When people hear the term "online marketing," laypersons often imagine a magic box whose workings no one truly understands. Although many online marketing tools are now AI-driven, fortunately, we have a much better insight into how this extensive machinery operates than into the workings of a magic box. We can say that online marketing is more akin to a long-term stock market investment. Of course, it's easy to throw around analogies – if you're curious about the 'why' behind them, read on!
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Why compare online marketing to anything at all?!
You might ask… Analogies are useful because they help us better understand something elusive and unfamiliar by placing it in a more familiar context.
#m1-p#Better understanding leads us to smarter decisions and a holistic perspective.##
That's why we want to delve a bit into the world of stock markets and long-term investments to show that online marketing is far from a mystical activity based on lucky or unlucky coincidences – quite the opposite! We can better understand its operations through the dry numbers and prospects of the stock market.
Let's start with the goals that drive companies when they want to grow. By examining these goals, we can see why this investment is long-term: these objectives can only be achieved through persistent effort, over months or even years.
Brand Building
Earning the trust and loyalty of customers/clients is one of the most challenging tasks in marketing. Persistent content creation, an active online presence, and effective advertising. Anyone who has created social media content for more than 6 months can appreciate the immense effort involved in producing posts, maintaining the attention of existing interested parties, and attracting new ones.
#m1-y#Brand building therefore requires a particularly significant investment, and its return can only be measured indirectly.##
SEO and Content Marketing
Both are known for their effects only being felt months later. However, they differ in that while the SEO activity results can be measured precisely and numerically, for content marketing, we only have indirect indicators available.
Customer/Client Retention
We can acquire customers or clients easily and quickly with a well-targeted online campaign.
The trick is in retention, which requires continuous, long-term marketing activity based on a sales funnel.
The good news is that the customer acquisition and retention process can be automated. After a single, significant investment, we can build a well-measurable customer base that provides high returns and continuously expands in the long term. The proprietary database acquired this way is just the icing on the cake.
Data-driven marketing
If we are proponents of data-driven marketing (and we at Selector certainly are), then the data we've collected over many months and years can provide a massive resource. Of course, who analyzes it makes all the difference...
Data represents experience, and comparing that experience with new online marketing trends points us to the North Star of online marketing, showing us the direction we need to take.
And collecting historical data takes time…
Sustainable Competitiveness
Start-ups or companies operating for 1-2 years typically focus on how to quickly scale up their operations. However, those who fail to at least outline in their strategy what will happen when the company is booming and competitors start multiplying like mushrooms make a mistake. It's worth considering this phase as well, as it can influence decisions made in the initial stages.
The Parallel Between Online Marketing and Stock Market Investment
Now we understand why online marketing should be viewed as a long-term investment. But why and in what ways does our online marketing activity resemble the stock market? Surprisingly, many parallels can be drawn between them, and decision-making processes are similar in both activities.
Investment and Return
Our strategic goals certainly require long-term investment, but if we break down online marketing into its components, there are tools that also work in the short term.
Just think of a 2-month (e.g., pre-Christmas) PPC campaign for a webshop with a larger budget. Such an action can be analyzed independently, and we can clearly compare the invested resources with the return. It's obvious that in this case, we expect a much higher return than with our longer-term investments, but overall, we invest less money.
Risk Management
Similar to the stock market, in online marketing, the higher the investment value and the shorter the investment period, the riskier a particular activity. However, taking on higher risk can generally lead to higher profits.
For example, if we want to launch a new product, we have little data available to run a well-performing campaign from day one. However, our goal with the new product is to dominate the market, so we launch campaigns with a high budget from the outset. This involves significant risk, as we don't know if the target audience, message, platform, campaign type are appropriate, or even if customers will like the new product at all. By the time we have enough data to optimize, we could have already spent millions of forints.
However, if the campaign is successful and the product is excellent, we can expect high returns and significant traffic from the very beginning, and even gain a competitive advantage by having our product talked about everywhere.
Timing
We are well aware of the importance of stock market timing from films depicting the lives of brokers. In the field of PPC, technical terms like bid, bid ceiling, and bidding strategy also originate from the world of stock trading.
Here, CPCs fluctuate depending on the economic and marketing environment at any given moment, and while the system is now automated, technically hundreds of decisions are made every minute about how much we can bid for an ad.
However, timing can also be crucial in SEO and social media communication. For example, we could miss the mark significantly if we start focusing on the "black friday" keyword in mid-October. Keywords with immense competition may require several years of continuous SEO activity.
And with social communication, we can complement PPC campaigns, reinforce the messages used in ads, or even provide keyword ideas to our audience through educational posts.
Change and Adaptation
When we discussed timing, we mentioned that the bidding method fundamentally originated from the stock market world and was adopted by online marketing platforms.
The number and composition of competitors, as well as the broader economic and/or political environment (consider election campaigns, which consistently drive up advertising costs), are constantly in flux.
The moment our ad is eligible to appear, the algorithm instantly assesses who else is bidding in the same "marketplace" as us, how far we are willing to go, and what bidding strategy we are employing. This constant interplay of change and adaptation is what sustains PPC advertising platforms.
In social communication, it's not numbers that compete, but rather the messages themselves. If we react to a competitor's communication, it can impact the entire marketing apparatus (see: Lidl Facebook post).
The foundation of SEO is simply our position relative to competitors, which we aim to improve.
Fundamentally, it is change and adaptation that continuously drive markets, whether we are talking about stock exchanges or marketing-driven companies.
Summary
Online marketing is a complex, often opaque world, but it's not a magic box. By drawing an analogy to the stock market and long-term investments, we can gain better insight, enabling us as business owners or marketing managers to make informed decisions and set more realistic expectations with our partners.
If we pursue our online marketing activities with a well-structured strategy that also considers long-term goals, we can achieve increasingly higher returns with low risk over time. Furthermore, we can build sustainable competitiveness in our rapidly changing world.
#promobox-en#If you also advocate for data-driven marketing, low risk, and stable returns, contact Selector's expert team, who will create a comprehensive online marketing strategy for you!##
