When a new, superior technology or process comes along, early adopters often gain an outsized competitive advantage that isn’t available later.
The introduction of the moving assembly line by the Ford Motor Company reduced the time it took to manufacture an automobile from 12 hours to about 90 minutes, producing enormous cost savings and profits. In financial services, arbitrageurs compete aggressively to gain computing speed advantages of just one or two milliseconds because being faster on a trade can be the difference between it being profitable and missing it altogether. In sports, the early teams to use data had a “moneyball” advantage in evaluating players and signing hidden gems.
But later, when everyone is doing it, that competitive advantage disappears. Laggards are often in the position of having to adopt the newer technologies just to stay in business.
I recently studied the adoption of marketing technology by 351 mid-market B2B companies that operate on a global, or at least national, basis. Specifically I was looking for the use, in even the most minimal manner, of 9 marketing technologies. Each of these 9 technologies has been around for years with, like AdWords, provable ROI.
What I found was that early adopter opportunities exist for marketing technology in many industries. For example, companies that are early adopters in their industry typically can run search ads on Google, Bing, and Yahoo cost-effectively because there is less competition for keywords.
But later clicks become much more expensive. Here are some recent “suggested bids” on big-ticket B2B keywords from Google. Google doesn’t set these arbitrarily; they start around $1 a click or less and have dynamically risen to this level due to competition:
|Virtualization cloud computing||$108.91|
|Load testing machines||$20.45|
|Best IT consulting firms||$59.60|
|Printed circuit board designers||$36.32|
|Business online storage||$45.40|
|Network managed services||$161.73|
|Custom trade show exhibits||$67.11|
|Help desk software||$53.51|
|Master data management vendors||$52.79|
|Search engine marketing companies||$40.13|
Because of the money that can be made from mesothelioma cases, lawyers advertising for clients have bid up related keywords to several hundred dollars a click. Google’s keyword tool reports that two mesothelioma terms are over $1,000 a click.
Early adopters of marketing technology in their industry will also find it easier to get high search rankings, can establish a position of thought leadership, and get more high-quality inbound leads. And they can better identify and prioritize prospects and accounts through predictive analytics, thereby increasing the efficiency and effectiveness of their sales teams. And so on — there are many opportunities.
Let’s look at how this played out for one company, AFA Protective Systems, which designs, installs and services fire and burglar alarms, closed circuit TV, and related systems. AFA is about a $75 million company that has traditionally spent less than $150,000 a year in advertising. But in their 2014 annual report the chairman and CEO Robert Kleinman wrote, “Last year I reported that we began to embrace the modern age of marketing. During 2013, the Company decided to experiment on a limited basis with various forms of marketing to increase our visibility to potential customers and in turn sales. The year end results in this regard were very encouraging. In fact, we traced new booked sales attributable to these efforts and learned that they were produced at a rate of ten to one in comparison to amount spent.”
Ten dollars of revenue for every dollar of marketing is an ROI that almost any company would welcome. And using SpyFu.com, a service that tracks the Google AdWords spend of companies and the keywords that they’re using, we can see spending on Google AdWords by AFA started in late 2012 and increased significantly in 2013, finally settling in at about $10,000 a month in AdWords clicks. Search ads are definitely now part of their successful marketing mix.
AFA was not alone, though. Competitor Sentry Protective started using AdWords around the same time, advertising at about the same rate as AFA:
By late 2013 ADT started very aggressive AdWords advertising, too, at a rate 10 to 20 times higher than AFA or Sentry Protective:
(Note that SpyFu is not necessarily 100% accurate, and it can be more useful for comparative purposes and understanding the keywords advertised on than determining absolute budgets. But the trend in this industry is clear.)
It would appear that the word was getting around the industry that AdWords works, although some competitors were still not advertising in early 2014. Some of that early advantage was diluted, but AFA still reported a great ROI.
AdWords is one of the most visible forms of online marketing, so a company’s competitive advantage may be short-lived there. Just a competitive search, or search on an industry keyword, might reveal to a competitor that a company has started using AdWords. It’s easier to use other marketing technologies and remain under the radar of competitors. Digital marketing programs such as content marketing, search engine optimization, email marketing, conversion optimization, and predictive analytics can be done without so easily tipping off the competition. Similar, or even greater, ROI has been achieved with those and other marketing technologies.
And in most industries these early adopter opportunities still exist because, outside of the software industry, most companies have been very slow to embrace these modern, data-driven marketing technologies.
What I found is that while software companies are aggressive in their use of these tools, companies in other industries are far behind. Software companies are using a median of 7 of the 9 tools I studied; the companies in other industries are using a median of just 2 of those 9. Here are the tools and their adoption by software and other companies:
|Martech program||Software companies (85)||Other companies (266)|
|Search engine optimization||67.1%||35.7%|
|Search ads (e.g., AdWords)||62.4%||15.4%|
As I discuss in the report, there are various reasons for this low adoption rate, but for companies in most industries there is still a great opportunity to get a jump on the competition and reap the kinds of results that AFA reported.
If you’re in that position, how do you take advantage of that opportunity? I recently blogged for the Harvard Business Review a marketing technology starter kit of 7 technologies that companies can initially focus on to get provable ROI:
- Conversion optimization
- Search engine marketing
- Marketing automation
By thoughtfully combining these tools, companies in many industries across all revenue ranges can generate significant incremental revenue, profits, and competitive advantage.
Louis Gudema is the president of revenue + associates, which helps companies increase revenue through measurable improvements in sales and marketing.