Marketing is crucial to a company’s profitability—but that’s about as far as general consensus goes. When it comes to agreeing upon the most effective ways to spend budget, marketers and CFOs may find themselves at odds.
Marketing is transient. What worked yesterday won’t work tomorrow, and what works tomorrow might not have been tried yet. It can be tough, therefore, for CFOs to give their backing to marketing approaches that either don’t align with past successes, or don’t guarantee an immediate ROI.
However, it’s become increasingly clear that owned marketing channels are among the most efficient, privacy-compliant, profitable ways to generate revenue, making them a safe bet for both CMOs and CFOs. Here’s why.
What are owned marketing channels and why are they worth investing in?
Owned marketing channels, also known as owned media channels, are any type of marketing channel that your brand fully controls—such as your website, text message marketing, and email marketing—that collects and uses first-party data. Users who interact with your owned marketing channels may voluntarily hand over their information (such as their job title, cell phone number, or email address) via a form-fill in exchange for an offering (such as a whitepaper or a free demo), and can be retargeted via other owned and paid channels.
These channels are central to how a brand showcases itself and provides value to its prospects and customers. But most importantly—and this is the big one for you CFOs—owned marketing channels are an excellent revenue-driving tool.
Why? They’re incredibly cost-effective. If you’ve mastered the art of SEO, then shoppers will arrive at your website organically which costs you (essentially) nothing. What’s more, owned marketing channels give brands the power to use first-party data to send personalized, targeted messages that engage and convert customers.
“Having an owned audience doesn’t cost you anything,” says Cian Agnew, Executive Director of Client Partnerships at Wunderkind. “Once they hand over their email address or phone number, you simply have to focus on providing value and giving them a reason to come back to your site.
“Renting customers, which is essentially what happens when using third-party data, is an expensive business; it’s unscientific and scattergun. While you might get your message in front of a few people who will be receptive, it’s also going to be seen by scores who aren’t interested.”
This approach, unsurprisingly, results in high acquisition costs. When you target irrelevant content toward an uninterested audience, those are marketing dollars wasted. Rather, you can leverage owned marketing channels to collect first-party data and nurture an already engaged audience.
Why first-party data is important
The demise of third-party cookies has long been predicted, and come 2024, they will finally be consigned to the past. Rather than “renting” customers via the use of third-party cookies, as has been the predominant trend during much of the eCommerce boom, retailers and brands are now seeking to own their audiences by focusing on acquiring first-party data instead.
Once acquired, it allows marketers to reach customers directly, enabling them to send bespoke emails, texts, or push notifications that are not only personalized, but relevant based on past behaviors and shopping habits. This data is also highly accurate since it’s coming straight from the source. And—here’s the kicker—McKinsey research has found that “personalization most often drives 10 to 15 percent revenue lift, with company-specific lift spanning 5 to 25 percent.”
“First-party data is valuable for brands and customers in both the short and long-term,” Agnew explains. “For brands, it means the ability to provide the customer with value beyond the core product(s) or service(s). For customers, it means getting access to exclusive and useful offers, benefits and content.”
Build brand loyalty with owned marketing channels
Brand loyalty is more important now than ever before. Numerous sources claim that acquiring a new customer is between five and 25 times more expensive than retaining an existing one, and owned channels play a huge role in keeping customers happy. By using a customer’s data to provide them with offers, discounts, content, reminders and updates that they’ll find genuinely valuable, they’ll not only keep coming back to your site when prompted, but will start to do so of their own accord.
And let’s not forget customer lifetime value. Research has found that the chances of selling a product to a new customer are between 5-20%, but for existing customers, it’s 60-70%. Additionally, according to the White House Office of Consumer Affairs, loyal customers are, on average, worth as much as 10 times as much as their initial purchase.
“Owned channels are a fantastic way of engendering loyalty. Bespoke messaging shows your customers that you’re thinking of them and have their best interests at heart,” Agnew says. “If you can give people what they want time and again, be it in the form of content, products or services, why would they look elsewhere?”
While attracting new buyers is always important for growth, marketers and CFOs should team up to upsell, cross-sell, and retain existing customers through owned channel strategies.
For CFOs, the primary benefits of investing in owned marketing channels are:
- First-party data is free, highly accurate, and can be used to target marketing messages at those willing to engage. Higher conversion rates = more revenue.
- It enables marketers to foster loyalty with existing customers. Remember, repeat customers spend 31% more than first-time buyers.
- It gives retailers the chance to build powerful, impactful, long-term relationships with highly engaged shoppers. Research suggests a 5% increase in customer retention rate can increase profit between 25% and 95%, which is far from trivial.
At Wunderkind, we ensure brands harness their owned channels to drive profit. Want to shift revenue to owned channels to drive sustained growth? Get in touch today.