Branding vs Direct Response Ep 506

Alex Mozi, owner of acquisition.com, discusses the nuances between branding and direct response marketing, underlining how delayed asks can lead to greater rewards. He shares insights from conversations with top marketers, including a significant discussion with Dean Graciosi, emphasizing how branding can be an arbitrage opportunity to maximize value. Mozi explains that while direct response marketing seeks immediate actions through advertisements, branding focuses on reinforcing values and stories, leading to a more profound, long-term return on investment. By building goodwill and brand equity over time, companies can create more sustainable and substantial growth, moving away from the quick transactional nature of direct response to the compounding effects of a strong brand reputation.

• Alex Hormozi introduces the topic by emphasizing the importance of understanding the difference between branding and direct response marketing.
• He claims that not understanding these differences could cost millions of dollars.
• Hormozi owns acquisition.com, a portfolio of companies generating $85 million a year in revenue.
• The discussion is based on his experiences and lessons learned, with no intent to sell anything.
• The conversation with Dean Graciosi, a world-class marketer, inspired Hormozi to share insights on the topic.

"In this video, I want to break down the 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."

The quote sets the stage for the discussion, highlighting the financial stakes involved in understanding branding versus direct response marketing.

• Hormozi introduces the concept that delaying the ask allows for a bigger request later on.
• He uses a relationship analogy to illustrate how a longer period of engagement leads to a higher likelihood of agreement to a significant request.
• The concept is likened to a plane needing a longer runway for a bigger takeoff, implying the greater the buildup, the larger the potential payoff.

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

This quote introduces the principle that time invested in building a relationship or presence allows for larger requests or offers to be made to the audience.

• Hormozi differentiates between Gary Vee's long-term brand building and his subsequent NFT launch, which Hormozi considers a direct response marketing strategy.
• He suggests that many marketers start with direct response and transition to branding over time.
• The strategy of building a brand is seen as an "arbitrage opportunity" for maximizing value.

"Gary Vee, he's an influencer and he owns a marketing agency out of New York and he spent, I want to say, ten years or twelve years building his personal brand. And then he finally had his ask, which was, hey, buy my NFT. And then within the span of six months, ended up making like $100 million from that NFT launch."

The quote exemplifies the payoff of long-term brand building followed by a direct response marketing strategy, as demonstrated by Gary Vee's success with his NFT launch.

• Hormozi posits that goodwill compounds faster than revenue, suggesting that brand building can create more value over time than immediate sales.
• He explains that every time you ask for a sale, you deplete goodwill and must start rebuilding it.
• The concept implies that continuous selling without providing value diminishes the relationship with the audience.

"Goodwill compounds faster than revenue does."

This quote encapsulates the idea that the intangible asset of goodwill can grow and become more valuable over time, outpacing the immediate gains from revenue.

• Hormozi cites examples of celebrities who have leveraged their personal brands to launch successful products.
• Dwayne "The Rock" Johnson with his tequila brand, Conor McGregor with Proper Twelve, and Kylie Jenner with her lip kits are mentioned as successful cases of brand arbitrage.
• These examples illustrate how a strong personal brand can be used to facilitate successful product launches.

"You look at Dwayne Johnson, the rock built his huge brand and then said, hey, I'm starting this tequila, you guys should check it out. Conor McGregor. Conor McGregor built up his personal brand that said, hey, check out proper twelve. Kylie Jenner was like, hey, built up a brand and then she did her lip kits."

The quote provides real-world examples of individuals who have effectively utilized their personal brands to support and amplify their business ventures.

• Direct response marketing involves requesting immediate action from advertisements.
• Branding reinforces the values and stories that people associate with products and services.
• Alex Hormozi initially believed branding was ineffective compared to direct response.
• Over time, Hormozi recognized the value in branding, observing that most large companies focus on branding.
• Direct response marketing measures return on ad spend immediately, while branding looks at long-term returns.
• Branding allows companies to sell products at higher prices due to established brand value.
• Hormozi suggests there should be a balance between direct response marketing and branding.

"You're constantly depositing and extracting capital in the relationship. And the hope is that it costs you less to deposit than you make on the extraction. That's fundamentally what traditional direct response marketing is at its most basic form."

This quote explains the transactional nature of direct response marketing where the goal is to spend less on acquiring a customer than what that customer spends in return.

"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 of any kind."

This quote defines direct response marketing as a strategy that seeks an immediate reaction or action from the audience.

"And the more I studied 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 jab, right hook, whatever, of just give, ask, give, ask, give, ask, give, ask."

Alex Hormozi reflects on his realization that large companies tend to focus on branding rather than the give-and-take approach of direct response marketing.

"And so why is that? And I would posit, 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."

Hormozi proposes that the key difference between direct response and branding is the timeframe over which the return on investment is measured.

"If you believe what we believe, vote with your dollars about the things that you care about. Right, align with us. And that's fundamentally what branding is."

This quote illustrates the concept of branding as a way for consumers to align with a company's values and express their own beliefs through their purchases.

• Hormozi discusses how branding is about aligning what the company says with what people are already saying about the brand.
• The reputation of a brand in direct response marketing can often be negative due to aggressive tactics.
• Branding is essentially the reputation and stories told by others about your company.

"And when branding works very well is when what you are saying about your brand clarifies what people are already saying."

The effectiveness of branding is highlighted when a company's messaging resonates and clarifies the existing perceptions of the brand.

"And so their brand is the reputation and the things that other people say about you."

This quote emphasizes that a brand's reputation is built on what others say about it, not just what the company claims.

• The podcast grows through word of mouth, without the use of ads or sponsorships.
• The host encourages listeners to share the podcast the same way they discovered it, promoting organic growth.

"The only way this grows is through word of mouth. And so I don't run ads, I don't do sponsorships, I don't sell anything. My only ask is that you continue."

This quote from the podcast host explains the reliance on organic growth through word of mouth, as opposed to paid advertising or sponsorships.

"So if it was a review, if it was a post, if you do that, it would mean the world to me, and you'll throw some good karma out there for another entrepreneur."

The host expresses gratitude and encourages listeners to share the podcast, thereby supporting the entrepreneurial community.

• Elon Musk emphasized that consumers ultimately define a brand's reputation.
• Musk noted that despite marketing efforts, a brand like Toyota became known for reliability and quality through consumer experience rather than direct claims in their advertising.
• Alex Hormozi interprets this as the importance of giving people accurate words to describe your brand, which reinforces genuine qualities rather than attempting to redefine consumer perceptions falsely.

"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, 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."

The quote illustrates that consumer experience and perception are more influential in establishing a brand's identity than marketing claims. Toyota is perceived as reliable and high-quality not because of their marketing statements but because of the consumer's belief and experience with the product.

• Alex Hormozi learned from Grant Cardone that effective branding can be encapsulated in one or two words that the public will associate with your brand.
• The idea is to simplify the brand's message to the extent that it's easy to remember and aligns with the truth of what the brand represents.
• Hormozi wants his own brand to be associated with terms like "digital business builder" or "digital business investor," which are succinct and reflective of his activities.

"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."

This quote captures the essence of distilling a brand's identity into a simple, memorable concept that consumers can easily recall and associate with the brand.

• Hormozi discusses the importance of being aware of the messaging conveyed in content and advertising from the beginning, even if branding isn't the immediate focus.
• Consistency in messaging and alignment with the truth can lead to a positive feedback loop that reinforces the brand's identity in the market.
• He believes branding offers a higher return on investment over time, as evidenced by large companies that focus on branding over direct response marketing.

"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."

This quote suggests that branding, when done correctly, can yield greater long-term financial benefits than direct response marketing, as supported by the practices of large, successful companies.

• Both Seth Godin and Simon Sinek began with direct response marketing but now focus more on branding.
• Hormozi himself has transitioned from direct response to discussing branding more, believing it is more profitable in the long run.
• Direct response marketers often burn out or leave the industry because they do not like the brand they are building, which is why many in the space are younger and lack long-term lessons.

"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."

The quote highlights a potential pitfall of direct response marketing: the lack of a sustainable or satisfying brand identity can lead to burnout and turnover within the industry.

• Newcomers in the internet marketing space often mistakenly view themselves as veterans after a short period.
• The high burnout rate in internet marketing is due to rapid declines in brand equity.
• Consistency over time is essential for building significant ventures.
• Branding becomes a key focus for those with the resources and patience to build a lasting presence.
• Goodwill accumulates more quickly than revenue in environments that favor giving over asking.

The fact that someone can consider themselves a, quote, og in the Internet marketing space after three years is laughable, right?

This quote underscores the misconception that a few years in internet marketing can establish someone as an experienced veteran, which Alex Hormozi finds humorous given the industry's rapid evolution and high turnover.

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, I don't want to 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.

Alex Hormozi suggests that longevity and consistent effort lead to the realization that branding, rather than short-term tactics, is the key to sustainable growth in internet marketing.

• The traditional direct response marketing strategy involves giving value before making an ask.
• A more effective strategy may be to continuously give without asking, which lowers consumers' defenses.
• When consumers start advocating for a brand voluntarily, word-of-mouth marketing begins to compound.
• The "give, give, give" approach builds brand equity continuously, while direct response marketing often resets equity with each ask.

And so this is the concept around give, give, give rather than ask, give, give, comma, give, give, give, comma, give, give, give, get.

Alex Hormozi explains his marketing philosophy, which emphasizes continuous giving to build relationships and goodwill, as opposed to the conventional pattern that includes an ask following a few instances of giving.

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.

This quote highlights the psychological impact of exceeding expectations in the giving process, which can lead to lowered consumer defenses and increased brand affinity.

• Clients who are naturally reciprocal will move towards a brand that consistently provides value without being asked.
• These clients tend to achieve better results, pay higher premiums, and contribute to the brand's implied scarcity.
• A strong brand with high demand eliminates growth bottlenecks due to an abundance of demand over supply.
• Delaying or avoiding the ask allows goodwill to compound and word-of-mouth to expand, leading to higher returns in the future.

And those are the types of clients that you want to be able to take on. It just takes patience to get there.

Alex Hormozi points out that attracting the ideal clients requires patience, as the process of building trust and goodwill through continuous giving takes time.

And you are always underselling your demand, which will essentially eliminate your bottleneck that you have in growing because you will always have more demand than you can possibly handle.

The quote emphasizes that a strong brand that consistently gives more than it asks for creates a situation where demand exceeds supply, facilitating growth without the typical constraints of capacity.

• Understanding the distinction between branding and direct response is crucial for long-term success.
• Observing the trajectory of industry veterans who have shifted from direct response to branding can provide valuable lessons.
• A long-term perspective yields higher advertising returns, but requires a longer timeframe to see results.

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.

Alex Hormozi encourages an understanding of the fundamental differences between branding and direct response marketing, suggesting that there are lessons to be learned from those who have successfully made the transition.

• Alex Hormozi shares his experiences to help others avoid the struggles he faced.
• The portfolio he manages has grown significantly, reflecting the success of his approaches.
• His motivation for creating content is to provide value based on his past challenges.

I make these videos because I struggled a lot coming up and I hope that the pain that I went through is not for nothing.

This quote reveals Alex Hormozi's altruistic motive behind creating content, which is to ensure his past difficulties serve a purpose in helping others.

But our portfolio is about $85 million a year. It's actually probably a little higher than that. I just try to stay consistent, but I think it's probably over 100 now.

Alex Hormozi discloses the growth of his portfolio, which serves as a testament to the effectiveness of his marketing philosophy and strategies.