“Those who stop marketing to save money are like those who stop a clock to save time”Henry Ford
Its not uncommon for companies to look at marketing and more specifically marketing resource as an expense instead of a revenue driver. Bootstrapped businesses in particular are tempted to just have someone from the team run some online ads “to see what happens”, or just get the boss’s nephew to run some ads on Facebook. Afterall, he is on social media all the time so he must know what he is doing, right?
What happens in those cases is that we see the initial cost but not the size of the potential opportunity.
This is fundamentally wrong and a costly error for most businesses but for start-ups it can be lethal.
Here is why.
Lets take a start-up which is at the beginning of its marketing journey as an example. They started a year ago with paid search ads as their first way of attracting customers cost efficiently. Paid Search tends to be the channel most businesses start with due to the ease of implementation and relatively low cost.
For a while Paid Search works great and customers are increasing. They are able to capture the lowest hanging fruit, which is by default existing demand in the market.
However, over time efficiencies have dwindled. Whether due to increasing competition by other vendors or simply because the volume highly qualified searches has remained stable this is in fact a very common scenario.
So what’s next?
The next logical step is to start looking for alternative growth avenues. In this story social is quickly identified as the next best channel to try.
Before they know it they find themselves in an interesting juxtaposition. On the one hand, they just want to test the channel fast and validate or discard it as a growth driver with minimum cost to the business. On the other hand, running the test properly requires marketing resource they can neither afford to outright hire, nor do they have anyone in the business with the right skillset to make this hire.
The potential solution of hiring an external agency is not an easy one. There are obviously the big six and the large independents as well as a sea of smaller outfits. The larger agencies typically have quite high minimum spend / fee levels. A combination of skyrocketing salary cost plus other overheads makes it very challenging to service smaller clients profitably.
In most cases, if they do decide to take a smaller business on, they allocate the most junior resource available. On occasion, agencies can use this as a way to train recent graduates so that they can then work more confidently on bigger accounts. They also tend to have a great array of processes which make them a particularly unattractive option for flexible start-ups that want to move fast and break things.
That then takes us to the sea of smaller agencies, the one and two person bands of this world. Don’t underestimate how hard it is to find the right fit with one of those smaller shops as well as vet them properly. More importantly, you will probably waste quite a bit of time going through proposals and running RFPs in a rather involved game of “spot the difference”.
But lets go back to our story.
Stuck between a rock and a hard place the business in our example decides to have one of the junior marketers in the team run a quick test on social on peak trading season. The thinking behind it is that they are saving a few thousand pounds on agency commission / salary. Soon, after poor returns, they decide to bin social as a channel. Their competition in the meantime is thriving on Facebook constantly getting a larger market share.
Don’t underestimate how hard it is to find the right fit with one of those smaller shops as well as vet them properly. More importantly, you will probably waste quite a bit of time going through proposals and running RFPs in a rather involved game of “spot the difference”.
The saving: 3k in salaries / commissions
The cost: 1.7 million in lost revenue over the year and many more thereafter
Scary isn’t it?
The moral of the story is: opportunity cost is not just a financial measurement. In reality it represents lost time. Start-ups have limited time windows in which they can corner the market before established brands rush in.
Opportunity cost is not just a financial measurement. In reality it represents lost time.
This is the reason why the biggest cost in this example was not the 3k that would have been paid to an experienced marketer. It wasn’t even the 1.7 million in lost revenue. It was the months of not advertising on social when other competitors were.
So why is it so hard to build and ship marketing channel testing?
Well, there are a few components that need to be firmly in place and each presents its own challenges. In essence, marketing needs to borrow a leaf out of Product’s book and define a Minimum Viable Test.
Marketing needs to borrow a leaf out of Product’s book and define a Minimum Viable Test
Components for the channel testing MVT:
· Selection and hypothesis: Know why a channel is a good fit for your goal as well as what you are trying to achieve. More importantly, does it make sense to be testing that channel next based on your current marketing mix?
· Measurement: How will you measure success and how will you know that the channel contribution is incremental? Do you have the right attribution model in place?
· Skillset: Perhaps the most important one, do you have the right experts in hand? If not, do you have a plan of how to source them?
The first two are elements of marketing planning that are typically in the wheelhouse of the CMO or marketing manager. In the absence of these people within your organisation you should seek help from an external marketing consultant, in particular someone who has helped similar organisations at the senior level.
At Adadot we offer a CMO helpline specifically to support organisations with channel selection, hypothesis formation, choosing the right measurement as well as projections and marketing led forecasting for investor related work.Our experts are former marketing directors so they have the right knowledge to help.
Once you know what tests you want to run, the next step is to find the right people to set them up and manage them. This, as per our cautionary tale, is no mean feat especially if it needs to be done fast.
How to choose the right marketer with the right skillset at the right time:
· Don’t just go with a friend of a friend who “knows things about digital”. You will need a seasoned professional in order to prove and scale a channel properly. Ideally, you are looking for someone with a few years of relevant experience on their backs who is able to deal with everything the live campaign might throw at them.
· Relevance matters. The more relevant their experience is to your niche or vertical the better. The key here is that a marketer who has worked in the vertical before will have a better understanding of customer behaviour as well as seasonality.
· Balance speed with due diligence. Vet and qualify. Freelancer platforms offer a fast route to talent but it can be a bit of a lucky draw as to how good the person you end up with is. If you are not able to vet your marketer yourself rely on services that have done the vetting for you.
Still struggling? Get in touch!
At Adadot we match experienced experts with high growth businesses creating a bespoke team for each projects. Based on our 10+ years of experience running award winning teams for big six agencies, independents and client side we know what great looks like.
Our marketeers are not just vetted, they are pre-qualified in the same way that we would select staff for our own team. Our algorithm ensures that each project only gets matched with the most relevant experts; no need to sift through endless proposals!