their site. They treat all products equally, some try focussing products by price etc, but they spread the budget too thin. Virtually nobody has an unlimited budget. It’s always a case of selecting some priority products and working through these to expand sales.

Our approach is to find products with competitive pricing and great opportunities for market growth, which are niche enough not to be a large brand’s key focus. Our objective is to enter the top 4% in this niche and use the profit to move to the next.

So in summary, our predictions for 2020 aren’t based around the latest strategies or the next piece of software that promises to “to make your life easier”. We’re suggesting that we need to get down to the real brass tacks of your business – what do you want to achieve? Aim for that top 4%, focus on reinvesting to take your business forward and make headway on the beach.

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