Some Personal News

#42 Retention Lessons: tactics to prevent churn + Why the Agency model must change and How AI in Google Ads changes everything

Jun 04, 2023

Happy Sunday. To those I spoke to this week or spent time with in-person - thank you. A very warm welcome to all the new subscribers. I’m thrilled to have you as readers and truly appreciate your feedback and support.

Let’s dig in.

The Agency Model Must Change

Various businesses have announced - or hinted at - reducing workforce as AI takes over aspects of work. IBM see that 30% of back end roles could be redundant and have stopped hiring in those roles. UK Telecoms giant BT group see 10k roles being replaced by AI.

So what about the Agency world? What happens when everyone is armed with production tools that make even the least-talented among us able to produce gorgeous creative works? What tools will become our go-to tools for production?

As we’ve covered before in SPN, all the big platforms are rolling out AI tools to optimize ads. Eric Seufert covered the implications of this rather well:

The compression of creative iteration timelines will simply put upward price pressure on auction mechanics, as real-time creative optimization automates away the last non-monetary lever for improving campaign performance: creative.

But many Agencies have let their role degrade over the years, from Architects to Builders - and relied on production to make them money. How do they react?

WPP have shown admirable timing - announcing a deal with chip maker NVidia just as the firm hit the headlines this week with an incredible quarterly revenue forecast and with it a $trillion valuation. Their collaboration on a content engine sounds similar to the work S4 Capital and others have been doing on Unreal Engine from Epic Games.

There was an interesting quote from WPP CEO in the FT recently who said that AI would be “fundamental” to WPP’s business, and added that “clients are seeing ways of rapidly reducing the cost of production, to match the demands of new channels.” Is your experience similar?

Can agencies connect the data to the creative in the way Meta or Google can? Without the data you don't know the value. Maybe the Architect can leave that to the platforms and add value in other ways?

Perhaps the most interesting move in ad tech of late is the Brandtech group (formerly known as You & Mr Jones) acquiring Jellyfish - fulfilling their ambition to make Media a key part of their offer. Jellyfish is a remarkable (agency) business that grew by being very close to Google and blending media chops with their own tech. Without the analog baggage that slows the other ad holding companies, Brandtech feel well positioned.

Google Marketing Live

Last week was Google Marketing Live - their global flagship moment and an event I had the joy of speaking at with a wonderful reader of SPN just a few years ago. Google announced a LOT of exciting new product launches, most of which involved AI.

And boy… Google Ads is gonna change forever.

I suspect automation and now Performance Max will have shaken up how your paid media specialists are working today but the recent wave of AI announcements is going to change ample, ample more.

Rather than give a summary of GML, which is googleable, I’m going to highlight 7 of the new product launches I’m excited for teams to test - and hopefully they excite you too.

New product launches I’m excited about

3 Performance Max updates
Generative AI in Google Ads
Edit ads with Product Studio
Broad Match brand controls
Better 1P (first party) data integrations

Let’s kick it off with a few quick Performance Max updates.

pMax update 1: Download search term insights

I’m grateful for more search term insights. And better yet - you’ll be able to download them. No more copy-pasting or asking ChatGPT to export the data for you. Not sure why it took them so long to deliver this but I’ll take it.

pMax update 2: More asset performance insights

Soon, we’ll get more insights on how specific assets performed for specific audiences. Hopefully, that includes real data and not just a “good, low, best, learning” performance rating. But I doubt it.

pMax update 3: A/B test with Experiments

Finally, we’ll be able to A/B test Performance Max campaigns (not just pMax vs. “shopping” campaign type, for example).

What you should be testing:

Bid strategies
Different assets
Final URL expansion on vs. off

… And anything else Google lets us.

It’s going to be fun playing around with the “Experiments” feature that will go live later this year.

Ok, now on to some non-pMax updates.

Generative AI in Google Ads

This is going to change E-VE-RY-THING:

Enter your URL
Answer a few questions
Google produces a campaign outline

No idea how qualitative this is going to be but one thing’s for sure: it’s going to speed up the campaign creation process and lower the barrier to entry for small advertisers. I love this.

Here’s a sneak peek they shared of what it may look like:

You can also use it to create ads inside of Google Ads.

Just enter some information about your org and Google will produce ready-to-use image ads that actually look decent:

But it doesn’t end here…

Edit ads with Product Studio

What’s even better: you’ll soon edit your ads inside the new Product Studio. All with AI.

A cool use case of Product Studio as shown by Google:

Upload a product image
Ask AI to remove the background
Ask AI to generate a new background
Automatically add the new image to your feed

This is going to make feed optimization and image testing so much more efficient and fast.

Here’s an inside look of Product Studio. All images are edited with AI.

The launch will be for the US only but it won’t be long until other countries get access too.

Broad Match brand controls

We all have our opinion of Broad Match keywords. Sometimes it rocks and sometimes it doesn’t.

Google has announced new features to take back a bit of control over Broad Match:

“Brand restrictions: limit spend to select brand keywords.”

Seems like a good feature as it can stop unnecessary spending on competitor brands (which we all see a lot with Broad Match). Let’s see how valuable this really is.

Better 1P data integrations

I’ve been beating this drum for a while now: whoever has the highest quality of relevant data, wins. And soon, it’s going to be easier to integrate first-party data in Google Ads with the following:

Simplify setup of Enhanced Conversions
Create converting audiences with Customer Match
Build and use GA4 audiences directly within Google Ads
Offline conversion adjustments to improve value-based bidding

These are smart updates that will help us get better data, which should lead to better decision making for us and our Smart Bidding.

Retention: Reducing Voluntary and Involuntary Cancels

I got deep into how to better keep subscribers and lengthen donor lifetime value with an Org this week. The beginning, middle and end of all the conversations had this through line: the more you elevate “the decay curve” the more you’ll drive long-term revenue growth.

Picking one conversation apart a little - reducing voluntary cancellations - here’s sone of what I shared about lowering churn and ensuring your regular donors keep regularly donating to you.

It takes different tactics to reduce voluntary and involuntary cancels. It’s challenging to have a meaningful impact on reducing voluntary or involuntary cancels. But the value can be massive: in both cases, by keeping a monthly donor from canceling, we’re saving longer-term cash flow, not just one additional renewal.

Further, improvements to retention usually have a compounding effect. By reducing involuntary cancels, you strengthen your payment infrastructure and improve the rate of successfully charging future renewals (and, in some cases, initial donations).

Even better, reducing voluntary cancels usually means improving your product or program and positioning, and delivering more value to your regular donors, making your proposition more compelling to existing donors, but also prospective donors - a key lever to sparking new donor growth.

Reducing the rate at which donors choose to cancel mostly boils down to how much value creation gets communicated to them relative to what they’re donating. There are two large problem spaces to consider when reducing voluntary cancels.

1. Less Measurable Tactics

At one end of the spectrum, there are harder-to-do, less-measurable tactics that focus on delivering more value to a donor before they even consider canceling. Delivering more value doesn’t always mean doing more stuff.

Sometimes, it’s about helping donors discover value, or guiding them toward habits that help them consistently get/understand/see/visualize (depending on your org) value from your product or program.

2. Growth Tactics

On the other end of the spectrum, there are various growth tactics that help chip away at voluntary cancels right before a donor chooses to cancel or their subscription expires.

These tactics bend the product or program slightly toward better-retaining donors, especially those who are on the fence about canceling e.g. presenting “special offers” to donors as they’re canceling (matching gift from a major donor or an influencer, social channel shout out of thanks) or test re-defining “regular” from a monthly giving cadence to quarterly.

If you want to decrease cancellations, try:

Preventing churn in the cancelation flow by:
- Allowing donors to switch to one-off, and reminding them of what they’ll lose (e.g. consistent impact-creation).
- Introducing a special offer in the cancelation flow (i.e match x% of annual monthly giving up front), which can help sway those on the fence about canceling).
- Allowing donors to downgrade to a lower-priced monthly donation tier before canceling.
- Allowing donors to pause a monthly donation commitment.
Using notifications to prevent churn"
- When a monthly giving plan is coming to an end/renewal, be sure to let donors know it’s about to expire and remind them of the impact-creation benefit they’re about to lose. You can do this by showing them what they’re regular giving has empowered your org to achieve over the course of their giving period.
  - It’s valuable to send these notifications - which usually work well as cohesive messages across emails, SMS and push notifications - both for single/one-off donations framed under a timeline (eg it takes X number of Y to cure/support/enhance Z), as well as for annual commitments that are about to end.
Encouraging annual plans. Why?
- It brings you more cash upfront (allowing for capital to be invested in to the program/product/org-wide growth).
- Annual plans have better retention and lifetime value.
- They have lower transaction fees than monthly.

And a cautionary bit of advice from experience: don’t push any of these tactics too hard. It hurts the donor experience. If someone wants to cancel, it should be “uncomfortably” easy for them to do so - seamless, gracious, zero friction - and not in any way feel like a guilt trip.