ROI Marketing For Startups & Growth Brands | Popular Pays

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ROI Focused Marketing – for startups and growth brands

by corbett drummey | 1 month ago

Depending on what stage your company is in, you can skip some of the early steps, but we’ll start at the beginning.

Overall we’ll cover:

Product launch

Whether it’s a physical product or software, B2B or consumer, there are best practices we can cover, but we’ll focus on B2C companies first. For this section, we’ll assume the product has just launched. We’ll also assume you have basically no budget at this early stage.

Website

We’ll assume you have a simple site, aka from SquareSpace/etc.

Instagram

Arguably the most important touchpoint for consumers is your Instagram page. You’ve probably visited more brand’s pages on IG recently versus their WWW site.

Other social media accounts?

Email

You’ll want a way to catalog your customers and capture a point of contact and way to own that relationship with them- e.g. Mailchimp, etc.

Storefront

If you have a physical product, we’d recommend Shopify.

Testing User Acquisition Channels

In general, startups should think about UA in terms of your first 1, 10, 100, 1000, 10000 users. The tactics for each change.

In general, you’re also searching for roughly 5-10% weekly growth if you’re a few months old and 100%–300% YoY growth in the first year or two, and if you’ve been around a few years maybe 40%-150% growth. (For SaaS companies to become a unicorn or go on the path to IPO, some people say you probably need to 3x three years in a row and 2x two years in a row: T2D3. There’s also metrics for SaaS companies doing this cost-effectively, like the rule of 40%. )

Anyways – these are huge huge huge oversimplifications. But if you’re getting 10% weekly growth (even with a small baseline) for the first 4-6 months of your company’s life, you’re probably doing something right.

At this stage you’re getting alpha / beta users and trying to see if they’re getting earnest use of the product. If it’s an app you want retention – maybe >33% of the users are sticking around after 1 month, for example. You don’t want to see churn at this stage. If you have no repeat usage or engagement, talk to users to figure out how to make the product better before moving on from this step! This is very important!

Benchmarking Your CPA

If you’ve just launched and relied on “doing things that don’t scale” for your first 1, 10, 100 users (which is good!) then paid ads on Facebook / Instagram are often the best way to test the waters and see what your baseline CPA is so you can understand what you need to beat.

If your CPA is under the revenue you make from your users/sales, then you’ve already got the right dynamics for a profitable business. For example, if you spend $15 on Facebook to acquire a customer who buys a $50 product from you where you have 50% gross margins. You’re making $10 in profit per sale then, and could continue re-investing in ads and making tons of sales & revenue. The same is true for freemium products: if you’re Dropbox and you spend $5 to acquire a user, and for every 10 users, 1 signs up for a $99/year plan, then Dropbox spends $50 to make $99.

What makes successful Ads

Interestingly, for all of the fretting around audience targeting, Facebook has repeatedly said that the biggest mover for Ad performance is actually the creative.

Getting started on Paid Social

FB’s business manager and advertising tool set makes it pretty easy to get started, and most platforms have ~$100 coupons for businesses to get started with their self-service tools. However, I think Paid Social is for the point where you can comfortably invest at least a few thousand in Ads. (Many of our startup/growth clients have test budgets in the thousands –or tens of thousands– but if the ROI is positive, they have the appetite to spend millions, since they can keep funneling it back to profitable growth.)  Sometimes venture-backed startups still decide to spend huge amounts in advertising because their ROI is decent enough to where they expect to recoup the cost of the ads over time based on the lifetime value – LTV – of the customer… or perhaps it’s a land grab and they just need to own the market. Our company’s recommendation is to not scale up advertising if your CPA is less than your expected LTV, but rather to use your budget to test more channels to lower your CPA.

Getting Content for your Ads

Again I would recommend using Content Creators to source content here, although using plain lifestyle content built for an Instagram feed won’t always have the highest ROI. At Pop Pays we have a group of creators “The Pop Shop” who are trained in ad assets (Carousel ads, etc) but if you see a creator who looks great at not just photography but editing, that’s a great sign. For example, a video Instagram story with engaging graphics and a Call To Action (CTA) of “Swipe up!” will perform better than a static image. A good video will cost in the low thousands of dollars.

Note: if you’re getting to the point where you need to scale content, try using Pop Pays Lite to find an editor or Creator and collaborate with them.

Tracking

A good reason to start with Paid Social is that there’s tons of collateral online about how to set up ads, tracking systems, etc.

Pop Pays is happy to take over full service management of boosting your content for a low transparent fee, but if you’re setting it up yourself, try to ensure you’re getting data around the conversion performance of your ad. If you don’t have a product yet, sometimes just using a Lead Gen ad unit and capturing a customer’s email address is a good way to capture value at this stage.

Semi-normal rates for CPAs and CPIs

Another huge generalization here, but if you’re a company selling a physical product, subscription box, a supplement, etc – your CPA might be $50-100. If you’re a free game, your CPI might be $1-5. However so much depends upon your industry that it’s really critical to learn your own benchmarks. I would spend more time than you think testing different ad units and pieces of creative, as people often are surprised that 1 piece of content has a 10x or greater difference in CPA/CPI than the other! As an example, my friend tested two batches of creative with a few thousand dollars and got a $2.50 CPI with one ad and 0 conversions with the other.

Testing New Channels

Let’s say we have a subscription box company as well as a freemium tool, and they found that the CPA for the box is $100 and the cost per install for the app is $5. What now? If the CPA < LTV then keep investing and optimizing! But you can also try discovering new channels to see if they provide a better CPA:

Don’t forget about retention

True growth is retention. If you retained every person you brought it, you would grow tremendously fast, and retaining a user is easier than getting a new one. You also learn a ton from retention. If you fix a problem for one person and get them to retain, you might also keep many others from that same effort. If ever you have a leaky bucket, go back to talking with your customers – the power users, the ones who churned, anyone – and try to learn more about how to make your product & service better. Once you have a great product and service, it magnifies your efforts in all other areas of the company, including marketing!

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