10 ms·
When to invest in marketing
- Exuma 3y agoI don't even know what to say
- ses1984 3y agoYeah, talk about mismanagement. > This is why accelerators like YC prefer cold outreach / emailing prospects during the early days of your company - it's free. It’s not free. I’m not sure what the rest of the article says but if the rest of it is as good as the beginning…
- Zetice 3y ago...it is free? It costs me nothing to send out an email.
- infecto 3y agoOnly if you are counting your time as zero which is not a great idea as a founder.
- benj111 3y agoBut if you're a 'founder' of a non VC company, you have less money than time, so you're better spending your time budget than your money budget. Of course the calculations if someone's throwing enough money at you that you can throw away 1.5m on marketing without results.
- chongli 3y agoIt costs you time. Time is money. Especially when you’re a founder with your hands full!
- stoniejohnson 3y agoIf you are doing it yourself, it costs you time. If you want someone else to do it, it costs you money.
- tester756 3y agowhat's the point of that pedantry? Managing ad campaign takes time too.
- BugsJustFindMe 3y ago"Something else also costs you" isn't a rebuttal to the statement that it isn't free.
- frumper 3y agoI don’t think you’d find anyone saying an ad campaign is free. A grandparent comment is saying a coldcall/email campaign is free.
- tekla 3y agoUntrue. Takes time, energy, and a worsening of your email reputation when people mark you as spam and all your effort goes straight to the trash.
- Zetice 3y agoThat's not the "cost" being discussed in the article, it's explicitly referring to dollar amounts, therefore the contextualized discussion is also about dollar amounts.
- marcosdumay 3y agoAll of the things on the GP have a cost in dollar amounts. And your time has a very direct one that you can trivially get with a calculator.
- Zetice 3y agoYour time does not have a very "direct" dollar amount, this is false.
- ses1984 3y ago“How much would it cost for me to pay someone to do this?” is pretty close. So is “how much could I earn in the same amount of time if I did something else?” It may not be strictly direct but it sets bounds around the value of your time. You could do cold outreach, or you could put yourself out on Uber or task rabbit and then put that money towards an ad campaign.
- Zetice 3y agoThis presumes falsely that you can come up with accurate numbers for those questions, or that the overhead involved in managing people is then quantifiable concretely. ...it also presumes that any of that is actually realistic; I wonder what TaskRabbit's ToS is like re: confidentiality, for example. "Hey TaskRabbit, pls develop my marketing strategy for my stealth startup, thanks!"
- deleted 3y ago[deleted]
- jhoelzel 3y agotry it in europe, see how quickly free will bankrupt you
- commonlisp94 3y agoAnd your customers know that too.
- deleted 3y ago[deleted]
- tekla 3y agoFeels like a cope post and how much nobody cares about your product. I spend $100 a month on Ads for a physical business and get 1 or 2 people in the door a month who tell me they saw my ad. Can I get $10 mil in VC funding now?
- duxup 3y agoWhat is a "cope post"? The article mentions a bad choice (not by the author) but moves on to talk about how to make better choices and never talks about the mistake again. Did you read past the first paragraph?
- dmoy 3y agoYea it's not really a cope post, more throwing the previous people in charge of marketing/ads at the company under the bus. Rightly so imo, who the fuck cranks up spend to >$100k/mo without proper conversion tracking and stopping/changing if things are obviously wrong?
- gabereiser 3y agowho cranks it up >$10k/mo without proper conversion tracking and retrospectives of the campaigns? This was a complete failure of leadership. If the first $10k didn't bring in any eyeballs (not to mention conversions), you need to change your strategy.
- captaincaveman 3y agoThose previous people probably got promotions in new role, as they had experiance with a $1.5 mill ad budget!
- emodendroket 3y ago“Cope” is slang for what people used to call “sour grapes:” convincing yourself aloud that some negative circumstance isn’t really that bad or doesn’t really reflect on you.
- bandyaboot 3y ago
- oatmeal1 3y agoI wish this post were about the management failures that wasted the money instead of general pointers about marketing.
- duxup 3y agoI would suspect it was "here is a marketing budget, go market" and someone who maybe didn't know better / much about marketing just spent it while nobody was paying attention. That might be a really short article.
- deleted 3y ago[deleted]
- hiatus 3y agoWould it be that interesting? "Management makes unquantifiable decisions based on feelings vs data" is hardly an interesting story.
- oatmeal1 3y agoIf you summarize anything down to one sentence you can make anything sound uninteresting. The details and nuances are what makes things interesting. If the author makes the title of the post about wasting $1.5 million the post should be an interesting story about how that happened.
- hinkley 3y agoThe complaint I’ve heard about Adsense over and over is that it can blow past your budget quickly. You can spend twice your budget in a month, spend the next few months trying to tune that, and end up out of your yearly budget by August.
- hinkley 3y agoThe first step of recovery is admitting you have a problem.
- 3y ago
- duxup 3y agoAs someone who feels allergic to the amorphous marketing talk I found this article refreshingly concrete. I like the idea of specific goals over just "marketing" that I usually hear.
- e1g 3y agoYou just enjoyed reading a made-up self-promotion piece from a marketing consultant, so perhaps good marketing works.
- deleted 3y ago[deleted]
- Vagantem 3y agoHey there - author of article here. Story is actually not made up! However, I'm a developer now so don't do consulting any more.. Merely writing this down for my own record and if it can help/inspire anyone else :) Thank you for reading though!
- Vagantem 3y agoThank you! Feel free to drop your email in the header of the site to know when I post my next article :)
- drones 3y agoWhat is the average ROI on advertising by using google AdSense et. al? Advertising is an assumed cost of business for any medium to large company these days, but I feel there's a growing silent minority who slowly believe, slowly know, that advertising in the online space is unfeasible for a majority of products. Advertisers like google make so much money because online advertising is one of those things that is super easy to keep throwing more money at. I wonder how many companies would benefit from entirely ditching online advertising and pursue alternate methods like direct outreach or sponsored content. We might see 4,000-10,000 advertisements a day[1]. Do you remember two advertisements you saw today? Mere-exposure effect is the only thing going for it. Which may be fine if you're Coca-Cola, not so much if you run an online clothing store. [1]https://webtribunal.net/blog/how-many-ads-do-we-see-a-day/#:~:text=According%20to%20marketing%20experts%2C%20the,social%20media%20is%20an%20ad https://webtribunal.net/blog/how-many-ads-do-we-see-a-day/#:....
- napo 3y ago> direct outreach to key customers are you talking about b2b? I don't know what you have in mind. Sounds like you are suggesting companies should start calling me or knocking on my door instead of puting ads on google search results. That doesn't sound great.
- saulpw 3y agoHow about giving out free samples in the supermarket? Going to a conference and talking with people? Busking at the farmer's market?
- drones 3y agoYeah, edited my comment. Agreed that direct outreach is ineffective if you aren't b2b. If you're selling commercial products for a mass market, I think doing things like sponsored content might be more effective. If I'm selling products to businesses or a few customers, it's better to do outreach by attending industry events, talks etc... I think the cold approach still works.
- 3y ago
- aninteger 3y ago"We Spent $1,500,000 on Ads Without Getting a Single Customer" but they did get the top #1 spot on Hacker News so maybe that's all they wanted? Just wine about spending all this money (poorly) and make a post about it and get free advertising with a trip to the front page of Hacker News.
- hackernewds 3y agoAnd what would be the point of fake Internet points? Unless this leads neither to consumers
- HWR_14 3y agoWhat's the value of a top HN post? Probably not $1.5MM. But not zero.
- jklinger410 3y agoThat is why I flagged it, as should you, and it should be removed from the site. It is low effort and misleading at best.
- Vagantem 3y agoHey there - author of article here. As the article mentions in the beginning, this is a spend that happened before I started consulting them - and the blog has nothing to do with the actual company. Also, I'm a developer now so don't do consulting any more.. Merely writing this down for my own record and if it can help/inspire anyone else so not looking for free advertising. But thank you for reading!
- deleted 3y ago[deleted]
- lordnacho 3y agoBut you can drip your money into the ads and see if anything comes back. How could you run it for 12 months and 1.5M? Doesn't even matter whether you have PMF, you can just use the direct feedback: ad was on for two weeks and nobody showed up, let's stop and think. I've run little web shops and you always get some kind of interest. It might not pay back, but you wouldn't get zero.
- Vagantem 3y agoHey there - author of article here. Took this from another comment I wrote: The problem for them was mainly that the agency running their ad account counted "demo requests" as their top metric and mistakingly counted all demo requests that came in as attributed to the marketing spend. So they reported on faulty numbers during the entire year. Hubspot showed that direct ads actually didn't work at all (mainly because they didn't really have PMF yet). Needless to say, that agency got fired pretty quickly.
- benj111 3y agoI don't see how you can spend 1.5m and not see any return. Sure spend 10k, if you don't see results, try something else. I assume they have customers from elsewhere, so they must have a clue who their customers are. I don't really get the venture capital model anyway. If my business is anything like anyone elses, it takes a few years to find out what actually works. You don't need millions to find that out, and you don't need millions in marketing until you've actually found that out. As it is this is a story of a company not knowing what they're doing pouring 1.5m down the drain, and still don't know what they're doing.
- dakial1 3y agoThis is just a bait to tell you not to invest in marketing without knowing your customers (which is pretty obvious but many companies just don’t bother taking a good look at their customers.
- monooso 3y agoI realise the headline story just is a jumping off point for the article, but it still begs the question: why did it take the company in question an entire year (and $1.5M) to realise their marketing wasn't working? Now that's a story I'd like to hear.
- Vagantem 3y agoHi there - author of article here. The problem for them was mainly that the agency running their ad account counted "demo requests" as their top metric and mistakingly counted all demo requests that came in as attributed to the marketing spend. So they reported on faulty numbers during the entire year. Hubspot showed that direct ads actually didn't work at all (mainly because they didn't really have PMF yet). Needless to say, that agency got fired pretty quickly. I've realised I might have to write a separate post just about this specific incident and what we did to bring the spend and results back on track. Thanks!
- monooso 3y agoThanks for taking the time to answer. A separate post is a really good idea.
- nologic01 3y agoWell, 1.5M did get you 15min of fame (on the HN frontpage).
- secondcoming 3y agoCould have been a broken click-through URL
- glyphy177 3y ago[dead]
- matrix_overload 3y agoTime and again, people make the same mistake. Online ads work if you are selling a more-or-less commodity. If your product is a propane tank, paying for AdWords to be #1 whenever anyone googles "buy a propane tank" will generate leads (whether acquisition costs would make sense is another story). If you have just designed an AI-powered robot for welding propane tanks, you won't get a single lead via AdWords. Your best bet is trade shows and sales people who know people inside companies that need to weld propane tanks.
- danpalmer 3y agoI've heard of similar things, like a team "turning on" Facebook ads and just leaving them running for a total of £1m, with almost nothing to show for it at the end. I don't think many people understand just how much active management these things take. New ad content is needed all the time, new testing needs to be done, ad channels change in cost and effectiveness month to month and need balancing appropriately, targeting needs to be reworked.
- edmundsauto 3y agoExactly, it is playing Battleship, not a money printing machine.
- Vagantem 3y agoIt happens more often than people think!
- greenie_beans 3y agoi'm glad capitalism is so efficient at allocating resources
- imchillyb 3y agoMarketing is not ads. Marketing your product is placement. Was the product placed in the proper market, at the time where it would receive the most eyes? Was the product placed in the proper segment of the market? Was the placement during a time where the market was slowing? Ads are only a tiny portion of marketing. The where, when, and how of marketing are just as -or even more- important for success.
- Vagantem 3y agoAuthor here - absolutely, fully agree! The full story of how this happened did not with with the overarching theme of objectives and KPIs so will have to write up a full story about this later. But the later posts in this article series will hopefully touch on all the factors you mention. Thanks for reading!
- imchillyb 3y agoThank you for sharing your story with us.
- romafirst3 3y agoHow I know the person who wrote this doesn’t understand user acquisition. They give an example that their conversion rate on their website is (cue some heavy math /s) 0.16 % so if they want to acquire X customers they need to bring in Y traffic. But of course anyone who has done even the most basic user acquisition knows that the way you achieve a visitor to your site is more important than the visitor. Customers who show up organically have a vastly higher conversion rate than the randos who show up from your ad, in fact many of them probably aren’t even going to be real so your conversion rate is going to nose dive as soon as you start using paid acquisition. Happens every time.
- refulgentis 3y agoThis isn't very kind, in fact it's an outright personal attack. Worse, it misses the point, it's about making a quick back-of-the-napkin calculation as business consultant while making OKRs. The problem with adding segmentation for more accurate calculations is there's always one more person who can sneer it's inaccurate because there wasn't enough segments. This type of person tends to move on from marketing / data science quickly, real world constraints are very frustrating to them
- romafirst3 3y agoThis is happening in the real world, not some imaginary world and so we must talk about real effects. As soon as you turn on a torrent of paid traffic conversion rates go to shit. So your old conversion rate doesn’t work anymore and is just a random number that is an upper bound on your new conversion rate.
- edmundsauto 3y agoI wouldn't necessarily say organic is always better than paid, although that's a reasonable generalization. I think of it in terms of the yield curve - organic tends to be high quality but doesn't always scale. You drop your efficiency in the marketing media mix as you scale to reach a ROAS that meets the business need.
- Vagantem 3y ago
- bufferoverflow 3y agoWhy didn't they stop and investigate after the first $10K or $50K? That ad budget is nuts.
- Vagantem 3y agoAuthor here. The problem for them was mainly that the agency running their ad account counted "demo requests" as their top metric and mistakingly counted all demo requests that came in as attributed to the marketing spend. So they reported on faulty numbers during the entire year. Hubspot showed that direct ads actually didn't work at all (mainly because they didn't really have PMF yet). Needless to say, that agency got fired pretty quickly..
- bufferoverflow 3y agoThat sounds like the agency should be sued.
- water9 3y agoDamn you almost as good as the Bud Light marketing team
- gkoberger 3y agoYou don't really deserve a response, but what are you talking about? Bud Lite sent cans to multiple influencers as part of a larger campaign, one of whom happened to be a trans woman. They didn't spend millions of dollars on this campaign; they didn't try to sell these cans; they were just commemorating (in a corporate-y way) an influencer they did a brand deal with. It's sad how much hate you have toward someone for simply existing. Why do you feel the need to bring it up when it's completely irrelevant?
- salada 3y agoYou're so out of touch is not even funny.
- gkoberger 3y agoIf you'd like to explain why, I'm open to listening.
- stevenicr 3y agoI have no idea what is in the mind / heart of op - however from a purely non-emotional place it would be reasonable to point out that losing a million dollars to ads and not getting a sale is or is not a better or worse result than another marketing campaign that spent less than that and instead of getting zero dollars in sales caused a loss 300 million (I think that's the last number I saw, and does not include stock losses / brand devalue-ing) in sales. I think it's unfair to to say someone has hate for someone else without knowing, and to assume it's for 'simply existing' - the BL situation for most people caught up in it is not that I believe. I agree it may be sensitive to bring it up, but considering this is about marketing and such it's completely irrelevant - although I believe the discussions on this piece would be fine without it.
- 3y ago
- l5870uoo9y 3y agoSounds like a combination of an unpolished product with insufficient demand and wrong business model. Users today don't want to pay XXX up front for a complicated product, they want a free tier where they incrementally learn about features. I just looked up what I spend on Google Ads for a small campaign on SQL/AI related keywords for https://aihelperbot.com https://aihelperbot.com: - $699.95 (part of a spend $400 to get $400 deal) - 244K impressions - 3.68K clicks - 15 conversions The conversions where "Begin checkout" events for a free trial period (I now run free tier). I don't know how many actually end up paying or cancel the free trial within the first week. Was it worth it? No. But I would consider advertisement once I reach a bit higher revenue. I talked to multiple newsletters who cater to my customer segment but it is still too expensive for since I am bootstrapping myself.
- Vagantem 3y agoAnd you also have to keep your products consumer journey in mind - the B2B selling cycle works very differently from e.g. B2C, direct ads might not work at all or should be used at a very specific part of the journey.
- ren_engineer 3y agoit's actually mind boggling how bad the average marketing exec is at most tech startups, there's companies that have raised 10s of millions that have absolute garbage implementations for analytics and tracking. Lots of people just bluffing their way into high paying gigs and throwing money at ads to get results. Even massive companies like Uber and AirBNB threw away hundreds of millions because of dumb ad spend without proper tracking: uber - https://news.ycombinator.com/item?id=25623858 https://news.ycombinator.com/item?id=25623858 airBNB - https://www.wsj.com/articles/airbnb-says-its-focus-on-brand-marketing-instead-of-search-is-working-11667506438 https://www.wsj.com/articles/airbnb-says-its-focus-on-brand-... I'd hire an affiliate marketer who built their own website and grew traffic to make some money over the average VC backed marketing exec. Same goes for most big corporate marketing types, their skillset is worthless for a startup. Any person who has made $1 online from scratch would be better
- kyleyeats 3y agoThis is such a crazy take. They made Uber (a meme word) into a household name. It's like saying you disbanded 2/3 of your army after taking over the continent, and nothing happened. So they were useless all along! Well, try it next time without the army.
- lovegrenoble 3y agoDue to the mismanagement, for sure
- paulddraper 3y ago> If you don't have any PMF, don't invest money in marketing A couple problems. 1. This is just terrible advice. 2. Not all marketing is flashing rectangles. E.g. industry trade shows.
- Vagantem 3y agoAuthor here - in my experience, industry trade shows are terrible money drains if you don't have PMF. They can be more expensive than many online ad campaigns! I had a client who spent Over $50K on going to one, with booth and everything - probably got around 50 leads and only a handful turned into customers.
- paulddraper 3y agoThat's true and I also realized that missed a negation in that sentence
- egonschiele 3y agoI used to sell homemade watercolor kits. I tried advertising in a bunch of places: Instagram, Reddit, Pinterest. I was targeting my audience pretty well but it just did not work. I happened to mention this to someone in marketing at my company, and he said buying ads for a single product like that rarely works. Advertising is useful if I can direct potential buyers to a shop where I have a variety of art goods. Then the next time they need something art-related, they might visit my shop. But selling just watercolor kits I was better off making YouTube videos, making posts on Reddit, etc. My CPA was something like $35, and I was selling the kits for $29.99. I ended up selling them to friends and family, and giving a few as birthday gifts.
- cm2012 3y agoI'm a professional B2B advertiser who specializes in growing start-ups. This article is kind of silly. It's like going to a start-up with a really bad engineering team and saying this is why engineering is useless.
- personjerry 3y agoHuge clickbait. Doesn't even address the answer of "how we got there", just tries to sell you on "how to market properly, my way". How they got there is: They didn't set up analytics and ramped up ad spend way too fast.
- Vagantem 3y agoHey, author of article here - I'm sorry if you felt baited, I'm planning to write more about this later in the series but it didn't really fit the story about PMF & setting objectives so I could not round it out more in this one unfortunately. But I've realised I might have to write a separate post just about this specific incident and what we did to bring the spend and results back on track! Also, I'm just describing how I was taught to market stuff - I've worked with a wide array of startup and Fortune 500 companies and it has been quite formulaic for all of them. But obv there are more than one way to do so. I'm actually a developer now so don't do any consulting any more - merely writing this down for my own record and if it can help/inspire anyone else :) Thank you for reading!
- crazygringo 3y ago> I once joined a company as a consultant - in the previous 12 months, they'd spent their entire $1,500,000 marketing budget on Google/Facebook ads. Using Hubspot we could track leads through the funnel and look at exactly how many customers this money had generated. The answer was 0. This just doesn't pass the smell test for me. Places that are smart enough to have raised/made $1.5 MM just for marketing are generally smart enough to roll it out slowly, track conversions, and be adjusting ad content and ad placement along the way. You know, the absolute basics -- "AdWords for Dummies". This makes as much sense as saying that a company spent $1.5 MM on five engineers for a year without a single line of code ever being written.
- darksaints 3y agoWhile this example is admittedly extreme, I think you’re severely underestimating the amount of bullshitters and charlatans that are able to secure VC funding.
- jklinger410 3y agoYeah, and writing this blog post is a major red flag for this company, no matter how you shake it out. Either they are lying, or grossly incompetent.
- n2d4 3y agoFrom what I understand, this is not a company, but the personal blog of a (former) consultant that worked for a company that had already spent $1.5mil when he took over. Given that context, the headline seems clickbaity as he wasn't personally involved, but whatever.
- refulgentis 3y ago+1, it was definitely written by someone wise but the thin veneer of storytelling added makes you feel cheated instead of engaged/drawn along the post. Such an abrupt ending
- 3y ago
- nwatson 3y agoThe article suggests cold emailing. Never use your main domain for sending outbound marketing stuff. It doesn't take many to categorize the emails as spam before the domain suddenly becomes blacklisted and unusable for not just marketing but anything. Your outbound emails will hit a distributed black hole.
- Vagantem 3y agoAuthor here - this is 100% true! Always get another domain for your sales emails, warm it up with a email "warmup" service and off you go :)
- lxe 3y agoI don't understand how people can plan customer growth with OKRs like "get 666,250 additional visitors". Or "increase revenue by 8,000,000 by EOY". First of all, why EOY? And where does that 8m number come from? It just seems so arbitrary. Why not set growth direction with some lower boundary, and have simple guidelines like "If you do X, you will probably slow customer acquisition, so avoid X when makes sense" and "If you do Y, you will probably speed up customer acquisition, so try to do Y when makes sense".
- refulgentis 3y agoWhy year? Needs to choose _some_ timeframe, otherwise the KR is irrelevant. Businesses generally plan quarterly (3 month spans) and yearly (12 months). You're free to use ranges in OKRs if desired. Identifying rules / guidelines are "not even wrong" when writing OKRs, OKR = Objective + Key Result(s) usually a sentence each, in bullets. It's better to focus on setting goals separately from setting rules, and humans being humans, you can't really identify a full set of rules that will prevent each and every form of unintended consequence (also, note this is just fermi estimates in a blog post for a marketing consultant, they're focused on laying out a hypothetical, theres all sort of layers and interactions in a business)
- gumby 3y agoThis article conflates advertising and marketing right from the get-go rendering most of its advice, at best, as quite limited. Blowing $1.5MM on ads with no result is a sign of no marketing at all. Marketing is a two way process you should start right away -- "before starting", actually. Marketing is understanding your market: who wants your product, who uses it, who decides that it should be used, and who pays for it (sometimes four different people), both at the micro (individuals) and macro (demographics, market lifecycle ("crossing the chasm"), external factors (changing environment)). And then why -- what matters to them? And only later in the process do you start to think of how you might reach them -- ads? What kinds? What tone do you set? At the very beginning you want to get some idea of 1- would anyone at all actually ever use this and 2 - how many o of those people will there be on day 0 and how many in a few years? The other thing you learn is how to design your product: what features actually matter, and for my SaaS how big a back end infrastructure will I need -- with multiple answers like in the first year and when it's time to scale. Lets' you design a small product with affordances for later, revenue-funded changes to make it scale. You don't need K8s on day 0, maybe never, or maybe someday so you design your MVP without supporting k8s but with it in the back of your mind. This all comes from marketing. Many years ago I raised a $20MM A round (when $20MM was a lot of money and there were rarely seed rounds and no "pre-seed" nonsense) on a powerpoint-deck-only plan with no TAM $ analysis at all. It was a drug, and I knew (from talking to doctors and patients) that on day 0 people would pay thousands, and their doctors could sell it to them (specific market where that was the case). Then I had a slide talking about demographic trends (aging baby boomers). Because the marketing was so compelling the investors did their own TAM in their heads. I mention that not because I think you should ignore TAM! But in my case TAM $ was impossible to calculate; OTOH I had enough market data (and the one VC who did some DD doing his own survey confirmed it, to his surprise) that I knew enough about the market to be able to talk about how I could steer (as much as you can in the pharma business) as certain numbers turned out to be wrong.
- Vagantem 3y agoHey there, author here! I fully agree - this is exactly where I want to get to with my article series. This is just the first post, talking about objectives. If you click on the next article, it talks about branding and after that, how to define your target audience. More to come! This introductory story was just a horror story of what can happen without great PMF or clearly defined marketing / advertising objectives. Thank you for reading!
- kposehn 3y agoI see this sort of headline and have a visceral reaction, but this time it wasn’t justified (woot). Some thoughts: > I once joined a company as a consultant - in the previous 12 months, they'd spent their entire $1,500,000 marketing budget on Google/Facebook ads. Using Hubspot we could track leads through the funnel and look at exactly how many customers this money had generated. The answer was 0. In total, the ads brought in two leads to the website who never even booked a demo for the product. For $1,500,000. I would posit that this isn’t entirely true. This is what Hubspot saw, but ( unless they’re doing really scaled Account Based Marketing) they’re going to miss non-click signals in the funnel and misattribute results. I’ve done a ton of B2B SaaS marketing over the last ~18yrs and most (>70%) of the marketing ROI comes from reaching your target accounts at scale - and they never fill out a lead form. Instead they respond to your sales team that has already reached out, resulting in sales taking the credit. I’ve quantified this effect several times now with a number of companies so I’m quite confident in it. That said, it doesn’t mean the company he cites was doing great - far from it! They definitely needed to get their house in order and spending $1.5mm was clearly not the right path. Was it zero effectiveness? Unlikely. Was it really effective? Absolutely not. > But how do you know if your business is ready to invest in marketing? To answer this question, you'll need to understand if your company have some form of product market fit - PMF. Agreed. I typically warn clients that are early on in their growth journey to focus on product led growth, start a referral program (I end up doing that a lot) and get their organic growth in order. Paid ads should be an amplifier on a strong foundation, not the foundation itself. > If you don't have any PMF, don't invest money in marketing - you might end up like the examples mentioned in the introduction. It’s less about not investing and more about being smart. Referrals are great and low cost, investment in SEO early on - those are where to put the energy. They are great ways to accelerate your path to product market fit without burning excessive cash. > How did we arrive at this number? As a rule of thumb, the pipeline in startup SaaS businesses usually comes from: > > - Marketing: 40% > - Cold-outreach/sales: 40% > - Partnerships: 20% Just like my own experience with the ratio of B2B SaaS conversions from leads vs. sales outreach through paid, be very careful here ascribing a rule of thumb to your business. I’ve seen companies with very different mixes of sources, all very healthy. Your business may see greater opportunity from marketing and nearly zero lift from sales, so don’t assume this is a metric to shoot for. Overall, I enjoyed the article and I’m glad to see that despite the clickbait-y title it was a more levelheaded read.
- somethingreen 3y agoIn somewhat related news Studio Ghibli recently released new last Miyazaki animated movie - The Boy and the Heron - with pretty much no marketing, as in not even a trailer. Its opening box office surpassed that of Spirited Away.
- Vagantem 3y agoAuthor of article here and massive Studio Ghibli fan. Can't wait to see this movie!
- jongjong 3y agoWhat terrifies me about customer acquisition is that people's preferences are highly homogeneous. Sometimes even finding a group of 100 people to try out a product seems like a massive challenge. People these days don't like to try stuff from non-authoritative sources. People seem to have a lot of trust issues which causes them to seek out known brands/companies.
- vxjester 3y agoI’m still wondering if they actually clicked through any of their ads. You know just to see if everything is actually working like it’s supposed to. Just like going to your companies website and filling out any of those forms found there. Then follow up if they work or not. Then maybe having a significant other clicking through the ads. To make sure things make sense to them. I mean if you’re spending the money on it might as well kick the tires.