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Whether you call it the “buyer’s journey” or the “sales funnel”, the messaging for each stage needs to be appropriate. Discover what type of messaging and ads work for awareness, consideration, and decision.
Brendan Hughes of Optily shares with us what works and what doesn’t, and how to attribute your sales to the right message and the right channel.
Rich: My guest today is CEO of Optily, a software solution that combines proven ad strategy with innovative technology to enable digital markers to accelerate their e-commerce growth with paid media. He’s worked in e-commerce and digital marketing for over 20 years, he looks really young though. And created Optily to help marketers take back control and eliminate the waste that is baked into digital marketing.
Today we’re going to be getting into how to get the most out of your funnel with Brendan Hughes. Brendan, welcome to the podcast.
Brendan: Thanks, Rich. It’s an honor to be here. Thanks for having me.
Rich: I’ve been doing this also for a while. And in working with markers and entrepreneurs over the years, I’ve discovered that some people think only in funnels, where other people seem to ignore them completely. Further complicating matters, different people seem to define funnels differently. So let’s start with, Brendan, how do you define funnels?
Brendan: So when I think about a funnel, I think about how do consumers purchase, and then what’s the role of marketing and supporting people through the purchase journey. So most e-commerce direct to consumer brands where typically our clients are focused on the bottom of the funnel, and they don’t even think about funnels to be honest. They’re spending their time and they’re engaged in what we would call short-term ROI kind of metrics. So, ROAS, CAC – so return on ad spend, customer acquisition cost, cost per click, et cetera.
There’s really interesting work in the marketing effectiveness world. So from Les Binet and Peter Field, et cetera, and they talk about actually spending maybe 60% of your budget in this brand awareness, and long-term metrics, and long-term brand building. I think, and there’s a lot of value in what they say but try to convince a digital native company to spend that kind of money and everyone’s trying to hit kind of some short-term goals.
So the way I have the conversation with people is, well let’s not talk about funnels per se, but let’s try and understand how consumers purchase. And regardless of whether a customer purchases in an instance, in a single session, or it’s an impulse buy, or maybe it takes kind of weeks or months to purchase. All the behavioral science will suggest that there’s at least three major stages that consumers pass through.
The first being becoming self-aware of a problem that they want to solve, or a need that they want to fulfill, or a desire that they want to satisfy. And without that self-awareness is conscious or unconscious, it’s unlikely a purchase will happen.
And once that self-awareness happens, then the next stage that we tend to go through as consumers is informing our choice. So understanding our options and looking at the information that’s available to us, researching and evaluation. And even again if we only see one product we have some reference points in our mind that we can compare against; the price sounds reasonable, the quality looks good. So we have reference points even if we’re not actively searching around.
And then the final stage is the purchase decision. And there are trigger events that will trigger that. And it’s typically, why should I purchase this now? So things like urgency or scarcity or kind of something special, some offer that kind of carries me across the line.
And the role of advertising, because we’re involved in paid media in advertising in particular, is really to compliment your owned and operated activities are the things that you’re doing to nurture the customer to the purchase journey. And those other things might be your on-site optimization, your CRM or your email marketing, your text outreach. And all that advertising is doing is working in parallel with those activities for when people are not on your site, when they’re not engaged with your email or you don’t have their email address, they’re on other places, they’re on publisher websites or they’re on Facebook or Instagram or Snapchat or Tik ToK or Google or YouTube.
And that’s the way we think about it. So we see three broad stages of the funnel of how we nurture people through the purchase journey. And we do then talk about a funnel because there’s the economics of it, right? Which means you go very broad at the top because it’s very cost-effective to do that. And then at the bottom, you’re very narrow, because you’re really talking to people who have displayed high purchase intent, are ready to purchase, and the cost per action is much greater. But it’s worth it because you know, they’re about to purchase.
Rich: Brendan, I like your language around this. Because so often when we hear funnels, there’s an image of just trying to make sausage out of people and just pushing people through. And this seems to be much more supportive of what would be a kind of chaotic customer journey anyway. And all we’re trying to do is help point them in the right direction, get them where they need to be going. And hopefully it’s with our company, our product our offering.
So as you’re talking to people, and obviously funnel does become part of the language whether using that exact word or not, what do you think about some of the pros or cons to using a funnel first approach to marketing? Like, are there some advantages by using this model, and are there some things we might miss or not pay attention to if we’re using this model as well?
Brendan: Yeah. So I think there’s three reasons in my mind. So the first we’ve talked about, which is this is how people operate. So if we can support people and consumers in the way that they’re thinking at the different stages of funding, so the creative and the message is aligned with how people are thinking. The audience tactics that we deploy, how much we’re willing to invest in spend. So that’s understanding how people are behaving and what we need to do, is different at the different stages of the funnel.
There’s an overall structure piece, because it helps people think about how to structure campaigns within a single channel or platform, and then across channels. So some channels might be better at different stages of the funnel, some places might be better, et cetera. So to structure a piece. And then the metrics, right? So we try and encourage people to that yes, you will have an overall return on ad spend metric or a customer acquisition metric. But you’ve got to not be brutal about customer acquisition costs at the top of the funnel. You’re measuring something different because you’re doing something different, and you’re telling the ad platforms and the auctions you’re trying to achieve something different here.
I’ll give you an example of a client. A new client is coming on board with us, and they had a funnel structure. They had a top of funnel campaign, and they were labeled as such, they mid-funnel campaigns, and bottom of funnel. But every campaign had a conversion goal, so a website conversion goal. So just because you name it something different doesn’t mean it’s going to work like a funnel, right? Measurement is key.
Rich: One of the things that I heard you say is just the idea of there are these different stages within the funnel, and the ads need to support each stage. I think a lot of people when they hear about digital ads, all they’re thinking about is driving people to a landing page, like you said, for that conversion. So what’s wrong with their approach, and how do we have a healthier, more sustainable approach to thinking about our ads at those three levels or whatever the model is that you use it optimally?
Brendan: Yep. So driving people to your website is a key goal when at a certain stage of the funnel. And let’s say at the top of the funnel we don’t try and drive people to our website. Some we make them swipe up or we make the link available. But it’s quite a costly activity to achieve, let’s say at a mid-funnel state. So what we would tend to do at the upper end of the funnel, we’d see a lot of successful e-commerce brands doing is using video. So story format full screen video at the top of the funnel in order to build audiences, right?
So why are they doing that? So one at the top of the funnel, the engagement is much more emotional. At the bottom of the funnel we’re in rational mode. At the top of the funnel, we’re trying to inspire people with how our brand, our brand story, our product solves a problem or satisfies the desire. So it’s a much more emotional engagement. And so video is probably the best way to tell stories and to engage emotionally with somebody. So we typically use video.
We don’t tend to see a lot of e-commerce brands doing very broad awareness and reach. We kind of leave that to other companies to do, you know. And maybe what we do is we’re coming in… my team says, “Brendan, top of funnel is not what we’re talking about. We’re talking about the lower end of the top of the funnel.” So we’re disrupting the customer journey. We’re asking the platforms to help us to find people who are in the market for a product, but not necessarily purchasing.
So maybe if I give you an example. So we have one a direct consumer client who sells dog collars for fleas and ticks. So not a terribly exciting product. But at the top of the funnel, the most effective formats that they use are full screen video with a cute puppy playing in the garden, and then maybe having an itch or a scratch, like all puppies do especially this time of year. And what we get with that is massive engagement from people who are pet owners. Because the internet is built on cute puppies and kittens. And yes, the product is in there, but the hero is not the product. The hero is the lifestyle or the human story that we’re trying to tell.
And what we do at that then is we use that to build an audience, Because a very cost-effective way to build audiences are people who watch our full 15 second or a full 30 second kind of video, typically a 15 second video. And we ignore the rest. We ignore people who just kind of swipe through in one or two seconds. That’s not an indicator of interest or engagement in our store.
Out of the next stage of the funnel…
Rich: So let me just pause you for a second here, Brandan. Because I want to make sure, not everybody may be as experienced as you with digital ads. So if we’re using a platform like Facebook or possibly YouTube, or really any of these, very often these platforms are looking at a user behavior. And so if they stop on that ad, they watch the whole ad, they kind of tag that person. And now you can create an audience around the people who watched the whole thing. So now you can take that smaller audience who’s willing to watch 15 seconds of a dog scratching his ears and move them to mid-funnel advertising with a different approach. Am I correct there?
Brendan: Yes, that’s exactly right.
Rich: Perfect. So let’s all move down to that mid-range of the funnel right now. And tell us about the kind of ads or the approaches you might recommend for that part.
Brendan Yeah. So in the mid-range of the funnel, then what we’re typically switching to is maybe longer form video. And maybe in particular, in something like Facebook or instant carousel ads.
So what a carousel ad is, maybe I sometimes ask people to think about it like this is the storyboard for a movie. So each frame, so it’s a still frame, and you can have between four and 10 frames. And each frame the user swipes kind of from right to left on the frame, so they don’t see all 10 frames at one go. And what that allows you to do is within the limited space of the frame of an ad, you can have multiple messages kind of coming through. And what we typically see at this stage of the funnel, we’re trying to educate people as to why our products, the product we gave a hint to at the earlier stage of the funnel, why this one is better than others that they might be looking at. And so it’s features and benefits, and value adds are maybe our delivery proposition. So what’s different and better about what we’re selling and what we’re promoting than something else you might be looking at.
And at this stage, we have in mind that somebody might not yet have gone to our website. So they’re still in the app platforms doing whatever they’re doing, but we know they have some level of interest. And now we’re trying to educate them with a little bit more information about why. And again, some of those people will then click through and buy. And we might have what we’ll be sending them through to is our landing page. So an optimized landing page with possibly the call to action is ‘learn more’. So we’re trying to drive high volumes of engaged traffic. I’m still not expecting massive volumes of conversion at this stage, but yet we would know we would get conversion.
So for example, If we are getting a return on ad spend of let’s say 10 at the lower end that the funds are for every $1 I spend on ads, I can attribute $10 of revenue. At this stage of the funnel we might be expecting to be three and four. So we will get sales. But really, we’re driving traffic. And the other thing we’re doing is where we’re jumping into kind of search, right. And we’re jumping into broader category searches in the search engines, so we’re not just into social platforms, we’re now starting to use other platforms.
And at the lower end of the funnel, there’s a mix of audiences here, right? So, we’re nurturing the people who have been to our website who visited our landing page, maybe looked at a product or maybe even added a product to the basket, but not converted. So we’re excluding people who’ve converted from this stage of the funnel and we’re saying who’s been on our site and who’s showing high purchase intent but hasn’t converted. And now we’re going back to those and it’s a much smaller subset.
And what we do here, our tactics are quite different here, because we are now in rational mode. So we know people are engaged in our product and we know they’ve shown interest, but they’re not convinced. So now we have to give them something to get them across the line. And here we often see the use of concepts such as scarcity and urgency and something special. Very strong offers to get people across the line. “Here’s an offer that’s available today”, “Here’s a discount code”, “Click here before midnight tonight”.
We also see at this stage of the funnel reactivation activities, so previous customers. I have a new product or a new offer or expect them to have purchased again now. So we put them into this stage of the funnel because we don’t need to educate them. We don’t need to generate awareness, we know they like our product. Or reactivating inactive customers. So people who haven’t purchased from you in more than three months and they should have, and I’m already to expect them to, I’ve got a special offer for them or something different for them.
And what we see is here the format of the ad can be quite different and can look quite uninspiring, because it’s got the product up front and center, a strong reminder of the product. It might have some splashes on it in terms of special offers and discounts, and the ‘shop now’ button will be the prominent call to action, and it’ll be a very functional ad. And we probably won’t have it in the full video story format, it’ll probably be in the newsfeed where people are maybe going through a little bit slower. So we’ll be optimizing the different placements and opportunities.
We’ll also be heavily reliant on dynamic product ads and on our catalog ads in the Google merchant center. And one of the benefits that we see when we’ve done some of the more mid and upper funnel work is that, yes, people will shop around, they would go to the search engines, and they’ll be looking for flea collars. But because they have now a familiarity with my brand and who I am and what I’m about, then what we start to see is that the performance of the lower funnel in these more competitive spaces where you’re actually competing with very little opportunity to difference. So you’re only really able to differentiate on price, maybe on a delivery proposition, and then maybe your brand name. Then we start to see those environments perform because we’ve put a little bit of work in building awareness and engagement with our brand and further up the funnel.
Rich: Makes a lot of sense. So we’re talking about a lot of different stages of the funnel, a lot of different platforms. You had mentioned metrics earlier. So talk to me a little bit about attribution. How do we know what are the platforms that are working? And I understand this is kind of where Optily puts its focus, understanding attribution and perhaps increasing or decreasing ad spend in certain places. So can you give me a little bit more information?
Brendan: Yeah. So, there’s a few problems with attribution, right? So one of them, for me, it feels like I’m like waking up with a hangover, right? So we’ve become used to blaming the last shot that we had last night, and we say it was the tequila shot that I had at 2:00 AM that give me the hangover. And as marketing scientists, we know that doesn’t work, it doesn’t make sense. It’s a blend of all the things that might’ve happened on the purchase journey, all the drinks I had the previous night that led to this particularly bad hangover. I’m Irish so I’ve got to talk about booze.
So one of the things we need to do is to decouple that. And then when we’re across channel, particularly with the increasing restrictions on the very channel, particularly in the walled gardens around view through conversion. So what a view through conversion is, for people who might not understand that, is somebody saw an ad but didn’t click on it. And then within a period of time, maybe it’s one day or seven days they made a purchase. Then the ad platform will very often take credit for that sale. And that view to conversion attribution solutions, so such as Google analytics being obviously the most popular one, they struggle to really kind of attribute sales to what’s happening in the platforms, especially when it doesn’t be no click data kind of coming through.
So the approach that, we consolidate data from the ad platforms. So think of your Facebook ads and Google ads and all the data that’s in there. And together with Google analysts, and what’s happening in Shopify or WooCommerce platform, we start to model things out. Because if we just relied on an attribution solution, like Google analytics, and just have last click kind of data, or maybe some element of some conversion path data but based on clicks only, if we only rely on the ad platforms then there’s two problems. One, there’ll be view through conversion data in there. And two, the ad platforms don’t see what other things consumers did. So yes, they saw an ad in the Google world and YouTube maybe, but then maybe they clicked on an ad in Facebook, and they don’t talk to each other.
So the approach that we’ve developed and that our algorithms drive, is modeling across the different ad platforms, together with analytics, to say if I invest more in some of this upper funnel – and it might be viewed to activity or video activity – it will deliver more downstream conversion activity. So it will deliver more clicks to my website of highly engaged traffic, which will ultimately lead to more conversions. And for us, that’s been the most effective way to try and address this. And we haven’t seen a solution, because even if you install some other JavaScript or pixel tracking onto your site from another attribution solution, we still have the problem of the upper funnel and really understanding in real time.
So what we’re doing is predictive modeling to understand the correlation between investment at different stages of the funnel, and then what actually drives sales. And maybe in terms of measurement, because we’re also measuring different things at different stages of the funnel. And as an advertiser, we have a very defined strategy that we’re nurturing people through the funnel. So we’re then able to kind of get a handle of the audience that we built at the upper end of the funnel. How effective were we at taking them through that? So that’s how we think about it.
At the upper end of the funnel, we’re typically measuring and comparing across different platforms the level of engagement. For example with video views. So what’s the cost to get somebody to watch 100% of my 15 second video or 100% percent of my 30 second video. And what’s the click through rate. So am I getting a higher click-through rate on one channel versus another channel. And do those click-throughs ultimately lead to revenue in the other stage of the funnel. I’m not thinking revenue but am I getting higher propensities from either of these channels or these audiences or these creatives. And we’re constantly comparing all of those different metrics to see where I should be investing more of my time and my money to get a better return.
In mid-funnel, sometimes we call them traffic campaigns, which oversimplifies it. We’re trying to educate an audience in order to drive them to the website. So, you know, like cost per click. Where can I get the highest volume at the lowest cost, but that also has a propensity to convert? Again, I’m not trying to drive conversions at this point. What I’m really trying to do is drive engaged traffic.
So you might look at things like session length, so they’re staying longer on the site or conversion rates ultimately, and then revenue as well. And then at the bottom of the funnel, we’re back into ROAS, return on ad spend. So for every $1 I spend, how much am I generating? But we’re also introducing parameters such as bounce rates and conversion rates. Because until I generate revenue, I’m going to have smaller volumes of that data point. So I want to know if the traffic I’m driving from these particular campaigns or audiences or creative sets, are they demonstrating propensities to convert.
So that’s how we kind of model it. And I guess in our approach, in our software we create a funnel strategy. So connect your ad accounts and our algorithms will automatically suggest, these campaigns are upper funnel, these are middle funnel, lower funnel. And then it starts to work from there. And the reason we’ve done that is to answer the question that we often get asked is, how do I know I’m not just throwing spaghetti at the wall. Because that’s the problem I think that we’re trying to solve at least, especially when advertising across multiple channels.
Rich: And that makes a lot of sense. If I’m understanding you correctly, after the software’s had a chance to kind of pay attention to what’s going on, is that we should be getting better advice on what kind of ads, and more importantly what kind of what channels we should be using at each of those stages along the way. Because we’re starting to see through pathways that ultimately end in positive results, or at least enough of them that we’re getting continually improved results.
And that’s the goal here. It’s not to know whether the hangover came from the tequila or the six whiskeys, but it’s to know which got us to which pub so at the end of the night we ended up, whatever it may be.
Alright. Awesome. Brendan, this has been great. If people want to learn more about your software or want to learn more about you, where can they find you?
Brendan: They can find us on optily.com or finally follow me on Twitter at @BrendanHughes. And yeah. So listen, Rich, this has been great. Lovely talking to you and thanks for the time and the opportunity.
Rich: Yeah, this has been fantastic. I really appreciate you coming by. Definitely some great insight into how to start approaching your funnels. And thanks so much for your expertise today.
Brendan: Great.
Show Notes:
Brendan Hughes loves helping businesses take the mystery out of their sales funnels. Find out how Optily is helping businesses save time & money by optimizing their sales funnels. And follow him on Twitter and be sure to let him know you heard him on this podcast!
Rich Brooks is the President of flyte new media, a web design & digital marketing agency in Portland, Maine, and founder of the Agents of Change. He’s passionate about helping small businesses grow online and has put his 20+ years of experience into the book, The Lead Machine: The Small Business Guide to Digital Marketing.