Audience Building: The Linear Commerce Model For Sustainable Demand Generation

Growth Strategy
0 min read
August 17, 2022
Isla Bruce
Head of Content

Is your business model built for sustainable growth beyond the online data privacy revolution and transformational shifts in online user behavior? 

As paid customer acquisition gets more expensive and less effective, investing in organic customer acquisition and loyalty is the key to growth. Relationship depth now matters more than audience reach in order to sustain marketing ROI and business growth. Businesses built to survive in the post third-party cookie digital ecosystem need to flip to operating like a media company to achieve this. 

Linear commerce is a framework for modeling how brands can go about achieving this, so let’s dig in and dissect exactly what it means!

What Is a Linear Commerce Model?

Linear commerce describes a concept that’s not new in practice, but was only more recently labeled as a hybrid business model that’s part media and part commerce. It’s the brainchild of Web Smith who co-founded Mizzen+Main, and is a leading voice for linear commerce through his media and consulting company 2PM.

The premise is to first build an engaged audience, then sell a product perfectly innovated for their specific needs and tastes. In its purest form, the commonly accepted business model is turned on its head. You operate as a media company with organic content as your first product, building a loyal audience that resonates with your brand values, then provide an aligned product or service solution for the premise you have built your audience upon.

Source: 2PM

As this 2PM diagram shows, a business can launch a product or service without any existing audience, right up to a captive audience that’s already been sustained for years. Linear commerce models would apply to versions 3, 4 and 5.

2PM’s blog NO. 333 explains “The most viable companies across the digital ecosystem will share a common trait: established, organic audiences. Content and community are core to that outcome. For the well-executed linear commerce brands, retention rates will be high and CAC will be low.”

While product and service features or qualities are a fundamental part of customer retention, that’s only part of it. Consumers today expect more marketing personalization and values-led resonance in exchange for their cash, meaning that this model is bound to become ubiquitous as businesses catch up. Especially with Generation Z upcoming as the leading consumer demographic. They prefer online-born, content-led brands over their legacy counterparts by 40-45%

The Case for a Media-Led Business Model

Unfortunately for SMEs, and start-ups especially, relying on paid customer acquisition is becoming less viable as a quick-and-dirty growth mechanism. High CPMs and declining audience data quality across the board are a real sore point that the marketing community is being forced to adapt to. It’s part of the wider online data privacy shake-up, and Apple’s ATT framework in particular, which has put a chokehold on the volume of users that can be tracked, segmented and targeted accurately.

Source: Hootsuite

Data privacy measures are compounded by advertising saturation and user overwhelm which has fueled widespread ad-blocking, while a rapidly growing trend for values-led decision making further transforms consumer behavior. Online attention spans aren’t necessarily dwindling, but they are being redirected to higher quality content that resonates more deeply on a personal level. 

The value of linear commerce goes beyond the obvious benefit of an aligned online audience that’s primed for promoting products to. It’s also in the acquisition of an audience that simultaneously have higher retention rates and LTV (Lifetime Value) due to greater resonance and loyalty. It’s not that CAC (Customer Acquisition Cost) is always lower for media-led brands. However, the differentiator is increased brand loyalty and a lower churn rate to expand the LTV of customers. The future belongs to brands that can manage their customer LTV to CAC ratio for sustainable growth. And if you don’t already track these metrics, it’s time to start.

The brands staying on the right side of these trends utilize organic, content-led strategies to acquire and retain more loyal customers. So, ultimately your goal is to create (or tap into) the perfect customers; they are called fans. Linear commerce, by way of leveraging pre-built audiences of fans, will help brands achieve this.

I’m sure you can see the benefits of having an engaged and captive digital audience that’s primed for direct marketing of your offering before you invest in supply. So, what kind of companies have successfully managed to use this model? And crucially, how would an established SME brand currently focussed on paid growth strategies go about it? Read on!

Companies That Have Successfully Adopted Linear Commerce Models

Let’s get some inspiration from businesses that have successfully led the way using linear commerce tactics. 2PM focuses on online-born and DTC brands. However, linear commerce works for practically any kind of business and media format!

DTC and B2C brands

Michelin actually put the linear commerce model to work over a century ago when they created a very innovative publication - the 'Michelin Guide'. The initial concept was a driving handbook that encouraged French people to take road trips, recommending restaurants and hotels to stop off at, and creating a market for Michelin tires in the process. It became a retailing publication in 1920, and of course, we all know the prestige of the guide today. It helped turn Michelin into a global brand.

Linear commerce brands often employ some kind of blog format. Social influencers are an example of the Linear commerce model in action, promoting sponsored brands and products to their audience. With the emergence of online content creators revolutionizing media consumption trends, linear commerce models can be rapidly outsourced via partnerships with content creators that have pre-built aligned communities. ButcherBox is a prime example. Their online meat subscription service delivers ‘100% grass-fed beef, free-range organic chicken, humanely raised pork, and wild-caught seafood’. They achieved rapid early success by focussing on partnerships with health bloggers who wrote in support of grass-fed or organic meat, then lining up an Instacart partnership as a source of additional growth.

Glossier is a $1.8B DTC cosmetics brand frequently held up as a linear commerce paragon, born from founder Emily Weiss’ blog ‘Into the Gloss’. Or take Gary Vaynerchuk. He used a video blog, WineLibraryTV, to build an audience that helped transform his father’s liquor store into one of the first alcohol e-commerce platforms. It reached $60M AR within 5 years.

It works with traditional publishing methods too. Tim Ferriss became a content king. He started an online business selling nutritional supplements before writing ‘The 4-Hour Workweek’, not expecting much from it. It was received incredibly well and quickly became a must-read for entrepreneurs and CEOs the world over. He turned that initial following into a self-improvement brand with millions of fans that sells a number of products and sponsorship placements.

2PM has ten more great examples of content creators turned eCommerce gurus for you to check out in blog NO. 252, including Goop, Buzzfeed, Barstool Sports, Gear Patrol and the New York Times.

B2B brands

Businesses that are able to invest in insights, original research and thought leadership can quickly rise in prominence in new sectors. Consider the ‘Big 4’ accountancy firms. They are collectively diversifying and repositioning themselves as strategy, data and digital technology consultants through content marketing that establishes topical expertise. Publishing original industry research generates broad media coverage, building brand awareness for them in this space. Check out the EY global homepage as an example, or the Deloitte Digital website. You’ll see how the featured content is focused on shifting established perceptions beyond their traditional accountancy offering. The initial focus is put on creating awareness through a series of periodical research reports and consistent PR outreach, using experienced leaders as the public face for interviews and blogging. After winning clients, the project scope will determine how they recruit or train project delivery staff.

Niche B2B magazines can also perform brilliantly, carving out a loyal audience for a brand. For example, The Furrow magazine was created by farm machinery manufacturer John Deere in 1895, setting their brand apart. And it’s still going strong today in face of the decline in print publishing by catering to the needs of its audience; it has a circulation of 1.5 million readers and is published in 14 languages.

How Can An Existing Brand Adapt?

Linear commerce is usually a primary goal for dedicated content creators who build audiences via social, blogs or podcasts - often achieved through DTC sponsorships. But how can existing B2B or B2C brands adapt?

  • Like the Big 4 account firms example, you can create demand through your own organic channels and PR before investing in the supply to meet it. 
  • Alternatively, you can rapidly manufacture more predictable demand to meet the supply you already have by tapping into existing audiences pre-built by someone else. 

Here is a shortlist of tactics to execute, focused on improving your audience's experience and connection with your brand:

1. Define a goal-oriented strategy - Develop a formal content (or media partnership) strategy that continually tests and adjusts. The aim is to create genuine connection with your customers and keep them coming back for more. Select the best-fit channels, media formats and partners to match your target audience’s online behavior. Less can be more in terms of audience volume, as long as you’re reaching the right quality of customer that will deliver the LTV you need.

2. Resource your strategy - Be realistic about the requirements needed to achieve your audience building goals. Get the right content creators on board, or build integrated marketing delivery with aligned media partners’ platforms. Remember that you’ll never be able to outsource your audience building to a partner completely. Your media partners may introduce you to customers, but it’s still up to you to develop the relationship using your own branded content.

3. Follow your audience - If you want your audience to follow you, you’re going to need to understand them, meet them where they are, and deliver exactly what they need or desire. Authenticity or genuine topical expertise is essential to resonate with your audience and provide enough value to keep them digitally engaged over time. Join existing social communities to see what they talk about, and what language or communication style they use. If they are moving onto new channels, be there early so you are one of the first relationships they develop on that platform or community. Can you use these communities to find a star content creator already part of the target audience to oversee or contribute to the creation of authentic and insightful content? Resonating with your audience's values is everything.

4. Be easy to find - Get your brand in front of potential fans on search, social and media platforms by being easy to find. Platform-specific search volumes, hashtags and trending topics will help you find compatible trends to tap into - evaluate them regularly. For search, if competition for the most relevant keywords is high, focus on related long-tail search terms to boost your listing up the rankings. Long-tail search terms tend to come from users with higher intent.

5. Lead your audience - Fans all have something in common; they are followers. Understand how your audience perceives your offering within the wider context. Inspire them by leading the narrative within your field and providing aspirational goals. Aim to be a trend-setter or on the leading edge of evolving trends, and tie them into your values-led solutions. Values can range from the selfless to more ‘self-centered’ or anywhere in-between depending on the financial, psychological or emotional drivers your audience have in relation to your offering.

6. Engage with your audience - The goal is a lasting relationship, and no enduring relationship can be built without communication. Direct interaction with your online audience will improve their perception of your brand and keep them engaged while also providing invaluable feedback and insights. A social media engagement manager can be used to help better create a community around your brand. Provide audience interaction on your selected social platforms, plus great customer service that builds trust. Open channels to collect feedback, and of course action it where it’s helpful. Your early audience is also ideal to test and improve your offering with. If you’re still refining the offering and need customer feedback, consider offering discounts where feasible to keep them onside until you get it right.

7. Tailor your channel content - Unify your marketing content campaigns across media platforms without being repetitive. Users won’t look at the exact same content multiple times; they will filter it out. Create a consistent brand experience that is suitably adapted to distribution platforms and user devices. Universal login functionality on your website will support greater user personalization - such as a cart, recommendations or premium content - across users’ multiple devices.

8. Put PR and WOM before ads - We’re certainly not saying you shouldn’t advertise; it’s great for helping you build initial brand awareness and deliver campaigns. However, organic reviews and positive WOM (word-of-mouth) mentions are more influential to actually convert new customers. Advertise to boost brand awareness and increase audience touch points rather than as a stand-alone lead generation tactic. 2PM has also covered the impact PR can have when launching digitally-native DTC brands.

9. Be patient - It takes time to build an audience and develop a relationship; no one sees overnight results. Keep at it, and track the data so you can gather the necessary insights to adapt and optimize where necessary. Consistency is key!

To round up, a note specific to B2B content. Research has shown that B2B blogs that create educational content capture 52% more organic traffic. However, your content does still need to connect with people on a personal and human level. Aim to include some personality within your brand that people can connect with while still striking the right balance with professionalism.

Are There Any Downsides or Pitfalls? 

The most obvious potential pitfall is the content marketing investment required to build an audience before generating supply and cash is coming in. When starting up a new business, entrepreneurs have successfully achieved this as a side-hustle before a full launch and quitting their day job. It absolutely helps if you’re passionate about what your business delivers, which will also help shape a brand that the right target audience can really align with and develop loyalty for. However, an audience is absolutely essential. And assuming you don't run a drop-shipping business, any investment in content is likely to be less than the costs of hiring delivery staff or purchasing stock before enough predictable cash is coming in.

For an existing business, are there any profits you can reinvest, growth capital available, or a partnership you can create to lead an industry or consumer research study? You can also minimize costs in early building phases with freelancers, and focus on less time consuming content formats. Minimize the pre-launch building phase and timeframe to whatever is realistic for your business. If you’re working with social influencers, finding the right match in terms of the influencer and audience alignment is key. Trial a few influencers in your niche with smaller investments to gauge which can offer you the highest converting audience.

Source: Fractl

If your strategy isn’t working right away, don’t stop; adapt your approach or tactics instead. Use your data insights and customer research to keep testing until you reach the engagement or sales targets you need to hit.

On the other hand, if your audience generation works so well that you have a sudden influx of demand, pushing for more too quickly may not be advisable. Scaling up and ironing out growing pains is a challenging transition for any business. In other words, don’t bite off more than you can chew. Take time to build your quality processes and delivery capability sustainably. Trust in your brand can be easily lost and difficult to recover.

Summing Up

The writings on the wall warn that businesses which can’t adapt to a media-led business model may find themselves on the bench in the not so distant future. You will limit your new growth potential within the digital ecosystem, and bleed less invested customers who are attracted elsewhere by the standard of content personalization and UX that’s expected. And at a time when customer acquisition is getting more difficult and expensive, loyalty and retention are the key for sustainable growth.

We have more insights on the topic of flipping your brand into a media company with the help of a robust content strategy!

It’s part and parcel of switching to first-party customer data vs. relying on advertising platforms; another essential marketing tactic following the curb of third-party cookies.

The team at Half Past Nine are passionately dedicated to helping our clients ride the crest of these transformative times to take advantage of its opportunities. If you think your team might need some support, give us a holler. We’re always happy to explore whether our team are the right fit for enabling ambitious growth targets.

What To Read Next:

6 Growth Tactics For Marketing In A Recession: Lessons From 2008

Nate Lorenzen
Founder
Jenner Kearns
Chief Delivery Officer
Jenner Kearns
Chief Delivery Officer
Jenner Kearns
Chief Delivery Officer
Kenneth Shen
Chief Executive Officer
Kenneth Shen
Chief Executive Officer
Kenneth Shen
Chief Executive Officer
Kenneth Shen
Chief Executive Officer
Jenner Kearns
Chief Delivery Officer
Kenneth Shen
Chief Executive Officer
Jenner Kearns
Chief Delivery Officer
Jenner Kearns
Chief Delivery Officer
Jenner Kearns
Chief Delivery Officer
Jenner Kearns
Chief Delivery Officer
Kenneth Shen
Chief Executive Officer
Jenner Kearns
Chief Delivery Officer
Kenneth Shen
Chief Executive Officer
Kenneth Shen
Chief Executive Officer
Isla Bruce
Head of Content
Isla Bruce
Head of Content
Isla Bruce
Head of Content
Jenner Kearns
Chief Delivery Officer
Isla Bruce
Head of Content
Kenneth Shen
Chief Executive Officer
Isla Bruce
Head of Content
Isla Bruce
Head of Content
Isla Bruce
Head of Content
Kenneth Shen
Chief Executive Officer
Isla Bruce
Head of Content

Read next

Google Ads has significantly evolved with the integration of AI, making advertising more efficient and effective. One of the most notable features is AI-driven search campaigns, which leverage machine learning to optimize bidding strategies and broad match types. This helps advertisers reach their audience more precisely and efficiently.

Another standout feature is the AI-powered chat function that simplifies ad creation. This tool allows users to generate ad texts and assets easily, making it especially useful for those setting up campaigns. By streamlining the creative process, the AI chat feature saves time and reduces the complexity of creating effective ads.

Understanding these AI features can provide substantial benefits for advertisers looking to stay competitive. From smart bidding to real-time adjustments, AI transforms how campaigns are managed and optimized. Readers interested in these capabilities can explore more about the capabilities of artificial intelligence in Google Ads to enhance their ad performance.

Automated Bidding Strategies

Automated bidding strategies in Google Ads use AI to help optimize bids during ad auctions. These strategies aim to maximize conversions and improve cost-efficiency.

Defining Bidding Strategies

Bidding strategies are methods used to manage how much you're willing to pay for each ad click or conversion. In Google Ads, smart bidding is a popular method that uses machine learning to optimize your bids.

There are several types of automated bidding:

  • Target CPA (Cost Per Acquisition): Focuses on getting as many conversions as possible at the target cost per acquisition.
  • Target ROAS (Return on Ad Spend): Aims to achieve the highest possible return on ad spend.
  • Maximize Clicks: Seeks to get as many clicks as possible within your budget.
  • Maximize Conversions: Prioritizes increasing conversion numbers.
  • Enhanced CPC (Cost Per Click): Adjusts your manual bids to maximize conversions.

Each strategy suits different campaign goals, from driving traffic to improving conversion rates.

How AI Enhances Bidding

AI in Google Ads makes bidding smarter by analyzing vast amounts of data quickly and accurately. It adjusts bids based on various factors like time of day, user device, and location. This leads to better performance and cost-efficiency.

Predictive analytics helps AI forecast the likelihood of a click converting into a sale. By examining historical data, AI can make informed decisions on how much to bid.

Real-time adjustments are another benefit. AI in Google Ads can modify bids on the fly, ensuring you're not overpaying for clicks that are unlikely to convert.

Ad Personalization with AI

Ad personalization using AI in Google Ads allows marketers to create dynamic ads, analyze performance, and customize ad content to target specific audiences effectively.

Dynamic Ads Creation

One of the key features of artificial intelligence in Google Ads is dynamic ads creation. AI-driven search campaigns use machine learning to create ad variations that match user searches more accurately. By leveraging AI, Google Ads can automatically mix and match assets like images, text, and videos to produce ads that are highly relevant to users' search queries.

Dynamic ad creation can significantly improve engagement rates by displaying ads that closely match user intent. This results in higher click-through rates (CTR) and increases the overall effectiveness of ad campaigns. It saves time for marketers, as they don’t have to manually create multiple ad versions.

Performance Analysis

AI in Google Ads also enhances performance analysis. By utilizing the vast amount of data collected from ad campaigns, AI provides insights that help optimize ad performance. For example, Google Ads AI can identify which keywords and ad formats are generating the most conversions, and adjust bidding strategies accordingly.

The ability to analyze performance in real-time allows marketers to make data-driven decisions. AI can continuously monitor and tweak campaigns to maximize Return on Investment (ROI). Additionally, AI's capability to predict trends ensures that campaigns remain effective even as market conditions change.

Ad Customization Techniques

Ad customization techniques are another critical element of AI in Google Ads. With features like Performance Max campaigns, marketers can upload various high-quality assets. The AI then mixes and matches these assets to create customized ads that resonate with different segments of the audience.

Using custom formats and specific targeting options, AI can tailor ads to fit the preferences and behaviors of individual users. This personalized approach not only enhances user experience but also increases the likelihood of conversions. Techniques include using dynamic keyword insertion and adapting ad copy to different user demographics, which ensures ads are contextually relevant.

Predictive Analytics in Audience Targeting

Predictive analytics uses AI in Google Ads to enhance audience targeting by making data-driven forecasts about user behavior. This helps marketers reach the right audience more effectively and tailor campaigns to meet their needs.

Understanding Audience Segments

AI in Google Ads classifies users into distinct audience segments based on their online behavior. These segments include demographics, interests, and past interactions. This process helps marketers identify and target specific groups that are more likely to engage with their ads.

For example, artificial intelligence can segment users who frequently visit sports websites into a sports enthusiast category. Advertisers can then create tailored ads for this group, increasing the likelihood of successful engagement. By understanding these segments, campaigns become more focused and effective.

Predicting Consumer Behavior

Predictive analytics in Google Ads leverages historical data to anticipate future actions. For instance, it can predict which users are likely to make a purchase soon or which ones might drop off. This allows marketers to craft strategies that target these behaviors.

For example, AI can analyze past purchasing trends and identify users with a high probability of buying specific products. Marketers can then serve ads that highlight promotions or related products to these users, increasing conversion rates. Predicting consumer behavior makes ads more relevant and timely, ultimately optimizing ad spend.

Smart Campaigns and Performance Insights

Smart campaigns in Google Ads use AI to automatically manage various aspects of your ad campaigns, ensuring optimal performance. These features offer detailed insights, enabling businesses to make data-driven decisions.

Leveraging Smart Campaigns

Smart campaigns use artificial intelligence to handle tasks like bidding and targeting. By using Google AI to update search terms over time, smart campaigns ensure ads reach the right audience. This automation reduces the time and effort needed to manage campaigns, making it easier for businesses to succeed online.

Key benefits include:

  • Automated Bidding Adjusts bids based on the likelihood of conversion.
  • Targeted Advertising — Shows ads to users searching for relevant products or services.
  • Performance Enhancements Continuously optimizes ad performance through machine learning.

Interpreting AI-Driven Analytics

AI-driven analytics in Google Ads offer valuable insights that can improve campaign efficiency. These analytics highlight customer behaviors and preferences, providing data that can refine targeting strategies. Performance insights like detailed demographics and budget pacing help businesses understand where to allocate their resources effectively.

Important features include:

  • Customer Value Mode — Focuses on high-value customers.
  • Retention Goals Helps maintain existing customer relationships.
  • Budget Pacing Ensures ad spend is distributed evenly across the campaign timeline.

By using these AI features, businesses can make more informed decisions, leading to better outcomes for their advertising efforts.

A/B testing is a powerful method to improve ad performance on Facebook and Instagram. By comparing two versions of an ad strategy, marketers can determine which one resonates better with their audience. Using A/B tests, businesses can optimize variables such as ad images, text, audience, or placement to increase engagement and conversions. For instance, testing vertical videos versus horizontal videos can lead to significant cost savings per web conversion.

Setting up an A/B test in Meta's Ads Manager is straightforward and can yield insightful results. This tool allows businesses to use an existing campaign as a template, making the process efficient and user-friendly. Ad campaigns should run for at least seven days to ensure reliable results, with a maximum duration of 30 days best practices for A/B tests.

When running an A/B test, it’s crucial to test only one variable at a time. This approach helps in accurately determining what drives better performance. For example, small businesses have found success by testing creative variables first, like different video formats or static ads A/B Testing Ads.

Executing A/B Tests on Social Platforms

Performing A/B tests on social platforms like Facebook and Instagram allows marketers to pinpoint which ads resonate most with their audience. By comparing different versions of ads, advertisers can optimize their campaigns for better performance.

Setting Up A/B Tests for Facebook Ads

To execute an A/B test on Facebook Ads, start in the Ads Manager. Use the A/B Testing tool to test different variables like ad images, text, audience, or placement. This tool ensures that each ad version is shown to different audience segments, preventing overlap.

Steps to set up A/B tests:

  1. In Ads Manager, choose your campaign and click on "A/B test."
  2. Select the variable you want to test. It could be an image, headline, or target audience.
  3. Define the duration of the test. Facebook recommends a minimum of 7 days for accurate results.
  4. Analyze the performance. Metrics such as click-through rate (CTR) and conversion rates help determine the winning version.

For detailed guidelines, refer to Meta's resources on A/B Testing Ads on Facebook.

Optimizing Instagram Ads through A/B Testing

Instagram also supports A/B testing within the Meta Ads Manager. Identifying the most engaging ad elements is crucial for maximizing reach and conversions.

Steps to optimize Instagram ads:

  1. Access Meta Ads Manager and create an A/B test for your Instagram campaign.
  2. Choose a single element to test, like the ad's visual content or call-to-action.
  3. Set up the test to run for a period that provides sufficient data, typically at least 7 days.
  4. Review specific metrics such as engagement rates, likes, and shares to evaluate performance.

For more insights, visit the Meta Business Help Center page on A/B testing.

Keep tests simple by changing only one variable at a time, ensuring cleaner and more precise results. This method not only refines your ad strategies but also provides valuable insights into audience preferences.

Analyzing A/B Testing Results

Understanding how to interpret and act on A/B testing results is crucial for improving ad performance on Facebook and Instagram. This section will cover how to read data and metrics from your tests and what steps to take based on the insights gathered.

Interpreting Data and Metrics

To start, locate your A/B test results within the Ads Manager, where you will see various metrics. Look for metrics like CTR, conversion rate, and cost per result. The CTR shows how often people who see your ad click on it. A higher CTR suggests that the ad is engaging.

Conversion rate indicates how many of those clicks lead to a desired action, such as a purchase. Cost per result helps understand the financial efficiency of the ad. High costs might indicate an issue with the ad's effectiveness or targeting. Be sure to compare these metrics between different versions of your ads to see which performs better.

Actionable Insights and Next Steps

Once you have interpreted the data, identify which ad version performed the best. For instance, if Ad A had a higher CTR but a lower conversion rate compared to Ad B, you may need to tweak the call-to-action or landing page of Ad A.

Use these insights to inform future campaigns. If a specific image or headline resonates more with your audience, incorporate similar elements in your next ads. Document these findings to create a knowledge base for future reference.

Making educated adjustments based on these results can lead to more effective ad campaigns and better return on investment (ROI). Check out the details on viewing A/B test results to refine your strategy.