Scaling up tech start-ups with performance marketing has moved from being a nice-to-have to being a must-have.
As a tech founder trying to drive growth quickly, it’s very tempting to throw money at the problem in the form of Ads on various platforms like Facebook and Google. However, it doesn’t take a discerning Founder too long to realise that the problem of growth especially using performance marketing is a many-headed monster that is more complex than it seems at first glance. In very simple terms, Performance Marketing is a marketing specialisation focused on online channels where companies pay based on results.
Here are a few problems that can emerge when trying to scale with performance marketing:
- Conversions are scarce: Everything may have been setup right, with funnels implemented in the best way possible, and then, you notice that no matter what you do, your conversions remain below the industry average.
- Spend stays low: The company may have a huge budget for Advertising, but the campaigns aren’t spending as much as expected. This can be for any number of reasons, most advertising platforms deliver your ads based on algorithms and the customer data you feed it. Your audience size may be too small, your Ad may have a very low relevance or your creative may just not resonate with your audience. When this happens, your Ad may not receive enough interactions to allow the algorithm to deliver your Ads and use up the budget.
- CPAs are crazy: It’s one thing to want to spend more money, but quite another thing when the Cost per Acquisition (CPA) or cost per result (e.g cost per lead/ cost per install/ cost per add-to-cart /cost per purchase etc) is high. High, in this case, depends on your industry and the price point of your product. When your CPA is high, you’ll typically burn through your budget very quickly with relatively fewer results to show for it.
- Platforms are frustrating: Facebook is particularly well known for being super strict when it comes to its advertising laws. Sometimes, with false positives that land people in ‘Facebook jail’ where their actions are restricted, from disabled Ad accounts to personal accounts that are banned from advertising and many more. Sometimes, it is easy to appeal these decisions especially when you were wrongly accused by the algorithm, other times, these are made and is deemed final, leaving you to search for alternatives.
- Attribution is confusing: One of the most important aspects of performance marketing is measurement and one way to ensure that you are measuring the performance of your advertising efforts properly, is to ensure that you are attributing the right results to the right campaigns in the right way. The problem is, when running multiple campaigns, it’s difficult to attribute the results as most platforms use a default model that is not ideal.
Looking at these potential problems alone can deter one from venturing into performance marketing, however, the benefits of performance marketing when properly done far outweighs any challenges that might be faced on the way. Chief of those benefits is the ability to “Scale at will.” With Performance Marketing, it is possible to decide on the number of people that need to be reached with the product messaging and do it. It is also possible to meet potential and active users, at every stage of the funnel. Whether they are at the top of the funnel where they have never heard about the product (Cold audience), middle of the funnel where they have heard about the product, perhaps even downloaded the product from the app store or signed up but haven’t yet taken the desired action(warm audience) or they have taken the desired action, made a purchase, referred someone or other high-value action (hot audience). With performance marketing the messaging can be designed to be so precise that the audience feels that it’s literally magic, the resultant effect being growth that is sustainable and predictable.
To experience the amazing benefits shared above, there are a few principles that I have used that I always recommend. The great thing about these principles is that they are platform-agnostic and can be applied to any advertising platform being used because they are more about the way marketing is approached than specific tactics that are more platform dependent. The principles are;
1. More, not less – In the world of visual creators, the phrase “less is more” is celebrated, but when it comes to running paid advertisements for performance marketing campaigns, more is more and more is good. It’s pretty tempting to cut back on advertising when it isn’t performing as expected, however, a period of poor performance is a great time to experiment more. More creative styles, target audiences, campaign objectives, funnels, creative formats, ad placements. When more tests are conducted, the Founder or other decision-maker has more data to work with, learning can be maximised and the start-up is given more opportunities to succeed.
2. Whole, not parts – There are two ways to apply this principle; The first is how the product customer funnels are designed and the second is how the results are evaluated. Both ways feed off each other. When designing a campaign, it is important to be clear on the purpose of the campaign and who the audience is. Is this a campaign aimed at getting a completely cold audience introduced to the product? Is this a campaign to re-engage a warm audience that hasn’t taken the appropriate action? Or is this a campaign to get existing users to use an untapped feature, take a repeat action or complete a pending transaction? Whatever it is, it’s important to be clear as this would help with understanding the different stages in the funnel and how to design for them. The same thing goes for measurement. Many times, founders only look at the bottom of the funnel when judging the effectiveness of a campaign and when attributing performance they would most times use the last touch attribution model (which simply means that they attribute the sale or desired result to the last ad that the user clicked on before the action was taken). This can be very problematic especially when running full-funnel campaigns. To mitigate this, It’s important to explore more holistic models for attribution like multi-touch attribution.
3. Screams, not whispers – Testing more has been established as a core principle for scaling, luckily for most founders/marketers, ideas for a/b tests to conduct come in abundance but seasoned marketers know that not all ideas should be tested. When deciding on what experiments to conduct, it is critical to experiment with real changes so that the impact can be accurately understood and statistically significant results generated. Testing small changes limits the ability to produce convincing evidence to back up new theories, campaign ideas or marketing strategies. An example of a scream that people can test is changing the colour of the purchase or main action button to a completely different colour e.g from red to green however, a whisper, in this case, would be changing the colour of the button from red to another shade of red that is hardly noticeable.
4. Slow, not fast – The approach to scaling budgets should be cautious. It is not ideal to start out by scheduling the budget to be spent completely on one, two, three, four or even five campaigns. It is best to stagger the spending, doing it cautiously until multiple winning Campaigns/Adset/Ad campaign combinations are found. This ensures that Cost Per Acquisition and results are kept optimal and at their lowest.
5. In, not out – of the box – To avoid getting banned/restricted, it is crucial to follow the rules of the platforms that are used for advertising religiously. For social media advertising platforms, the customer is not king, the user is. This means that they would be quick to weed out advertisers that are perceived to hurt the user experience through poorly produced, ethically wrong or outrightly illegal ads.
Overall, when these are implemented, they make better results in the near and long term not only possible but consistent.
This article is written by Ajoke Emekene a Performance Marketing Expert passionate about helping Tech startups leverage performance marketing for growth. You can contact her via LinkedIn (Ajoke Emekene) or Instagram(@ajokee).