The big promise of online marketing has always been that everyone has a chance to compete for customers. Both small and large entities get to show their ads to prospects and the “best” company wins. We are taught that the company who scientifically measures every move and best optimizes their campaigns wins, right? The answer is maybe. Having the most optimized campaign is important, but the strength of the brand heavily influences the ROI of digital marketing.
Think about your own behavior. If you search for a new office copier on Google and you see a Xerox ad next to a Joe’s Quality Copiers ad, which one are you going to click on? Xerox, of course. When prospects (like you and me) click on the Xerox ad more often than Joe’s, Google will reward Xerox with a higher quality score. A higher quality score translates into a higher ad position and/or a lower cost per click for Xerox. The brand now has a big advantage – more traffic at the same or lower cost.
But, it doesn’t stop there. A strong brand benefits throughout the entire buyers journey. Let’s look at an example.
The Power of the Brand – Nursing Degrees
At 360Partners, we have had the opportunity to work with several traditional, not-for-profit colleges and universities (think schools with sports teams and logo sweatshirts). Specifically, we have worked with several universities who offer online RN-to-BSN nursing degrees.
RN-to-BSN degrees are geared towards registered nurses (RN’s) who have the equivalent of an associate’s degree and want to attain a bachelor’s of science in nursing (BSN) degree. Nurses who have a BSN are paid more and have greater career advancement opportunities than those with RN degrees.
The process that nurses go through when selecting a program is very similar to what students go through when applying for college. It looks something like this:
This process looks familiar, right?
Let’s now look at how the metrics are different for two different university brands through the buying process. One university is a national powerhouse in the nursing field and has an extremely strong brand. They are regarded as having one of the top programs in the country and are well respected in the nursing field. The second university is more of a regional player and a lesser known brand. The quality of their online program is high, but they are not well-known in the industry.
360Partners had the opportunity to run online marketing campaigns for both university programs and the results of the “strong brand” vs. the “weak brand” are fascinating when compared side-by-side*. The exercise started with a level playing field. 360Partners ran pay-per-click search campaigns for both universities with similar keywords and similar costs per click. However, as things played out, the results were very different:
The Bottom Line: At all stages of the funnel, the stronger brand had significantly better results. Their “brand lift” extended throughout the customer journey. At the end of the process, the weaker brand university paid 80% more per enrolled student than the stronger brand.
While this example is specific to an online RN-to-BSN degree program, 360Partners has seen the same story play out again and again across different lead generation clients, B2B, B2C, etc. The story is the same: Stronger brands generally have significantly lower customer acquisition costs than weaker brands, no matter how much optimization.
Given the advantage the stronger brand has does it make sense to get into the ring and fight for digital customers? While the data above is fairly stark, there are a couple of things to keep in mind:
- Not every market has strong brands. While some markets have several very strong brands, most only have one or none. Also, the relative strength of the brand might not be as dramatic as above. The strong brand in your industry might only have a 10% acquisition cost advantage vs. 80%.
- Even at a cost disadvantage, you can still compete online. Even if you are in a market with several strong brands, there are things you can do to acquire customers. You might not be able to compete on industry head terms, but long-tail traffic is always available. The challenge you might face is how much digital will scale for your business.
- There are specific things you can do to compete against the strong brands. In Part II of this series, I will look at specific things a weaker brand can do to compete against a brand giant.
* Note: For this exercise, we normalized the traffic costs between the two universities so we could see how brand affected the process. Also, the exact numbers have been changed to protect confidentiality, but trends and ratios are the same.
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