Originally Published In Forbes:
Context Is The Secret To Growth For Modern Businesses
Over the past few years, three of the most disruptive businesses skyrocketed to success with almost zero advertising.
Tesla, which launched its Model 3 in July 2017, reportedly spends $6 per car on advertising, yet it dominates the electric vehicle market. According to a recent Quartz article, its “Model S sedans and Model X SUVs accounted for more than half of the EV market in the US in 2016, more than the next 12 models combined.” Similarly, Airbnb and Uber didn’t use any form of mass advertising when they started and now boast 19% and 31%adoption by travelers, respectively.
Their secret is not only a departure from the idea of advertising as a sustainable way of driving business growth but also the adoption of a new context-based growth strategy.
We’re in the midst of the great advertising revolt.
The issue with the current advertising-fueled growth model is simple: Consumers don’t like it, and they’re letting businesses know. The world’s largest advertising boycott is currently underway, with 615 billion devicesadopting ad-blocking software. By 2020, this is expected to cost companies $12 billion in ad revenue.
Businesses have attempted to sidestep the boycott by enlisting better ad tech and even anti-ad blockers, but growing amid disruption requires changing the entire business model, not deploying quick fixes.
Dominique Hanssens’ research published in his 2015 book, “Empirical Generalization About Marketing Impact,” underscores this simple fact. He found that a 10% increase in advertising generates a mere 1% increase in short-term growth — with no long-term impact. PageFair found that anti-ad blockers (which literally stop ad blockers from working) affect 90% of consumers using ad-blocking software. The problem is that nearly three-quarters of those consumers will respond by simply leaving.
Consumers are in control now, and they don’t want ads. Instead, they demand a new type of relationship with businesses — a contextual experience.
Contextual experiences are native
The first aspect of context is that it is available to the consumer natively.
In their book “Hacking Growth,” Morgan Brown and Sean Ellis explore Airbnb’s unique growth avenue. Rather than rely on traditional advertising methods, it leveraged an automated system to find consumers who were already looking for listings (and listing their own properties) on Craigslist. Each consumer was sent a personal message and offered some advice about Airbnb’s new service. By using the networks where its consumers were already looking, Airbnb was able to build a relationship within the native context of the experience.
Similarly, Uber sponsored local events by providing free rides to attendees. This allowed them to get home safely from an event they were already going to attend without having to deal with the hassle of hailing a cab. That is context.
Looking ahead, brands will increasingly look for opportunities to natively engage with consumers where they already are. I recently spoke with Jay Baer, a popular marketing provocateur who knows his audience is on Facebook. He began communicating with that audience via Facebook Messenger and is seeing almost seven times the open rate and five times the click-through rate of his messages versus emails. Native experiences allow for a level of context that advertising does not, and they are proving to be the secret to success for many recent breakout businesses.
Contextual experiences are personal
Personal in the realm of context means an individual experience, not just a customized subject line.
For example, RapidMiner, a new B2B technology company, replaced its lead-capture forms with a chatbot to test out a new level of personalization at scale. The bot is set up to respond differently to different types of visitors. It may deliver a specific content offer to a known site visitor. Or perhaps it will offer to connect the visitor with the proper employee to have an instant conversation. This personalized approach has led to more than 4,000 new leads and influenced more than $1 million of their sales pipeline.
Looking ahead, the need for personal experiences will only deepen. A new middle layer of technology is going to be required for companies to ensure all their customer data is available and actionable for their marketing departments.
Companies like Segment and Tray have come along to help marketers unlock their backend data and make it actionable within modern marketing tool sets. The ability to access and utilize your data is a critical factor in creating contextual experiences.
Contextual experiences are authentic and purposeful
Rather than bombard clients with endless advertisements, AT&T took a more authentic approach. It used the comments section of its blog posts to engage with consumers directly, asking them questions about the articles. The conversations not only introduced readers to new content, they also opened up a dialogue around key consumer pain points.
This authentic, purposeful tactic netted the company $47 million of new business within 18 months. In addition to the windfall, customers saw the strategy as a refreshing break from more traditional push advertisements.
Consumers are no longer buying products; they are buying experiences. Advertising doesn’t create better experiences, only better messages. Contextual marketing fulfills the needs of the consumer by creating an authentic and purposeful experience able to grow a business in a way advertising simply cannot.
Advertising is glamorous and sexy — I get it — but we have to put it in the context of its time. When advertising was born and grew up, it was living in a world of limited connections, limited data, no transparency and very basic expectations from consumers. The world we operate in today is the opposite. It is instant, dynamic, hyperconnected and filled with infinite information resulting in an infinitely changing and contextual world.
Businesses must adapt. They must give up on ideas made for a different time and see the future in a new way of marketing. The breakout successes of Airbnb, Tesla, Uber and so many others have shown us that in our new world, contextual marketing is the pathway to growth — not better advertising.