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How the best startups do paid marketing

Photo credit: Pedro Belleza

I run an ad network (for email) called LaunchBit. These days, our advertisers run the gamut – some of our advertisers make billions each year while others are bootstrapped individuals who don’t earn anything right now.

But in beginning, all of our advertisers were startups. I had the rare opportunity to see how some of the fastest growing companies do paid customer acquisition (and compare it with other startups who barely had any customers). This is what I’ve learned from our advertisers:

1) Don’t go for a sale right away

When comparing our “best” advertisers (as defined by successful customer acquisition) with the rest of our advertisers, I noticed a big difference in the kind of landing page advertisers would use. Most of our advertisers would send traffic  directly to their home page.  In contrast, our best advertisers would create special landing pages with much easier calls to action than a purchase.  They would create  whitepapers or webinars or have a special freebie that was related to their product/service that people could get simply by signing up for it.  Once someone was added to a mailing list, the advertiser would then reach out through email marketing to try to educate and eventually upsell the reader to buy.  

If you assume that you can get a direct sale on average 0.1%-1% of the time (depending on the cost of your product/service), in contrast, landing pages with a simple signup will do 10-25% conversions.  Assuming our best advertisers can eventually convert just 10-25% of signups to paying customers, you’re still looking at at least a 3-60x increase in eventual conversions over trying to send people to a home page. (obviously very fuzzy math but you get the idea…)

This is not a ground-breaking strategy, but what surprises me is that so many advertisers still try to sell their products/services off a generic homepage.  Admittedly, we’ve been guilty of doing this too with our own campaigns on other ad networks!  So why do we do this?  Because it’s the easy thing to do.  Creating extra collateral or content takes time.  But, it turns out, this is a big factor in what distinguishes advertising success or not.  

2) Test like crazy

The best advertisers test all kinds of marketing channels.  But, not only do they test lots of different channels, they also test lots of creative.  I mean A LOT.  They’ll try images with people’s faces in them, images of nature – there are a million and one permutations.  And then, they’ll test changing the hues on each image, taking the same image and slightly dimming it.  Not to mention, they’ll test lots of text creative.

Turns out all that effort isn’t in vain.  In many number of cases, split testing lots of images will result in a clear winner, sometimes performing an order of magnitude higher click-through-rate than other images, even if the text-copy is the same.  

But, that brings me to my last learning, which is that the best advertisers…

3) …Invest $$ to test quickly

The best advertisers think of paid marketing as an investment not an expense.  They do paid marketing to quickly get a new cohort of customers to try their product improvements right now - they are ok with the fact that initially their campaigns will likely not be profitable.  They are not worried about that.  They think of paid marketing as an extension of product development – to get new customers to feed their data pipeline to shape their product.  That’s not to say they don’t care about profitability – they certainly do.  But, they are just not worried about the initial  losses.  They know that to make money, you have to invest it.  They’ll optimize their campaigns.  And, then after trying for a while, they’ll narrow to the channels that are profitable for them and scale their investment in those channels.

How do you become one of the best advertisers?

Take the time to create landing pages with simple calls to action (such as an email signup) for something really compelling AND relevant to your product.  (Note: giving away say free money as an enticing factor will NOT help you upsell your product later unless you are in the business of giving away free money.) You’ll get access to more potential customers.

Set aside time to not only make the landing page but also to try lots of different marketing channels with lots of creative.  You might need at least $1k to do this well with an statistically significant results – I know it’s a lot for a bootstrapped startup – I’ve been there.  But, it’s an investment in product development – to get you more customers for more quantitative and qualitative feedback to improve product.  

I see campaigns all day and have learned a lot through our advertisers.  Happy to discuss more about all this over email.  Feel free to shoot me a note at elizabeth [at] launchbit [dot] com.