We remember the late 90s for the tech stock bubble. Commerce companies went public, selling at negative gross margins. They were making it up on volume, as the new old joke goes. And if you could find an untouched vertical, it looked like you might just become rich. FerretStore.com became a personal favorite of mine. The company’s new tagline in 2000 was “We’re not just for ferrets!” It foreshadowed the rough times that lie ahead.
Soon enough, the markets came to their senses. Out of the ashes of the March 2000 crash emerged a handful of companies with honest-to-goodness business models. To be sure, they had ridden the rocket ship of tech stocks to the moon and had come back down to earth twice as fast. But instead of cratering into the ground like our beloved FerretStore, they emerged—with more reasonable valuations—and began to thrive. I know a little bit about those times because the company that my brother and I founded took that very ride.
A few years prior, in March of 1997, we introduced Be Free, the first affiliate marketing platform, with Barnes and Noble as our first customer. We were part of an arms race with Amazon and BN.com, warring for marketshare, back when Amazon was a bookseller and had, you know, competition. The affiliate model proved to be a good tool, allowing retailers to create what often proved to be their most cost-effective channel for new customer acquisition. Our little company grew quickly as we added clients that ranged from Pets.com to Google.
But not at first. Despite signing BN.com and making a splash in the market, our early sales proved slower than we expected. As I went into the field with our team, we discovered the primary obstacle: marketers and CEOs didn’t know how to budget for this new type of marketing. The challenge arose because affiliates are typically paid a percentage of the sales they drive (or, in some cases, a customer-acquisition bounty). That meant that affiliate fees could grow quite large if sales also did. If the affiliate fee was set properly as a percentage of sales, this would be great for a company; sales could grow quickly, and companies paid only when their marketing performed. But CMOs and CEOs were not used to variable budgeting. And legal teams would get hung up on the idea that they could not set a specific cap on these monthly expenses.
Over time, these channels proved themselves, and business practices changed. As more affiliate programs launched and CMOs came to understand the model, the e-commerce world changed. Leadership teams and the investment community became comfortable with variable budgeting and invested meaningfully in these channels. And the affiliate space grew into a multi-billion-dollar industry.
Today, we are on the cusp of seeing this same understanding come to B2B marketing. We are connecting content marketing platforms such as Skyword’s with marketing automation systems from Marketo, Oracle/Eloqua, and Salesforce/Pardot to make marketing highly measurable. This year at Skyword, we see our B2B content marketing clients leveraging this link. They are adding content readership information to lead profiles. Our most sophisticated clients are enhancing lead scores based on what types of content their prospects consume. And as the broader marketing stack is created, linking content marketing, marketing automation, and sales automation, B2B CMOs will be able to measure the precise cost and return of their content marketing efforts.
The new precision in marketing measurement opens a new chapter in marketing planning. With the ability to track value-creation precisely, CMOs and CFOs should meet and agree on acceptable costs of customer acquisition. Marketers should implement tracking and cost allocation to each lead-generation and lead-nurturing event. And, wait for it, marketers should be given unlimited marketing budgets so long as they are achieving target cost/sale. I am not saying marketers should have unconstrained budgets, mind you. This approach only works if a business has consensus on the appropriate cost of customer acquisition and if marketers can demonstrate that they are achieving those target costs. But so long as they do (and the business can scale operationally to meet increasing demand), those budgets should be unlimited.
Today, the idea of an unlimited marketing budget may seem radical. As I press publish, I am waiting to see our VP of Marketing turn around to speak with our CFO. Over the next several years, as the early investors start to show the benefits of this approach (with far larger, cost-effective sales generation than their competition), we will see much broader adoption. And, if that happens, we’ll be able to party like we did in the early days of the affiliate world—like it’s 1999.