Allocating Marketing Spend in Early Stage Startups


Organic versus Paid is a running debate, no matter the size of the company. Neither is free and both create value to a brand when used properly at the right stage of the brand's growth. In the last post, I explained why it is inefficient and cost prohibitive for an new/nascent brand to use paid social reach through digital ads (display). But, that digital spend can be more effectively employed to create value along all the business objectives you have.

THE KEY: micro-segment decision journeys

In this post, I outline 5 ways of effectively allocating budget to paid marketing channels to build awareness and nudge consumers along the purchase journey. Understanding your customer segment's decision journey is critical to the success of your product at any stage. The underlying idea in my approach is to -

  • Micro-target the most relevant AND resonant target audience.
  • Rank individual probability of conversion by understanding behavior towards decision making
  • Optimizing delivery of messaging and paid media to closely approximated in-market audience

Companies with large marketing budgets, and, established brands have the advantage of large third party datasets, first party historical sales data and third party support to analyse and target multiple segments at scale. As a small company, the best way to get around the problem of elephant in the room is to identify slices of market, test and tweak and then expand to markets that are alike in increasing ellipses.

High Frequency, Narrow Targeting

The goal here is awareness not purchase or conversion. call this the Sanders approach. Pick a singular, unique and differentiated value proposition for your offering. Identify a core audience segment that is highly relevant to that value proposition. This segment is not who you want as clients but who will want/need you. Study their media consumption patterns including type, style, times of most engagement and key value words that resonate the most. Feed this segment at a high frequency with awareness building outreach, including ads, direct mailers, emails offers, highly specific to this niche audience, that repeat and reinforce the identified value proposition. Set the ad budget to have a lower the per day limit and re-deliver the ads consistently over an initial 30-60 day period. Pause and repeat the delivery and test how the awareness was built up. Switch between CPM and oCPM payment options. The expectation is not to get clicks but simply achieve brand recognition and retention. 

Prioritize Paid Search over Display Ads

Enable the right market to find you and keep them warm

Search Engine Marketing (SEM) offers both brand awareness as well as conversion. To move from awareness to conversion, you need to be involved in their purchase journey from the time of research. This means visibility in search results. While there are ways of enhancing ranking in search result through content and inbound strategies, they take time and a lot more effort. If you have a distinct set of search key words that align with your offering, then a faster and more efficient parallel to a strong content strategy SEM or . SEM allows direct targeting of users in the market with the potential to lead towards making a purchase. Tied in with a strong content strategy, every search ad delivers higher ROI than display ad at this stage of your company. The added benefit of SEM is that it helps qualify your target segment.  Since you are not actively targeting any particular segment, data collected from this channel, allows to reevaluate any missed segment with high potential. Additional reading: Paid Search

Social Retargeting

Retargeting is delivering an ad to an user who has recently visited your site or searched for your brand. Often treated as redundant re-messaging, repeated studies have shown this channel to be very effective in creating brand lift and top line growth. Over 70% of consumers abandon their shopping cart and with retargeting, you can increase the return completion by 2,250%!

Increase in transaction completion rate

  • Users who are retargeted to are 70% more likely to convert.
  • Retargeted ads have a click-through of 0.7%.
  • Retargeted ads have the potential to increase branded search exposure by more than 1,000%.
  • 26% of users return to complete their checkout process when reminded.
source: Digital Information World

Go Contrarian on Content

The typical advice when you are building out a content strategy for a brand is to publish often and share often. I recommend doing the opposite and target not just volume but make yourself valuable and resonant. Post at a lower frequency and focus on quality. Engage your ideal audience by providing them with useful and actionable information that talks about the market and your consumer's decision journey more than about your product. Create an ecosystem of information that enables them to make the right choice for them rather than simply selling your product. This will make your brand the resource destination on the market you serve, create trust and loyalty in your customers, and, make your content infinitely more shareable. A great example of this strategy well implemented is the case study of Hubspot.

Focus on Influencer Marketing

Finally, build a network of early adopters and leverage their voices in creating a wide market. Influencer marketing can also be a paid channel. Entering into contracts with key players in your industry helps you build both a client list as well as visibility at a faster pace. The key to finding the right influencer is to create a value matrix, including cost, and ranking potential suitors against that. The choice of the influencer channel(s) should be based not just on the cost but also resonance with the brand values.

For example, if you are a food innovation company, your mission statement is an asset in negotiations. A potential influencer who shares your values creates more return in the long term and could be even cheaper in the near term. Additionally, he/she will be able to better align his messaging with your brand's positioning and, even, reinforce that.