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Why is Engagement Marketing Important?

Engagement is often seen as an oddball in terms of marketing KPIs – it’s not as sexy as reach, it doesn’t have the direct sales benefit of your latest conversion play. In reality, engagement is critical to turn reach into conversion, pushing consumers through the funnel, developing a relationship and creating opportunities for consumers to discover and buy more products.

Given current circumstances, engagement marketing is also the best opportunity brands have to amplify their success in today’s media landscape. Reach is increasingly expensive, new channels are hard to come by and there are only so many ways to achieve conversion optimization on your usual website or landing page. Consumers are also using more channels than ever before to make decisions, leading to disjointed experiences and great attrition from your funnel.

Engagement marketing is critical, but not as it’s been practiced before: brands need to use new technology to offer better experiences and generate more specific customer data. When combined, these experiences and data can first-time conversion, improve follow-up messages and empower higher-engagement approaches that ultimately increase the reach and total conversion a brand has with its consumers. This means that engagement marketing needs to be at the center of your brand strategy and that, with the right approach, it’ll do far more than “pay for itself”!

 

The usual advertising customer journey often looks something like this, with reach and conversion efforts simultaneous but segmented. Focusing on what drives engagement can help tie together campaigns for better performance. Source: Adobe

 

Traditional Approaches to Reach and Conversion

In the past, reach might’ve been best exemplified by magazine and TV ads, using a mix of art and commerce to resonate with a target consumer group. Today, the perfect example of a reach-to-conversion campaign is something like a widespread video or display campaign driving consumers to a website (whether on the first impression or the 10th). The consumer interacts with the website, spends time there, engages with content, sometimes signs up for emails and most often doesn’t buy on the first visit.

To turn these engagements to conversion, brands send consumers retargeting or follow-up messages. Consumers engage with emails – open them, read them, click through various calls-to-actions, and more of them incrementally convert to a purchase. Based on observed behavior, brands also use retargeted advertising to drive consumers to buy. These achieve higher rates of conversion, but still on an incremental and highly repetitive basis. Often, these messages also have to include a discount or limited-time offer – a sign that, with a traditional approach, conversion can also come at the cost of profitability. This is a common scenario, but the truth is it’s not only disjointed – it’s under threat. 

Even though reach campaigns are often designed to repeat, interrupt and create mindshare, brands face diminishing returns with repetitive advertising. For digital impressions, there’s a clear upper limit after which your message stops reaching that many more new consumers. Source: Nielsen

 

Reach is the first component in which “all is not well”. Usually, reach comes at the most affordable rate on the newest channels. However, even places like Instagram – where social engagement is often considered a way to measure the quality of a follower base’s reach – engagement rates have dropped between 20-40% for brands across various categories

This means that, ultimately, where less people engage with a brand’s content, fewer people see it and even fewer still will convert. Traditional approaches try to get the best CPM, viewing engagement as a mid-funnel signal of consumer response to a given campaign and then use a landing page or other conversion tool to close the deal (where conversion rates can linger around 2.5%). If you rely on effective top-of-funnel reach to drive this strategy, as soon as the availability of that kind of reach dwindles, you’ll end up on hard times and without a backup plan for continued growth.

 

The Current Marketing Mix Doesn’t Add Up for Many Brands

Doing some quick math, if you assume engagement of 2.5% and conversion of 2.5%, you’re looking at .625 conversions per 1000 consumers in your audience. At a CPM of $10, that’s $16 per conversion – assuming your conversion is worth at least $50, that might be profitable for your brand, but otherwise you need a cheaper CPM or higher cart values.

Now, if you look at search advertising, with an average CPM of $117, you need to start thinking about $600 carts as profitable – unless you have a long customer lifetime. Niche markets and brands may find cheaper costs, but how many $600 carts are there really in B2C marketing? No matter how much you maximize conversion, reach costs are starting to kill many brands. Even more direct-to-consumer “digital upstart” brands are turning to traditional marketing channels to get away from exorbitant costs – all with the usual tradeoffs that come for tracking and attribution.

Whether for reach, engagement or conversion, digital ad spending continues to outgrow traditional ads and the overall economy. Every aspect of the media landscape is saturated – tactical shifts can only be so effective, so brands should look to stand out through engagement instead. Source: Emarketer

 

In the regular funnel of Reach>Engagement>Conversion, continuously growing advertising costs are unsustainable, eating away at every brand’s bottom line. The same old mix of ecommerce browsing, landing pages, various attempts at social proof (reviews, user-generated content and more) and repetitive over-the-top campaigns aren’t differentiating your brand. You need one-to-one level engagement marketing to fill in the gap, simplify your offering and encourage consumers to make purchases they’ll love. 

 

How Engagement Turns Reach into Conversion

Generally, we assume engagement and conversion are correlated. Without “causal” mechanisms like a clickID from a previous ad or an email clickthrough leading to a specific purchase at a next step, we usually don’t start adopting “engagement first” marketing strategies. The medical term for this is a “multi-touch attribution headache“.

So what are some already-existing examples of engagement leading to conversion? Well one comes from an unlikely but helpful place; podcasts. Yes, podcasts are a leading channel for cheap CPMs today. Their highly engaged audiences – which are tracked primarily through promo codes – are essential to driving higher conversion.

Even if you have to dilute revenue with 10-20% discounts, most brands who practice this (and achieve outstanding growth) make up for it on sticker price. This is not an optimal choice for established brands, but it shows that sacrifice of broad reach in favor of highly engaged audiences is worthwhile, even if it means you have a few more promo codes floating around in cyberspace.  

Podcasts are a small media segment, but huge ad revenue growth indicates that brands are finding worthwhile conversion within smaller-but-engaged audiences. Source: IAB

 

The next option is retargeting. Most of your display or social advertising may be retargeting. You may drive consumers to a core website with search campaigns, TV promos to a website/landing page or a variety of other means. All of this relies on retargeting as the real opportunity to turn engagement into conversion, with email and advertising messages tailored to specific products after you’ve captured user activity on-site. 

This works even better in the case of things like cart retargeting. However, aside from cases where users have explicitly expressed an interest in buying a product, you’re usually just guessing as to whether their engagement with content means interest in particular products. What you need is technology that offers both higher conversion and allows you to learn more specific information about your individual consumers, and this means engagement is critical at every stage of your marketing funnel.

 

Conversational AI and Engagement Marketing

Conversational AI is the best way brands can achieve this today. It may seem like a faraway opportunity, but the benefits are quite clear. It doesn’t just help create multi-minute customer conversations – it can be positioned on high-reach advertising channels, in e-commerce portals, social media channels and even in retail stores, all of which leads to 30% higher sales and 90%+ customer satisfaction. 

By engaging consumers in a conversation (using products like virtual sales advisors), you can answer basic questions, offer diagnostics, provide recommendations and reassure customers about their best purchasing choices. This means that when consumers express a specific concern, whether it’s dry skin or a desire to travel more, you can register those specific intents in your CRM and leverage that through email and other retargeting methods. This empowers you to involve higher levels of personalization in your media mix, but also reduce the instance of irrelevant marketing – an all-too-common occurrence today that actually pushes most consumers away. 

In this case, this brand uses a conversational AI-based chatbot to identify skin concerns, driving conversion to products while also storing data in CRM for follow-up messages.

 

Within the experience itself, brands can also deploy tools like Conversation Conversion Optimization, which leverages even more AI to achieve the best possible sales outcome for each conversation in the fastest possible way. It’s like A/B testing on steroids – every interaction can use more and more incremental conversational data to determine the likely outcomes, and in real-time steer more conversations towards exactly the outcomes you want!

It’s this qualitatively different (and better) data – the information that comes from every statement, conversation and disclosure – that makes it possible to put engagement marketing first and achieve a radically better result. For example, using a virtual sales advisor in your advertising, on social channels and as a core call-to-action on your ecommerce website can surface specific concerns, create opportunities to talk and then simplify product selection, building a relationship and increasing purchase confidence at every step in the process. 

 

How Engagement Marketing Changes the Reach You Generate

This doesn’t just increase conversion and satisfaction – it gives you the opportunity to build more relevant audiences, grow your brand in new ways and ultimately expand your audience beyond the limits of today’s advertising platforms. Most of your customers already have disjointed decision journeys – they look at your website, competitors, review sites, third-party media, talk to sales representatives, consult industry experts, newsletters, family and friends. Much of the complex consultation involved in this journey is already being adapted to by major advertising providers and “reach-oriented” platforms.

Facebook has “Lookalike Audiences” and a variety of tools brands can use to refine their advertising from the broadest possible reach. Even Google offers custom intent audiences based on search, which also pre-packages consumers on the basis of existing engagement. Generating your own data for this, with greater knowledge based on a one-to-one understanding of your consumers, is only the next logical step.

More of the channels you look to for reach are already trying to use engagement to improve outcomes. As you enhance your engagement marketing approach throughout your owned media, it’ll only give you the opportunity to turn around and run more effective reach campaigns as a result. 

Marketers already know the power of first-party data, but Conversational AI can amplify its effectiveness with every new turn in a conversation. Source: Signal.com

 

In the end, the total “volume” of your reach may at first may be smaller. However, with higher user intent, the results will speak for themselves. Like in the example mentioned above, imagine taking the engagement you get from an audience from 2.5 to 10% – whether it’s on a top-level reach campaign or on your website itself – how much more profitable does that time of campaign become? What about doing that for conversion instead? Doesn’t that, in the end, enable you to better deploy resources in getting out and finding new audiences to fall in love with your offering?

 

Why Engagement Marketing is About to Get Red Hot

You already know how expensive advertising has become. You already know you can only optimize conversion so much (even the answer of most conversion experts is “look to the audience”). Engagement marketing is essential to cut away the chaff, find your most valuable audiences and better convert them. 

In the old days, “engagement marketing” meant going door-to-door selling things bibles or encyclopedias and talking the customer into making a purchase on a one-to-one basis. This was a grind, each conversation was different, but it worked for some businesses to help them carve out a place in the market. 

Brands need a high level of engagement to maintain a connection with consumers, but they can’t grind through it in old ways. Engagement marketing, powered by conversational AI, gives you a smarter way to transform both your funnel and the way your consumers make decisions – all generating meaningful, usable data through interactions they love.

Contact Automat to learn more about how to practice modern engagement marketing with Conversational AI