The Branding Coefficient (BrandCo)

The Branding Coefficient (BrandCo)

The only way you can really optimize an online business is work against a single metric. That metric should be the one your business is judged by, whether it is leads, downloads, sales, etc.

I had a very interesting discussion this week with an online retailer. This retailer was concerned about the intrinsic tension between performance based marketing and branding.

Generally, performance based marketers cringe at the mention of the word “brand”. They care about hard conversions, returns on investment and cold cash.

The brand fanatic has a vision; they see where the company is headed. They see that in order to capture the vision they can’t wallow in mud too much. They cannot sacrifice their brand for one off sales. They want to build a relationship, nurture a community and build brand equity.

Being a like  fan junkie will kill your business

The Likeoholic by Assaf Hanuka: Being a like fan junkie will kill your business

So how does one reconcile the brand with the science of online marketing? Well, I thought it over and decided to call it: “the branding coefficient” or “brandco”. This coefficient is something for the brand owner to decide on. It should be a percent. This percent is how much of pure performance marketing they are willing to sacrifice for the brand. So while the performance based marketer will naturally aim for positive ROI, their results should be judged by an ROI coefficient. This might represent 10% of their ROI, so if a campaign is 95% ROI (so a 5% loss) when adding the brandco the campaign now swings into a positive ROI of 105% (whether or not to keep that campaign is another question entirely).

Additional metrics that must be considered with the brandco are: email signups (relationship building), time on site (indicators of engagement), bounce rate (relevance) and social sharing (enthusiasm, endorsement). Each one of these metrics can comprise the brandco. This helps avoid the undoing of an online business: pure intuition based decision making.

Online Marketing Risk Management

Online Marketing Risk Management

One of the most interesting delimitations of jobs in the modern day world is the concept of risk. Different jobs have different levels of risk:

  • Bankers – they handle other peoples money, no risk
  • Entrepreneurs – they take the risk and keep the money
  • Artists \ inventors – no risk, no revenue – but much gratification

All vocations can be broken down based on the concept of risk. Today I was reminded of that concept twice. First, when I read an interview with Nissim Taleb, the author of Black Swan. A book in which he explains the force of events and crisis that can upset large systems – mainly economic ones.  Basically going back to linking chaos theory with Marx’s critique of capitalism being prone to periodic crisis. The second instance was when I was watching The Dragons Layer – which is the Canadian format of an entrepreneur pitching some investors. It reminded me of an early and very sad episode of the American equivalent I saw many years back.

But with business being all about risk management (as entrepreneurs we take risk and work towards rewards), the questions is – what is too much risk? In the case of online marketing the answer is very clear. If you are working towards a single metric: profits, that is the end all be all of your efforts.

That is why performance based online marketing, and in our case lead generation, make a lot of sense. You can set a budget to test, run a campaign and gauge the outputs very easily. Using such methods of performance based marketing as part of the marketing mix, is very helpful. It helps test the market early, cost effectively and an affordable manner. This helps avoiding sinking too much resources into a bad product or campaign. Which is the (very unfortunate) case of the video shown above.