Paid acquisition should be a great channel for your startup. One of the most critical decisions early-stage companies have to make is how to invest for growth. Each dollar is like oxygen and you need that dollar to come back to you within a predetermined amount of time. This is why I always recommend focusing on measurable channels as much as possible. If you can’t track it, don’t invest.
A few good Montreal startups have used paid acquisition with monster success. Beyond the Rack, Frank & Oak and Lightspeed all have mature paid programs that generate great returns month-in and month-out.
I’ve outlined five key ways to think about your paid program and how to approach it diligently.
1. Start with strategy
How much you invest has a lot to do with your market and its maturity. You will need to secure a budget, allocate resources and more importantly tie the investment to your core key performance indicator (KPI). You should treat it as investment decision and set growth targets as well as a payback period.
2. Pull beats push
Always go where your potential customers are. People search products and services on Google and Yahoo. Your customers identify their interests on Facebook. There is no secret that Google and Facebook are the first places you should invest (nine times out of 10). That doesn’t mean they are the only ones. Twitter, Pinterest, Bing and other niche properties can also drive results. After all, you should only care about your lifetime value (LTV) and customer acquisition cost (CAC) metrics.
3. Testing for life
If done properly, testing will always drive incremental results. This is why testing needs to be baked into your program each week. Ad copy, calls to action, and landing pages are good places to start. One caveat that needs to be mentioned: sample size is super important. You need to have enough users to obtain a statistically significant result.
4. Investment decisions should be challenged daily
What was the return on investment (ROI) of your campaign yesterday? Last week? Make sure that you don’t waste money on campaigns that are not working. Allocate your investment based on results and shift towards what’s working. To do this properly, proper metrics need to be in place. LTV, CAC and attribution need to be well understood.
5. Bring in outside help
Eventually, you may need to source your paid acquisition internally. Until then, try to connect with freelancers and agencies in Montreal that can help you increase your maturity and performance. The very good ones are rare, thus your network here is important to understand who the best people are to go with.
This is also tied to how much you invest and when it becomes economically feasible to hire internally versus an external firm.
Ultimately, don’t become overly reliant on your paid program. Customers gained by organic channels tend to be more valuable over time. Furthermore, investors frown upon startups that employ paid acquisition as their primary acquisition channel.
Paid media is a great weapon in your arsenal to drive growth when you better understand each platform and their differences. I love this quote that summarizes ads well: “‘everyone hates advertising in general, but love advertising in particular.” Staying relevant is the key to success.