Why direct response marketers get rich…not wealthy

Summary

• The longer you delay the ask in marketing, the bigger the ask can be; for example, building up a relationship with your audience over time allows for a larger payoff when you eventually make an offer.
• Goodwill compounds faster than revenue, which means continuously providing value without immediately asking for something in return can create stronger relationships and brand loyalty.
• Direct response marketing involves asking for an immediate action or purchase, whereas branding is about reinforcing the values and stories people tell about your products and services.
• Many big consumer brands don't offer discounts but instead focus on brand messaging, which reflects the power of branding over the long term.
• The ROI on branding isn't immediately apparent as with direct response, but over time, strong branding can result in a much higher return on advertising spend.
• Building a brand allows for simpler marketing strategies in the future, like simply placing your brand on a product and selling it at a premium, as people pay for values and identity association.
• Effective branding gives people the words to accurately describe what your brand is about, aligning with their perception and reinforcing your brand's message in the marketplace.
• Convincing the audience that your brand aligns with their values or identity can result in word of mouth promotion, which is more powerful and compounding than direct response marketing.
• The strategy of "give, give, give" without immediately asking for a return can lead to a growing audience that is more engaged, loyal, and willing to promote your brand spontaneously.
• Being patient and focusing on building a brand can create an environment where there is more demand for your products and services than you can handle, giving you a long-term competitive advantage.
• By examining the trajectory of large companies and marketers who transition from direct response to branding, one can learn the importance of a long-term perspective in building a sustainable and profitable business.

Video

How To Take Action

I would suggest starting by understanding the core difference between branding and direct response marketing. Realize that building a brand isn't about immediate sales, but about values, identity, and the long game. Here's how you can put this into action:

1. Offer Value: Start by consistently providing value to your audience without asking for something in return. You want to establish trust and build goodwill. This could be through free useful content, helpful tips, or insightful stories related to your niche.

2. Create Stories: Think about what stories you want people to associate with your brand. Share these narratives across your marketing channels, reinforcing the values of your product or service without pushing for a sale.

3. Be Patient: Allow your relationship with potential customers to develop over time. Remember, the longer you delay the ask, the bigger the ask you can make. Strong relationships lead to stronger brand loyalty.

4. Simplify Your Message: Find one or two words that describe what you stand for. Consistently communicate this simple message so it's easy for your audience to remember and share.

5. Embrace Word of Mouth: Focus on actions that encourage word of mouth. This could mean exceeding customer expectations or creating remarkable products that people naturally want to talk about.

6. Let Your Audience Speak: Listen to what your customers say about you. This is a form of branding that comes directly from customer experience. Align your marketing to reinforce these positive perceptions.

7. Think Long-Term: Shift your perspective from immediate ROI to a long-term vision. Branding is a strategic game, and when done right, it leads to sustainable growth.

Remember, shift the focus from 'ask' to 'give.' Your goal is to cultivate an engaged audience that's ready to support and promote your brand. It might take time and consistency, but the end result is a strong brand that stands the test of time.

Quotes by Alex Hormozi

"The longer you delay the ask, the bigger the ask can be"

– Alex Hormozi

"Goodwill compounds faster than revenue does"

– Alex Hormozi

"If you can delay the ask and you can have the resources and you can have the patience to build something bigger, your goodwill will compound faster than your revenue will in a direct response marketing environment"

– Alex Hormozi

"What you are saying about your brand clarifies what people are already saying"

– Alex Hormozi

"Goodwill compounds faster than revenue"

– Alex Hormozi

Full Transcript

difference between branding and direct response marketing and why not deeply understanding the differences costing you millions and millions of dollars and ultimately the amount of money that you probably want to make and if you don't know who i am my name is alex mozy i own acquisition.com it's a portfolio of companies that is about 85 million dollars a year in revenue all right i make these videos because i was once broke and i've learned a lot of lessons on the way and i don't want the pain that i experience to be in vain alright that's why i make these so that being said branding versus direct response i think this is one of the more interesting topics that i have dove into over the last year or so and it's come from a variety of different conversations i've had with top marketers and this morning i had a conversation with dean graciosi who is a phenomenal world-class marketer and we talked for like an hour this morning just about this concept of the difference between branding and direct response and i thought i would share some of the the lessons or discussion points that we had with you so that you can hopefully benefit and so the first point is that you may have heard this in my book 100 million offers but the longer you delay the ask the bigger the ask can be uh so for example you know if you're if you can use this in any situation whether you're you know courting a a lady or a guy or whatever you know if in the first five seconds you're like hey let's go home together it's like well you might have some audience to be willing to do that but the vast majority of people would not be willing to do that but if you date for you know six months then that might be something that would be almost everybody would be willing to do that after six months depending on whatever really beliefs that's not my point here but you can get the idea that a higher and higher percentage people would be willing to take you up on an offer if they spend more and more time with you and so the longer the delay the bigger the ask and the visual that i like to ascribe to this is the the longer the runway the bigger the plane that can take off and so the bigger the payload you can get based on the amount you delay to the same degree if you've seen um garyvee he's he's uh he's an influencer and and he owns a marketing agency out of new york and he spent i want to say 10 years or 12 years building his personal brand and then he finally had his ask which was hey buy my nft and then within the span of you know six months ended up making like a hundred million dollars from that nft launch right now i would make the argument that the nft launch itself was actually a director for its marketing play whereas everything prior to that was really about building the brand different examples of this that i think would be important to drive the point home and why i think that many many many marketers start in direct response and then end up in branding is because of one about to share with you so please listen closely to this if you are trying to make more money if you look at most big consumer brands you look at you know colgate or crest or you know shampoo brands right that have been here for a very long time they're not offering two for one deals they're not like hey go buy this toothpaste for 50 off right that's not actually what they're doing they're just talking about the products and if you look at some of these bigger celebrities that exist you look at dwayne johnson the rock built his huge brand and then said hey i'm offering i'm i'm starting this tequila guy you guys should check it out conor mcgregor conor mcgregor built up you know his personal brand then said hey check out proper 12. kylie jenner was like hey built up a brand and then she did her lip kits and so what's interesting is that brand people are now realizing is an amazing arbitrage opportunity for maximizing value and i think part of the reason behind this is that goodwill compounds faster than revenue does and so hear me out think through this with me if you've seen somebody who's consistently been selling and this may be you what happens is you provide value in some way and then you extract the value that you've the equity in the relationship through monetizing it through an ask or some sort of right hook as they say just getting them to try and buy something right and the thing is is that whenever you make an ask you decrease your goodwill right and so you kind of have to start over at zero again and then you build up goodwill and then you and you ask and then it goes back to zero again right so you're constantly depositing and extracting uh capital in the relationship and the hope is that it costs you less the deposit than you make on the extraction right like that's fundamentally what like traditional direct response marketing is at its most basic form right and the reason it is direct response is that we are actively requesting a direct reply or immediate action as a result of seeing our advertisement right of any kind to contrast that with branding what we're doing with branding is that we are reinforcing the values and the stories that people tell about our products and services all right so we're reinforcing stories versus asking for actions and you might be like well i you know branding doesn't make sense and i want to tell you this because when i started out my career i thought that every single company that did branding was i was like you guys are idiots if you guys understood how direct response worked you guys would make more money i'm such a genius blah blah blah blah and i was wrong as i often am and the more i study these massive companies i was like okay so all of these companies all do this type of marketing whereas little old me is doing this quick you know jab right hook whatever mark of just of just give ass give ask give us give ask and always just you know depositing enough value in order to extract the value later and the thing is is people get it people have seen it they know the game and yes it does work to a limited degree right but it's very very rare to find a massive massive direct response company i'm not saying they don't exist but i would say the preponderance of enormous companies are not direct response based companies and so why is that and i would pause it and this is my theory and this is what i talked to dean this morning about at length is the difference between direct response and branding is not the roi on the advertisement itself but on the time horizon with which we measure it all right and so in direct response you're always calculating your return on ad spend immediately rather than thinking can i build up this brand and then look at the return you're getting on that brand overall over an extended period of time and so i'll give you a classic example to illustrate the difference if i was selling t-shirts a direct response marketer might have a cool funny meme thing aggressively market it have upsells of two of two of the same shirts five of the same shirts getting on continuity for each meme shirt every month blah blah blah right that would be a typical direct response marketing plan not to say you can't make money doing it you can and that's this is the big exception i'm having here right is that like you can become a millionaire doing small games all right so i'm not saying you can't do it you absolutely can it's just that what type of game would you prefer to play and i can say that as i've i've aged or weathered in the game i continue to shift more and more towards branding but i do think there's a balance that needs to be struck but from a from a branding perspective in that same example it would be spending a year talking about what your values are the the stories that you want people to tell about you and your company and then you can simply put your brand on a t-shirt and people will pay a hundred dollars for it right and so then what is the return on the advertising you did for that year well if you can sell t-shirts for a hundred dollars rather trying to arb rather than trying to arbitrage you know meme t-shirts and discounts and bundling and doing all sorts of more complex things and just simply saying if you believe what we believe vote with your dollars about the things that you care about align with us and that's fundamentally what branding is when branding works very well is when what you are saying about your brand clarifies what people are already saying and so a lot of times people have a general gist of what your brand is hopefully it's what you want oftentimes it's not and this is especially true in the direct response marketing community at large because people say terrible things about the people who are doing their drug response and so their brand is the reputation and the things that other people say about you right and an example that elon musk gave in an interview i can't remember where he gave it he talked about how the consumer is the one that creates your brand he said if you look at i think he gave the example of toyota and ford but the point is not necessarily the brands but more so the message which is he said listen you know ford talked about being reliable and being high quality etc he said in toyota their marketing never said that and yet toyota is the company that's known for being reliable and high quality and things like that compared to the fords right he said so as much you can say whatever you want in the in the marketing messaging but it has to be true and so to my interpretation of that is what you want to do is give people the words to describe your brand that are true and just give them the words to say rather than trying to redefine the thoughts they have and i think that is really what comes to effective branding and doing that deliberately as an added point to that this is something that i got from grant cardone which has been one of one of the really deep and profound lessons i think i got from what our our two conversations we've had about marketing in general but one first off the many people who who don't like grant you have to appreciate how effective he is at promoting himself and his brand like you have to respect that all right you can you cannot like the man but you can app you must respect what his his level of effort and the outcome and the output of his effort right i personally have had nothing but positive interaction with the grant but my point is is that you have to respect that now that being said one of the things that he said that i have really taken with me is the one or two words that someone will associate with your brand he said when they think of me i want them to think this right and that is not uh you know this massive declarative you know value statement or mission statement because people don't care right nor do they remember hardly anything and so if you can get the masses to just remember oh yeah he's the real estate guy he's the business builder guy right which should be more aligned with what we do we build businesses and we take you know we buy interest in in information coaching e-learning type businesses that are in a niche and like that's what i want people to associate now they're not going to remember all the stuff that i just said but if i can just if they can just say like he's a digital business builder like he or like this digital business investor right either of those things would be things that i would say okay that's a positive association that's the type of association that i want people to make with my brand right and the thing is is that if i can wait a longer time which is why most people cannot do this and why i'm not saying you necessarily have to start branding day one but if you can be cognizant of what the message that you were relaying in your content and in the advertising that you do and i'm using advertising by the actual definition which is to make known right when you when you make your products and services known in the many ways that you do it if you can reinforce the simple message in every single thing people will begin as long as it's aligned with what's true to say the same things back to you and that will reinforce the cycle of who you are in the marketplace and what you stand for and so if branding is a higher roi activity overall i believe it is and i think that there's the many massive companies that exist out there would be great testaments and evidence to that point is that they don't engage in direct response marketing for the most part or even at all to the vast like the vast majority of the time they are talking much more about who they are and what they stand for right why they do what they do right and then people then buy their products and service in accordance with their values and they vote with their dollars about the things that they care about being the identity that they wish to associate with right and so i think that the reason seth godin started with direct response and then became and now talks exclusively about branding the reason simonson next started direct response and then talks way more about branding the reason that i started in direct response and talk much more about uh branding stuff now and at least that's my belief and where i think it's because that's where you make more money just over a longer time horizon and i think the reason that many direct response marketers burn out is because they don't like the brand that they are building for themselves which is why most people leave the space over a long enough time horizon and so that's why you don't see many i'm not saying there aren't any but the vast majority of direct response marketers tend to be younger one of the difficult things about this and i was having a good conversation with a friend about this is that because it is such a young space there are no there are not many people who have old lessons the the predominant education that exists in the space is people who are new the fact that someone can consider themselves a quote og in the internet marketing space after three years is laughable right it's laughable it's hilarious but it's true in that space it's very difficult to be an og because most people burn out because their brand equity drops so much right and so if the only way that we can build very big things is doing them the same thing over a long period of time then it would create the i don't say obvious but a natural conclusion that branding is the direction that more people end up going in once they have the ability to do so and so if you can delay the ask and you can have the resources and you can have the patience to build something bigger your goodwill will compound faster than your revenue will in a direct response marketing environment and so this is the concept around give give give rather than ask give give give comma give give give comma give give give get and what's interesting is that i think most people and the prospects that are consuming your your content and things like that they are waiting for the other shoe to drop they're waiting for you to make the ask and so they have their guard up but if you give give give and then right when they're expecting you to ask give again and then again and give even more their guard begins to drop and then they start to think man this guy or this gal is awesome i really like this person and then something interesting happens they start telling people about you because they don't believe that they're sacrificing their own brand equity by sharing your message that is where the compounding effects of word of mouth start to take off and so when i say that goodwill compounds faster than revenue it's because in the traditional example it would be give give give ask and this isn't me poo poo and gary or anything like that i mean i think that very much at least establishing that cadence is useful for most people who are doing a response direct response at least give something before you ask right but if rather than asking right where you have to start over at zero because you build you build equity build value in the relationship and then you asking you back down to zero and then you build it then you go back down to zero and then you're basically always capped by the amount of value that you have in the relationship that's the cap right but the alternative if you were to look at this visually would be give give give give give give give give and then it keeps going the chart keeps going off and then at a certain point a certain percentage of that audience because they have they are reciprocal in nature type people they will take steps towards you without you even asking simply because they believe so strongly in what you have and those the types of clients right that you want to be able to take on it just takes patience to get there but when you have those types of clients they get better results they pay for bigger premiums and it also gives you implied scarcity within your products and services and you are always underselling your demand which will essentially eliminate your bottleneck that you have in growing because you always have more demand than you can possibly handle and that is the benefit of building the brand over the long term rather than simply the the one two punches in order to extract capital today and so if you can delay the amount of time that you have between when you provide value and when you ask and ideally you never do you simply allow the goodwill to continue to compound allow the word of mouth to continue to grow to the point where you start receiving money probably far far further in the future than you are now and what you are accustomed to doing but in that future state you can then look at the minimal amount that you're spending right in order to distribute your message to advertise right to make known and then you will see that you have significantly higher returns on your advertising efforts it just took longer to get there and so understanding the difference between branding and direct response and having a longer term perspective and looking at the ogs in the space or lack thereof and the people who have transitioned from direct response to branding i think that there is a lot of lessons that we can take from it and this is just one of them that i wanted to share with you and if you're new to the channel welcome to mozy nation i said this earlier but our portfolio is about 85 million a year it's actually a little higher than that i just try to stay consistent but i think it's probably over 100 now but i i make these videos because i struggled a lot coming up and i and i just i hope that you know the pain that i went through is not for nothing and so that's why i make these videos so we i just i just hope you like it so anyways keep being awesome and i'll see you guys in the next vid