Marketing challenges for companies depending on where they are in the cycle
- Market Maturity and Digital Marketing
- What is Market Maturity?
- Crossing the Chasm
- How Search Changes in Mature Markets
- How Click Through Rates Can Change Based on the Market
- How to Estimate Market Maturity
- Strategies for Different Phases of the Market Cycle
- Is PPC Irrelevant Early in a Market’s Cycle?
- B2B Market Maturity
- How to Build Awareness
- The Importance of Content in the Pre-Chasm Stage
Aiden: Welcome to another edition of the SEMrush show. We are in “marketing challenges for companies depending on where they are in the cycle”. We're joined by Črt Podlogar and Tim Jensen, who is going to be talking to us for the next hour about all things, maturity curve and indeed a strong dash of PPC in there as well. Search is still very much present in this particular webinar.
Aiden: Črt, would you care to introduce yourself, my friend?
Črt: Welcome to everybody from my side as well. I've been working in digital for about 12 years, mostly eCommerce experience and these days I mostly try to analyze performance and how digital affects companies businesses and their business outcomes. We try to figure out what's wrong, why it's wrong, how we can fix it.
Aiden: Tim, of course, is PPC manager at Clix Marketing and is an interesting chap, himself.
Tim: I'm Tim Jensen, I work for Clix Marketing here in the U.S. I'm based out of Albany, New York. We specialize specifically in PPC so anything search, display, social, anything paid. Been in the industry about 10 years or so.
Aiden: We are going to pass it over to Črt, and Črt is going to talk to you, do a little bit of a keynote of marketing challenges in the growth cycle. That'll sort of be about 15, 20 minutes or so.
We're going to be talking quite a bit about market maturity here. Naturally, businesses are all in different stages of maturity one way or another. We're thinking about obviously how this merges, how this moves across content, across SEO, across the strategy, depending of course at what stage your business might be in this maturity cycle. Črt please take it away.
Market Maturity and Digital Marketing
Črt: As we've already said, what we will be talking about is marketing maturity and digital marketing. For all those who aren't that familiar with market maturity and how it impacts digital marketing, really it's how brands and products grow old and sometimes die.
It happens to a lot of them that are some cases and some industries that really defy the concept, or defy the natural cycle of things. But one of the things that how I came about trying to understand this market maturity concept and how it impacts digital marketing is because I used to focus primarily on performance.
It was always about ROI, it was always about return on ads spent, it was always about the cost per lead, cost per clicks and so on.
We try to look at the bigger picture of what's happening and that's how we came to the concept of marketing maturity and that's when we started integrating into the analysis, into digital advertising accommodations we do, and the concepts and the projects that we do with the clients.
What is Market Maturity?
Črt: Market maturity basically is the concept of a product, a category; maybe it's a smartphone, a TV: from the moment they existed until the end of their lifecycle, how do they behave?
On the screen, you can see five distinct stages that most of the products in most of the categories go through. They go through the introduction phase, growth, maturity, saturation and then possible development. Not all things die at the end of their lifecycle.
Some of them start contracting but it's a very, very long not necessarily painful process where there are less and less people using it, there is less and less demand. This can happen over years or sometimes it can happen over a decade, so it can be very slow. In some cases, some products and industries find renewed growth.
When we first started talking about market maturity concepts and where they can be applied as in digital and eCommerce, one thing that always stood out was sales of televisions. Because they don't seem to have an end of a cycle; they just keep persisting and sales are relatively stable or they're growing.
The idea of renewed growth under the possible development bracket of market maturity is that some products change in pivots. They become better, they start using different technologies. Just like you used to have that old huge TV that's eventually matured into the LCD concept and into 4K HDR concept.
That's one of the examples where market maturity concept behaves slightly differently, but the idea always is that in the introduction phase not a lot of people understand what it is that you're selling or what it is that you're producing if you're a manufacturer.
It's a new product in the works. Not a lot of people know it, not a lot of people understand it, nobody really wants it so you have very different challenges in the beginning of the growth cycle and the beginning of the market maturity cycle than you have in the end.
In the phase of growth everything starts happening here, you know, competition starts happening. There is more interest, there are more searchers, there is more revenue coming.
You have more options available for advertising and so on until it hits the stage of maturity and saturation. That's when most people have it; most people want it. There is a couple of improved versions there's a lot of different competing brands, there's a lot of different takes on the concept if we're talking about products.
And saturation is towards the very end where the fight is the hardest, where usually it's the price that matters the most, where there's a lot of competition. In the maturity and saturation phase, some very strange things start happening to what we know and understand as let's say classic concept and classic numbers when it comes to search marketing, when it comes to click-through rates and organic search, when it comes to search volumes and so on.
You need to understand what kind of audience you are talking to in different stages of the cycle. In the introduction phase, we're talking about innovators, they're willing to pay more, they're early adopters they're usually very tech-savvy, and they want to be the first that are using something.
Talking to those kinds of people, creating content for that kind of people is going to be something completely different than when we're talking about people who will be late to the party, who will be the last people to adapt or to adopt a certain technology or certain concepts, services. You have different challenges when it comes to different stages.
Prices are most favorable in the introduction phases when people are willing to pay more for revolutionary new concepts and there is not a lot of competition yet that will be eating away at your price. Of course in the earlier stages, you have low sales, low competition and your business focus needs to be on awareness. Then it kind of slowly moves towards growth, and then it moves towards market share where you're fighting with the rest of the competitors for a mature market.
In the end, it's all about customer retention because there is just so many competitors and not so many new customers left, not so much new business opportunity or new growth opportunity left on the market.
Crossing the Chasm
One very big divide that you need to take into consideration when it comes to market maturity. Pre-chasm and post-chasm. So what does that mean? When you have a market maturity concept, the stage where you're brand new to the market and the stage where you're just starting to grow the market: that's pre-chasm.
Usually, in the chasm, two things will happen with new concepts with new products with new subscription services and ideas. Either they are going to fail, they will not be profitable and the world will forget about them, or what's going to happen is they will become popular and they will become part of the popular market where most of the people will start using it if it makes sense for them to use.
The pre-chasm and the post-chasm difference is the one that you really need to understand, because in the pre-chasm market it's all about trying to explain to people what it is that you are producing, what it is that you're selling, what kind of a problem your product or service is solving and why they actually need it.
It needs to be much more descriptive than in the post-chasm world. In the post-chasm world, it's all about USP, it's all about how we're better or different than the competitors. Then as we get to the late majority and laggers, the price becomes more and more important. The chasm and whether or not you're before it or after it with your product in the industry in which you are is usually the defining factor and you really need to pay attention to.
Early market is ideal for content creation, so if you plan to do a content strategy usually pre-chasm market is the one where it can have the most benefit. Everybody does blogs, everybody does content and there are great impacts and great benefits coming from it in terms of your organic rankings, in terms of how it affects your SEO.
It drives organic traffic, that it's good for the user experience that you give on customers and people useful information. In pre-chasm, it gives you a very specific opportunity where you can actually shape how the market is going to look like, how the market is going to behave, and for example also how search behavior is going to work.
One of the biggest challenges that I personally didn't expect or fully understand and appreciate until my first analysis came through on market maturity is that post-chasm market becomes highly competitive.
When I say highly competitive I mean it changes the face of organic search. It changes the nature of how people behave in organic search, and you can have very long term fundamental impact on how effective your other digital channels are going to be. And we came about this for the first time when we were trying to solve a problem for a client.
How Search Changes in Mature Markets
Let me tell you a little bit about the case. The first thing we looked at is something that we now always try to look at when we're discussing market maturity, and that is generic keyword diversity index. We look at the number of different keywords that are used in a specific month to search for the same product and concept, and the idea is that the more mature the market is the less different phrases people are going to use.
Today we all talk about smartphones. First, there were different phones and then it was screen phones, touch phones, phones with touch screens and so on. A lot more descriptive language was being used. Then the share of those keywords that are descriptive rather than specific, and then we also look at the share of branded keywords.
How many people still look for a generic concept, "I need a smartphone." And how many people look for a specific smartphone like Huawei, or Apple smartphone? How many people go straight to a specific retailer like Orange because they know that's where they will find their smartphone and they don't even use generic search numbers anymore.
On the left, you see month number one, and you can see that generic keyword diversity index was really high, which means that mostly people were looking for generic keywords, not brands. People were using a lot of different keywords that were descriptive, that had multiple keywords inside one search query and so on.
The new competitor then came into the market, and you can see that nothing really dramatic was happening. Month number two is when they started their massive branding investment that was online, offline. They really made an effort to push for the market, and you can see that immediately the generic keyword diversity index started dropping. The drop after that was quite immense, and it's still dropping as far as we can measure it.
And the scary thing for a lot of people that are doing SEO, and the scary thing that a lot of us never think about is, "What's going to happen to generic keywords, and how people are going to look for products?"
Either they converted into direct traffic to the website of this brand, they went into the physical stores of the brand, or they simply typed in the name of the brand into search.
The space that all the other brands were using for advertising for growth for revenue for performance marketing started shrinking dramatically at a very fast pace one this competitor entered the market, and this is a typical example of what can happen in a very mature market.
And this is the PLA, so product listing ads, for those of you that you don't know. This is the PLA cost index, so we took the cheapest cost per click average of the PLAs that this client was using. At the beginning of the analysis and this is the growth index that happened, and you can see that it started growing quite quickly after the generic keyword index begins dropping.
Because there were less and less searches because there was less potential. Still, a lot of competition; the costs simply started going up and the effectiveness of these PLAs started going down. Eventually, ROI simply wasn't positive anymore, so the client had to abandon the effort.
What's going to happen based on our experience to search behavior as the market matures, it's a very safe bet that eventually you're going to run into this problem, is that generic search volume will decrease, branded search volume is going to increase as a replacement. There is usually a clear market brand leader or at least a couple of brand leaders that are going to be established. They take over the majority of generic searches and other brands as well.
The cost of paid search and PLAs is going to go up, and the key differentiation becomes the price. Whoever is the cheapest, or whoever is the strongest in terms of branding is the one that is going to take the revenue.
How Click Through Rates Can Change Based on the Market
One important thing is to keep an eye on your organic click-through rates, which I think is something that a lot of people don't think about when they're doing organic search SEO optimization. Everybody's obsessed with rankings because they assume a specific rank is going to bring you a specific click-through rate on Google, when in fact it isn't always the case.
This is one example of how organic click-through rates behave depending on the type of query. In the early markets, queries are usually information, people are trying to understand something, they're trying to learn about something.
Navigational click-through rate is when people are trying to figure out where they can get something, where to buy something, how to get instructions and things like that. Don't always expect that if you're number one on organic rankings you're going to have a 20 to 25 percent click-through rate because very often you might be disappointed.
More importantly, how does market maturity impact it? This is two clients that are in relatively early market, just pre-chasm. And their click-through rates on organics are behaving how we would have expected. First three positions are the best then it drops quite dramatically.
This is another example that's kind of towards late majority. You can see that the effectiveness of the click-through rate is dropping on organic already. Why? Because there are more competitors, there is more content, because there is already more branded searches. We're talking about generic keywords here only, and because there is a lot more advertising as the market matures compares to the pre-chasm market.
This is an example of a couple of cases that are in a totally mature market, sort of saturated market. You can see that the (SERP) position has practically no impact on click-through rate. On saturated late markets, mature markets, number one position doesn't necessarily mean that much traffic so this is something that you need to take into account.
If you start suddenly losing your organic traffic after several years of successful SEO strategies, you need to think about the market maturity because that might be the reason why it's happening, not necessarily because something's gone wrong with your SEO optimization.
How to Estimate Market Maturity
How to estimate market maturity? You need to look at the generic keyword diversity, that's usually the best way to tell. You need to find your direct competitors and you need to estimate the brand strength because on mature markets there's a lot of very strong brands and unless you are the leader on the market you're going to be one of the smaller ones.
You need to estimate the quantity of non-sales content related to your product. As the market matures, there's a lot of media, a lot of bloggers, a lot of influencers. There's a lot of people generating a lot of content about it.
Early markets typically don't have as much content as mature markets. You can also check for competing advertisers on paid search because on mature markets there will always be more competitors than you can see in your audience insights in Google Ads for example.
Strategies for Different Phases of the Market Cycle
The last thing I want to briefly touch. Early market, you need to focus on content creation and you need to focus on controlling the narrative and the keyword formation of the clients because it's going to be massively beneficial for your later months or years of advertising, and you need to invest into outreach marketing.
You need to do display network, you need to do Facebook, YouTube, influencers, other ways of trying to explain to people, "We're here, we have a product, you have a problem, our product solves that problem." Because that's the only way how you're actually going to gain traction on the market.
In growing markets, you need to dominate organic and paid search market because that's where the money is, and that's where you can gain the market share. You need to continue producing content and think about clear USPs because now you're moving towards what most people are familiar with.
In mature markets, I've seen that in many cases a lot of experienced companies begin de-investing from all expensive traffic generators because it only eats away at their profitability.
One thing that most of these companies focus on is in growing their branded search volume on the media and direct traffic. They would rather invest in something that creates more brand searches and more direct traffic on the mid-term rather than going full-on performance and fighting for whatever's left of generic keywords on search for example.
And in saturated markets, as much as I hate to say it, my recommendation would always be sell pivot or move out of the market.
You need to separate your long term and short term strategy, last thing. Performance strategy and long term strategy are very different because performance strategies focus on producing short term results, bottom of the funnel ROI, CPA and stuff like that. The long-term strategy is about creating an environment and conditions more than it is about creating results, that's why it's more focused on branding, that's why it's more focused on long term content and strategy and concepts.
And you need to have both because otherwise, you are simply going to miss out on all of the important signals that the market is telling you about its maturity and you are going to miss out on some of the things you can do pre-chasm that are going to help you post-chasm when you need them the most.
Is PPC Irrelevant Early in a Market’s Cycle?
Aiden: Črt mentioned in his talk, this idea that content is particularly important or particularly lucrative at the beginning of the journey, do you think then from a PPC perspective its role is diminished then if content is so particularly important at that stage? What do you think?
Tim: No, I wouldn't say so, I would just say the PPC platform that you're using at that stage changes. I would look at platforms like Facebook for example where you might have built a demographic of the people who might be interested in your product, maybe some personas that you can target and then target them, get them to those content pieces, build some retargeting audiences that you can re-target later.
Quora is another platform that I've been playing with a lot lately. A lot of people asking some really specific questions on there. You might browse through those questions, there's a lot of different types of targeting you can do there, topic, question targeting, they're rolling out a lot of features. Again, platforms where you can reach an audience even if they're not necessarily searching.
Aiden: Črt mentioned in his presentation that performance strategy and long term strategies are almost in opposition to some degree. To some degree, perhaps you'll clarify that for me. Are they so distant from one another that they should be thought of as separate or is there something that we can do to connect the dots a little bit?
Tim: I think everything is going to connect together at some point, but again you can't think of strategy as in a silo. Anything you do on a paid acquisition ad has to be planned together with anything that you're doing, building at an organic end. Obviously, if you're going all in on one channel then that's a mistake. You kind of need to emphasize different channels at different stages, but I do think it all eventually ties together.
Aiden: Cool, thank you, Tim. Marco's asking, “you mentioned influencers, is this not the old method, is this not the old approach to growth? Could you clarify?”
Črt: Sometimes content is a great way to try to qualify people and then drive sales onward with your marketing. Why I love influencers is because there's a lot of influencers out there that have a very good idea of who their audience is and in many cases, they have very specific audiences.
There is a couple of very specific influencers that have a huge hold on B2B tech guys, so IT managers, people working IT, people who love to implement new process optimizations in companies. They have their own dedicated influencers that they follow, so if you can get in touch with this kind of influencers if you can get content out there through them, I think it's going to help you reach the right audience.
What I'll always tell my clients is, don't look at influencers as something in on itself. Always have a follow out plan. Whenever we're doing influencers we try to tag the traffic coming from those influencers with analytics, with FaceBook pixels, with LinkedIn pixels, and then we try to look for lookalike audiences and stuff.
The influencer for us is just kind of a graduation level, one qualification of the potential audience and then we try to expand on this as much as possible.
B2B Market Maturity
Aiden: Črt is it the same across B2B and B2C in your experience? I guess measuring this maturity, and making these decisions around I guess the dynamics of paid.
Črt: One specific thing that I need to warn B2B people about in the market maturity concept is, in B2B you need to be careful about how you estimate where your market is. One mistake that I've made a couple of times is, I've looked into search volumes, I've looked at how generic they were, the diversity index and so on, I've looked at the competitors and I figured, "Okay this must be a pre-chasm market because there's just not a lot of stuff happening there."
But coming from originally an eCommerce experience I overestimated. The problem in B2B is that people who will be the most active in terms of generating content, in terms of looking for content, they're usually key decision makers and key influencers within companies.
Even if you have a product that's fit for all of the companies on the planet, there will be two or three people in each of those companies that will actually be interested in the concept or looking for stuff. It's very easy to think, "Okay this is a pre-chasm market because there's not a lot of stuff happening."
We always try to estimate in the beginning with clients or with companies is what's the total attainable market, how many companies do you think globally, or in the market where you're at, are actually going to be interested in the product. Then you try to estimate digital activities compared to that number rather than compared to numbers you are familiar with or some generic keyword search volumes from other industries because they might be irrelevant.
How to Build Awareness
Aiden: At the very early stages when maybe some of the people are in the market or not necessarily aware of the product, what it does, what its features are or indeed that they even need it. How can we build awareness there, particularly we're thinking about things like search?
Tim: You definitely want to go back to the problem-solution model where there might be a problem that someone doesn't even know that they have. You can speak to that in, it can be a display ad, a social ad, link someone to a white paper where you can explain. That's kind of an approach you can take when people aren't necessarily searching for a solution but it does exist or if it is something like that's in the early stages where it doesn't exist.
Aiden: And how would this work, let's say when people are a little bit more aware of the product and competitors are starting to spring up. Perhaps the market is not mature yet, per the model that Črt ran us through. How do we start to draw attention to your brand versus your competitors? Does competitor analysis come into play? Keyword research?
Tim: Definitely keep an eye on what your competitors are doing, what features they have versus what you have. Whenever I talk with clients, even if a product is very similar to their competitor, there's always something, some way they can differentiate it.
And another thing I would call out is that competitor analysis can be more than just looking at search, obviously look at what they're doing in search with competitor tools, but Facebook has an ads library where you can actually go and you can see anybody's ads; go to anybody's page and see ads that they have active.
LinkedIn actually just rolled out a similar feature, particularly helpful for the B2B space where again you can go to the page and you can see the ads that they're running. Definitely, think outside the box of just search when doing that competitor analysis.
The Importance of Content in the Pre-Chasm Stage
Aiden: Is the content end of things very important?
Črt: A lot of people in B2C simply skip the research phase, especially for products everybody knows how to buy. Meanwhile, in the B2B, research phase is 70% of all of the interactions that potential buyers will make with the company. Absolutely yes, content.
In terms of content in the pre-chasm, the thing is that if you're early in with the content that means that everybody who's looking for the content will come to your website. You know Google will like it, you'll have good quality, you'll have good behavior metrics, so you will really fortify the top positions with that kind of content and one thing that people usually don't count on in pre-chasm is, once people start discovering these concepts they will talk about them, they will link to them, they will post about it.
If you're one of the early content producers and you are perceived as the most reliable one, you can get a lot of free backlinks, you can get a lot of very relevant backlinks early on. It's just going to be that much harder to dethrone you from the top positions and it's definitely going to be much harder than to try to push somebody else out of it if they knew what they were doing in the pre-chasm phase.
SEO all the way, it's just that towards the end you need to start thinking about what I was explaining about click-through rates, for example. It doesn't mean that you give up on SEO, it just means that you get a different perspective because then at the market saturation you need to start thinking about, "Okay, the market is really saturated. I'm getting those 5% click-through rates flat across all of my top keywords. Which means that compared to three years ago I dropped 90% in organic traffic, or 80%."
You need to think about how to get those click-through rates up, so it's all about maybe trying to change descriptions, trying to think about titles, trying to think about you know which URLs you really want to push that have the most relevant content and stuff like that. I think it shifts and pivots but it definitely should stay at the forefront all the way to very end, which hopefully is going to be a sellout or a successful pivot.
Aiden: What do you feel is the best approach for long term brand fortification across the market maturity cycle, regardless of what stage that one is at as a brand?
Tim: I would say a robust multi-channel strategy...and a good understanding of attribution too. Because it is crucial not to just look at last click particularly when you're building awareness in the early stages, but even later on when for example as Črt was talking about, brand search being big then, you might be looking at just, "Oh we're just paying for a bunch of brand terms and they're driving people through."
But if you look at multi-channel funnels and Google analytics, you might see that people are searching non-brand terms and then they did an organic search, and then they did a brand term search or touched you by multiple touch points. A multi-channel strategy and good robust integration of attribution into there.
Črt: I think that the underlying thing that everybody needs to understand is when they're going for the long run in the market maturity cycle they need to change the metrics they are thinking about. I think they need to think about customer lifetime value and they need to think about the long term.
They need to think about frequency and recency, how often do people buy with us? When was the last time we've seen this person? Because you need to be effective in reminding people, "I'm here and I'm selling this stuff," but they also need to leave happy and satisfied if you want to have any chance of bringing them back.
Aiden: Thank you very much. In summary, we're talking multi-channel, appropriate metrics, don't focus on the wrong things, probably with a particular view to don't obsess about click-through rates and indeed make sure it's all attributed and measured appropriately regardless of whatever stage in the maturity cycle that you are.
And that, folks, is all we have time for on this particular episode of SEMrush webinar land. A massive, massive thank you to Črt for both the awesome presentation and the awesome insights. And Tim, thank you so much for your input over the last hour.