We Stopped All Paid Media Marketing Although ROI Was Soaring

We went back to the drawing board and invested in our core services to play the long game instead.

Have you ever pulled the plug out of a machine while it was performing its best work to date?

I have, and I would love to show you why I think it made sense.

Your results should be seen within the context.

We all have seen the presentation where market conditions explain a bad quarter, external events, and in which the presenter dives deep into particular KPI’s to explain a job that didn’t yield the expected results.

How many times have you seen someone explaining that the great results were basically just context, outside of our control?

It is exactly what my team and I did in the last couple of months.

The current health-crisis drove a lot of online traffic to our platform, mainly because the physical alternatives were closed. Most fashion stores were closed from April onwards, and those that did open had such a tedious list of rules that they were unable to be visited in an enjoyable way.

Meanwhile, our digital marketing team was knocking it out of the park. Outperforming every KPI that really mattered.

New customers were cheaper because the conversion from an online ad to becoming a new member was higher. On top of that, they converted better and faster to buyers, and the average re-visit and repurchase rate went up.

It was a magnificent dashboard to look at.

And yet we pulled the plug on the paid marketing efforts and its team in mid-June. Year-to-Year monthly results of our core business were rising between 40 and 50%, and still, there was one signal that showed us we needed to make changes.

Econometrics only make sense when you also look at the effects you don’t control.

In this case, the context (health crisis) and the overall e-commerce market.

The world, as we knew it came to a hard stop, and we were lucky to be in a business model that could serve its customers without major issues. Yes, we had delivery delays and logistical issues. We also struggled to upscale our customer care department, given this unique event. But we were able to sell exactly what people needed in a convenient way.

Outside of our marketing view, we saw a bigger problem coming. We currently support the brands we ultimately consider our partners, and they were and still are struggling. They needed help to make ends meet, and we truly believe that we should always make sure we understand our prime reason for existing.

So back to the drawing board.

Back to clear guidelines on who we are, what we do, and why we do it. We serve as a platform that aids brands in offloading stock, but more than that, we are a platform that allows them to grow and to develop.

Ultimately you want your company, your brand, to grow indefinitely.

Indefinitely, or the long game, doesn’t mean pushing the quarterly results into an exponential curve even the Tesla stock price couldn’t reach. It means building a solution with your partners that is healthy and able to withstand these crises. Today we help our partners because we can. We ultimately want to make sure all of us are here for generations to come.

So the million-dollar question became, what would happen if we shift the budget for marketing/advertising growth and use it to support our brands/b2b customers? Think in terms of longer payment terms, more investment into the creativity of their shop-in-shop experiences, hosting pop-up warehouses, and logistical services.

What would happen with our business’s overall performance in the short term, versus what could the effect be on our business model and our relationship with the brands over the long term?

So we set forward and reduced the paid marketing budget by 70% and held our breath.

The overall incoming traffic dropped, yet was still above our set targets.
We saw that the organic traffic outperformed the paid channels, which is normal, but it also outperformed the historical organic metrics.

So the context’s effect was strong enough for us to hold back on super aggressive growth in favor of shifting the budget to our core offering.

We started looking at the logistical backlog and determined that it would make sense to slow down the paid marketing-driven growth further to allow us to get back to a healthy service level, not letting our members down, while freeing up even more resources to fuel better services and possibilities for our partners.

So we knew that reducing the budget, in the current context, wouldn’t hurt our top line too much, and would actually improve the experience for our existing members.

So we finally dropped the budget to zero since the year member-growth targets were basically already met.

Sounds stupid?

I understand. Why did we not keep ramping up the ad spend when traffic and new buyers are cheaper than ever?

Because marketing should be part of a business and its main strategy, working as parts of the same machine, and not functioning of a KPI dashboard and an isolated budget.

We focused on our singularity. Rediscovering our ‘Why’ while we were flying high. Making sure to focus on our vision/mission and who we want to be.

We chose to invest in brand support and customer journeys rather than milk the marketing results to make a splendid presentation at year-end.

This post is written in the current timeframe. Hindsight gives perfect vision, whereas this is more a conviction upon which we executed.
Hopefully, I can look back at it in 10 years and be proud of what we did.