RedBalloon: Why it’s time to invest in marketing
Last week, Big Red Group, the parent company of RedBalloon, a popular online marketplace for one-of-a-kind experiences like climbing the Sydney Harbour Bridge, acquired a minority stake in the US-based martech company Albert for an undisclosed sum.
Albert offers software that helps companies get more bang for their marketing buck by calculating the most effective combination of copy, creative and audience segment for digital campaigns on Facebook, Google and other platforms using artificial intelligence (AI).
The software is used by businesses around the world, including US skincare brand Crabtree & Evelyn and Italian lingerie brand Cosabella, and for the past three years, Big Red Group has held the exclusive licence to Albert in Australia and New Zealand.
Now that it owns part of the company, Big Red Group is focusing on scaling up the local offering and creating a hub of experts to service Australian clients. In addition to RedBalloon, those clients include Optus, Cellarmasters and Skinny Tan.
David Anderson, chief executive of Big Red Group, believes there’s a big opportunity for retailers to optimise their marketing campaigns using AI.
“Very few are AI-powered,” Anderson told Inside Retail.
“A lot of people use programmatic,” he said, referring to the practice of using software to buy ad space.
“And the native tools within Facebook and Google are significantly improving over time. But the difference between those guys and Albert is that Albert is autonomous and product-agnostic.”
“Google Analytics is probably understating Facebook performance and vice versa.”
According to Anderson, businesses need to feed a significant amount of material into Albert in order to benefit from the technology.
“If you’re not spending $30,000 to $50,000 a month minimum on digital marketing, you’re not spending enough for it to learn,” he said.
Optus reportedly is spending “tens of millions” of dollars a year running its digital campaigns through Albert.
The acquisition comes at a time when many businesses have slashed their marketing budgets due to the ongoing impact of Covid-19 on consumer spending and their own earnings. But Anderson believes this is a mistake.
That can be seen in Big Red Group’s approach to RedBalloon, which saw sales plummet in March, April and into May, when most Australians were told to stay home except for essential reasons.
“There was an enormous amount of anxiety – the last thing people were thinking about was having a high tea with their mum,” Anderson said, referring to one of the experiences available on the online marketplace.
But unlike most of its competitors which stopped bidding for digital ad space during this time, RedBalloon decided to raise its profile.
“We saw the opportunity to keep our brands alive and offer [consumers] hope, something to look forward to on the far side,” he explained.
At the same time, the marketplace expanded its range of experiences to cater to customers in lockdown, offering online cooking lessons with VIP chefs and outdoor cinemas delivered to your backyard.
It also worked with suppliers to rethink popular experiences like hot air balloon rides to be Covid-safe and extended the expiry dates on its vouchers to reassure customers they wouldn’t lose their credit.
The strategy appears to be working. Sales in June were comparable to the same month last year, and sales in the first two weeks of July were up 17 per cent on the same period last year. RedBalloon is planning to spend more on marketing between now and Christmas than it ever has before.
“We’re going to be courageous,” Anderson said. “We are anticipating that demand will be the same, if not greater, for getting out and doing something.”
The company is expecting a significant portion of this demand to come from the 6.4 million Australians who travelled overseas last year, and will be unable to do so this year.
In addition to RedBalloon, Big Red Group owns and operates two other experiential marketplaces, Adrenaline and Lime & Tonic, a corporate recognition platform, Redii, and a marketing arm, Marketics, which manages the Albert business.