Alex Hormozi: Why direct response marketers get rich...not wealthy

Last updated: Jun 16, 2023

The video discusses the difference between branding and direct response marketing, and how not understanding this difference can cost marketers millions of dollars.

This video by Alex Hormozi was published on Mar 7, 2022.
Video length: 16:13.

The video discusses the difference between branding and direct response marketing and how not understanding the difference can cost millions of dollars.

The longer the delay in making an ask, the bigger the potential payoff. Direct response marketing involves actively requesting a direct reply or immediate action, while branding involves reinforcing the values and stories that people tell about products and services.

The video also highlights the importance of goodwill and how it compounds faster than revenue, making branding an arbitrage opportunity for maximizing value.

  • The video discusses the difference between branding and direct response marketing.
  • Not understanding this difference can cost marketers millions of dollars.
  • The longer you delay the ask, the bigger the ask can be.
  • Goodwill compounds faster than revenue does.
  • Branding is about reinforcing the values and stories that people tell about products and services, whereas direct response marketing is about requesting a direct reply or immediate action as a result of seeing an advertisement.
  • Direct response marketing can make you money quickly, but it's not sustainable in the long term.
  • Delaying the ask and having the patience to build something bigger will compound goodwill faster than revenue.
  • Building a brand over the long term eliminates the bottleneck in growing because you always have more demand than you can handle.
  • Effective branding involves giving people the words to describe your brand that are true, rather than trying to redefine the thoughts they have.

Why direct response marketers get rich...not wealthy - YouTube

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Introduction

  • The video discusses the difference between branding and direct response marketing.
  • Not understanding this difference can cost marketers millions of dollars.
  • The longer you delay the ask, the bigger the ask can be.
  • Goodwill compounds faster than revenue does.
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The Delayed Ask

  • The longer you delay the ask, the bigger the ask can be.
  • A higher percentage of people would be willing to take you up on an offer if they spend more time with you.
  • The longer the runway, the bigger the payload you can get based on the amount you delay.
  • GaryVee spent 10-12 years building his personal brand before making his ask and making a hundred million dollars from his NFT launch.
  • The NFT launch itself was a direct response marketing play, whereas everything prior to that was really about building the brand.
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Branding vs Direct Response Marketing

  • Big consumer brands like Colgate or Crest are not offering two for one deals or discounts.
  • They're just talking about the products.
  • Celebrities like Dwayne Johnson, Conor McGregor, and Kylie Jenner built up their personal brands before making their ask.
  • Goodwill compounds faster than revenue does.
  • Branding is about reinforcing the values and stories that people tell about products and services, whereas direct response marketing is about requesting a direct reply or immediate action as a result of seeing an advertisement.
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Why direct response marketers get rich...not wealthy - YouTube

Conclusion

  • Branding is an amazing arbitrage opportunity for maximizing value.
  • Goodwill compounds faster than revenue does.
  • Direct response marketing is about depositing and extracting capital in the relationship, whereas branding is about reinforcing stories.
  • Massive companies all do branding, whereas direct response marketing is more for smaller companies.
  • People get branding and have seen it work for massive companies.
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The Difference Between Direct Response and Branding

  • 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.
  • In direct response, you're always calculating your return on ad spend immediately, rather than thinking about building up the brand and then looking at the return over an extended period of time.
  • Direct response marketing plans typically involve aggressively marketing a product, having upsells, and getting on continuity for each product.
  • Branding involves spending time talking about your values and the stories you want people to tell about your company, and then putting your brand on a product.
  • Branding works well when what you are saying about your brand clarifies what people are already saying.
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The Importance of Effective Branding

  • Effective branding involves giving people the words to describe your brand that are true, rather than trying to redefine the thoughts they have.
  • Grant Cardone emphasizes the importance of one or two words that someone will associate with your brand.
  • People don't care about massive declarative value statements or mission statements, but they do remember simple associations.
  • Effective branding involves waiting a longer time horizon to see the return on investment.
  • Branding involves giving people the words to say about your brand that are true, rather than trying to redefine their thoughts.
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The Effectiveness of Direct Response Marketing

  • Direct response marketing can be effective, but it is rare to find a massive direct response company.
  • Direct response marketing plans involve aggressively marketing a product, having upsells, and getting on continuity for each product.
  • Direct response marketing can make you a millionaire, but it involves playing small games.
  • Direct response marketing involves calculating your return on ad spend immediately, rather than waiting for a longer time horizon to see the return on investment.
  • Direct response marketing is not the best option for building a massive company.
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The Importance of Respect for Effective Marketing

  • It is important to respect the effectiveness of marketing, even if you don't like the person or company doing the marketing.
  • Grant Cardone is an example of someone who is effective at promoting himself and his brand.
  • One of the things Grant Cardone emphasizes is the importance of one or two words that someone will associate with your brand.
  • Effective marketing involves giving people the words to say about your brand that are true, rather than trying to redefine their thoughts.
  • Effective marketing involves waiting a longer time horizon to see the return on investment.
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The Difference Between Branding and Direct Response Marketing

  • Branding is about creating a message that people associate with your company or product.
  • Direct response marketing is about making your products and services known in many ways.
  • Reinforcing a simple message in every single thing will help people remember your brand.
  • Massive companies engage in branding more than direct response marketing.
  • People buy products and services in accordance with their values and the identity they wish to associate with.
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Why Direct Response Marketers Get Rich, Not Wealthy

  • Direct response marketing can make you money quickly, but it's not sustainable in the long term.
  • Branding is a higher ROI activity overall.
  • Direct response marketers tend to burn out because they don't like the brand they are building for themselves.
  • Delaying the ask and having the patience to build something bigger will compound goodwill faster than revenue.
  • Give, give, give rather than ask, give, give, give, give, give, get.
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Why Goodwill Compounds Faster Than Revenue

  • Give, give, give, give, give, give, give, and then it keeps going.
  • A certain percentage of the audience will take steps towards you without you even asking.
  • It takes patience to get there, but those types of clients get better results and pay for bigger premiums.
  • Building a brand over the long term eliminates the bottleneck in growing because you always have more demand than you can handle.
  • Branding creates implied scarcity within your products and services.
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The Importance of Patience in Building a Brand

  • Direct response marketing is a young space, and there are not many people who have old lessons.
  • Most people burn out because their brand equity drops so much.
  • Building a brand takes time and patience.
  • Goodwill compounds faster than revenue.
  • Give, give, give, give, give, give, give, and then it keeps going.
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The Importance of Understanding the Difference Between Branding and Direct Response Marketing

  • Direct response marketing is about extracting capital today by providing value and asking for a sale immediately.
  • Branding is about delaying the amount of time between providing value and asking for a sale, allowing goodwill and word of mouth to compound over time.
  • By delaying the ask, marketers can receive money far in the future and have significantly higher returns on advertising efforts.
  • Having a longer-term perspective and understanding the difference between branding and direct response marketing is crucial for success.
  • Looking at the OGs in the space and those who have transitioned from direct response to branding can provide valuable lessons.
  • As an entrepreneur and CEO of Acquisition.com, Alex Hormozi shares his experiences and knowledge to help others avoid the struggles he faced in his own journey.

Watch the video on YouTube:
Why direct response marketers get rich...not wealthy - YouTube

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