How to market your startup

Marketing your startup can seem daunting and confusing. We simplify the process for you
31 minute read
Adam Smith @HomebrandAdam
Technical Co-pilot
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The best business in the world is useless if no one knows about it 

You may have developed an incredible product or service. You may have written a foolproof business plan. You may even have your finances in order. But if no one ever hears about your business, you've failed before you've even begun.

That's where marketing comes in. A good marketing strategy will set your startup up for success, and the lack of a plan is nearly certain to sink you. So read on to find out how to market your startup.

Why do you need a marketing strategy?

A good marketing plan is your way of reaching your target customers and making them aware of your brand. It puts you in touch with your customers' needs, and allows you to communicate your unique way of addressing those needs.

Regardless of the size of your business, marketing is an essential part of your business strategy. And you need a well-developed marketing strategy in order to measure your impact and determine the return on your investment.

With this in mind, your marketing needs to be well-defined, targeted and measurable. It's worth investing money in marketing, but first you have to determine how much to invest, and where.

How much should you pay to acquire a customer?

There's an oft-repeated quote from marketing legend Dan Kennedy: "The business that can spend the most to acquire a customer wins." There's a lot of truth to this statement. The more you can spend to market your product, the more customers you'll bring in.

But how do you know how much you can spend to acquire a customer? This metric is known as your Customer Acquisition Cost, or CAC, and you'll need to figure this out before you begin your marketing efforts.

We've broken the process down into a handy worksheet you can use to determine your CAC.

Customer Acquisition Cost worksheet

Figure 1: Calculating Customer Acquisition Cost

A sidenote before we begin: As your startup grows and matures, there's an argument to be made for focusing more on customer retention than acquisition. But before that argument can be made, you have to actually have customers to retain. So we'll focus our efforts on the cost of acquisition. 

How to calculate lifetime value

Before you can determine how much you can spend to acquire a new customer, you need to know each customer's lifetime value (LTV). It's rare that a customer purchases just one product from you, or uses your service only once. So that initial sale doesn't represent the end of a customer's value to your business.

If you're a startup, it's likely you don't have the customer data to determine LTV. That's OK. Generally, industry benchmarks would put LTV at between 2 times and 8 times the cost of your initial product or service. For instance, if you're charging $100 for your product, customer LTV would be $200–800. We suggest taking an average of this and assuming a multiple of 5.

Next you'll want to account for products that get returned that require you to offer a refund. A conservative estimate here would be about 7%. So in our scenario of an LTV of $500, we subtract 7%, or $35, to get a final customer LTV of $465.

If you're a subscription-based service, this gets a bit trickier. You can calculate customer LTV by looking at your churn rate. Your churn rate is the percentage of customers who will cancel their subscription. Again, if you're a startup you won't have preexisting data on this. So let's go with the industry standard for subscription models, which is 5–7%. For the sake of illustration (and the ease of math), we'll take the optimistic figure of 5%.

Once you've determined your churn rate, you look at the average revenue per account (APRA), which is the amount an account generates over a specified period of time such as a month. In other words, your subscription price.

Once you know your churn rate and your APRA, you determine the lifespan of a customer by dividing 1 by the churn rate. In our example of a 5% churn rate, you end up with 20. In other words, the average lifespan of a customer is 20 months.

To calculate LTV, simply multiply this by your APRA. If your subscription price is $150 per month and your average customer stays with you for 20 months, your customer LTV is $3,000.

Subtract your costs

Once you know the LTV of a customer, you need to subtract your costs. This includes both the cost to make and deliver your product and the cost of your business overheads.

Let's say, again for ease of math, that it costs $20 to manufacture and deliver your product. Assuming a customer buys 5 products from you for an LTV of $500, subtract $100. You now have $400 left to spend to acquire your customer.

But we're not done. You also have to look at your overheads. These are costs like rent, utilities, inventory and payroll.

Now here's where it gets tricky. You have to figure out your overhead cost per unit. In other words, for every product you sell, how much are you paying in overheads?

First, determine your annual overheads. If you've read our chapter on financing your business, you should have a good idea. If you haven't, go back and read it now.

Next, estimate your monthly sales and multiply by 12 to get your annual sales. Even if you haven't made any sales yet, if you've written up your business plan and financial projections you should have a good estimate.

So let's assume your overheads are $100,000 for your first year (although we've mentioned before, we're big fans of keeping your operation lean). You've estimated monthly sales of 1,000 units for annual sales of 12,000 units. Now divide that by your overhead costs, and you get a cost per unit of $8.33. If customer LTV is 5 units, that's $41.67 in overheads over the life of a customer.

So in our example above, after deducting manufacturing and delivery costs from your LTV, you're left with $400. Deducting overheads, you're left with $358.33. 

OK, so that gives you $358.33 to spend on acquiring a customer, right? Not so fast. Now you have to actually turn a profit.

Determining profitability

The profit you make per customer is entirely up to you. It's your business, after all. But you have to determine the profit you want per unit before determining how much you can spend to acquire a customer.

For a digital product, a profit margin of 20–40% is healthy. For a physical product, the margin could be lower. Just remember that every dollar you take in profit is a dollar that can't be used to acquire new customers.

But let's assume you're selling a digital product, and you decide on a profit margin of 30%. Multiplying customer LTV of $500 by 30%, we get $150. That's how much profit you want per customer. Now deduct this from your $358.33 and you're left with $208.33. And that's how much you can afford to spend to acquire a new customer.

What elements does your marketing strategy need?

So now that you know how much you can spend to acquire a new customer, you have to decide how to allocate those dollars. It's likely you'll want to split them up between inbound marketing and outbound marketing.

Inbound marketing

Inbound marketing is marketing that brings customers to you via content that they want to consume. It's offering something of value to customers, and using that value to draw them to your product or service.

Content marketing

A lot of inbound marketing could easily fall under the umbrella of content marketing. For our purposes, though, we'll discuss content marketing as it relates to content that lives on your website's blog.

You are planning on a blog, aren't you? If not, you absolutely should. A blog gives you the opportunity to set yourself apart as an industry expert, a voice of authority in your field. 

A good blog shouldn't be about making a sales pitch for your product. It should draw people to your website because it offers valuable information. You can use your blog to link to your service pages where you actually convert customers. But the primary purpose of your blog is to draw visitors in by offering them something of value.

You can read our guide for more about why you need a blog and how to create a great one. But the long and short of it is this: create a blog on your site and post regularly. Post about your area of expertise. If you're starting a business, you're already an authority in the market you're servicing. Leverage off that.

So how do you decide what to write about? The key is to answer questions people are already asking and provide solutions to problems people have. There are a few ways you can determine this.

Your first step will be to do keyword research. Keywords are the words and phrases people are typing into search engines. You can use a free tool like keywordtool.io. Simply head to the site and type in a topic. You'll receive a list of keyword ideas based on the topic, and this will give you a good idea of the subjects you should cover.

Next, head to AnswerThePublic. Here you can type in a topic and receive a list of questions people ask about that topic. Write blog posts that answer these questions.

If you're producing content of value that offers answers to common questions and solves problems, people will take notice. 

But your blog doesn't have to be limited to written content. You can also produce content like infographics, quizzes, white papers and e-books to deliver content in different formats. Spend time on your content, and if you don't have time to produce content that's more comprehensive, informative and engaging than anything else on the internet on a particular subject, consider hiring a freelancer to do it for you.

Social media marketing

With more than 3.5 billion active users, social media platforms are an enormous opportunity for businesses. Each social platform has its own unique character, and different types of content perform best on different platforms. Here's a rundown of some of the top platforms:

Facebook: Facebook is tough for organic results. Unless people follow your company's page, it's difficult to appear organically in their newsfeed. However, a good business page should include your contact info, an eye-catching cover photo, a profile photo of your logo and a call-to-action button leading people to your website. 

Visual content does best on Facebook, and video performs well. Consider offering your followers glimpses behind the scenes at your business. Interactive content like quizzes also perform well.

Twitter: Twitter users are very active, with 46% using the platform daily. Again, visual content performs well. Use your Twitter to link to useful content. You should also capitalize on its strength as a customer service platform. Just remember to respond to all customer service queries promptly.

LinkedIn: LinkedIn is all about business. This is the platform to connect with other influencers in your industry, and position yourself as an authority. You can use LinkedIn to post original long-form content that offers business insight. List-based articles perform well, as does video.

LinkedIn is a great platform for your business if your product or service is in the B2B market. For B2C companies, LinkedIn is less effective.

Instagram: Instagram is all about the visuals. While around 80% of Instagram's users follow at least one business, you won't achieve success by pushing sales. Instagram users want to engage with beautiful imagery, particularly aspirational lifestyle imagery. This is also a great platform to offer a behind the scenes look at your business.

Pinterest: While Pinterest might not have the largest audience among the social media platforms, it has the audience with the highest buying intent. Pinterest users are there to get purchasing ideas. If you have a product or service that lends itself to a visual medium, Pinterest is a great platform for you. For more esoteric services, think about creating infographic content that links back to your site.

Search Engine Optimization (SEO)

Search engine optimization, or SEO, is the process of optimizing your content to be found through search on platforms like Google and Bing. It's ensuring that people searching for certain terms find your website in the search results.

If you don't know anything about SEO, we suggest your read our comprehensive guide to SEO marketing. But we'll give you a rundown of the basics of SEO here.

Why you need SEO

SEO is crucial because it allows people to discover your website and content. You could have the most insightful, useful content on the internet, but that's little help if no one can find it. 93% of all internet sessions begin with search. SEO helps ensure those sessions that begin with search terms relating to your industry end on your website.

On-page SEO

On-page SEO refers to any action you take on a web page to improve its ranking in search results. It encompasses a discipline called technical SEO, but we'll discuss that separately.

Where content is concerned, on-page SEO means making sure your content is in the best position to rank for the search terms you want it ranking for. The best way to do this is to create the best, most comprehensive content on any subject you tackle.

As we stated before, look for the questions people are already asking. Answer those questions thoroughly and make sure you include the relevant keywords. Look at the pieces of content that are already ranking for the search terms you're targeting, and then make sure the piece of content you produce is more comprehensive.

Off-page SEO

Off-page SEO, as the term suggests, is any action you take outside of the page of content you produce to promote it in the search results. The most productive off-page SEO task you can undertake is link building.

Link building is the process of getting other sites to link to your content. There are a number of ways to go about this, but at its core, link building is all about business development.

You should work to build relationships with other content creators in industries adjacent to yours. Offer them content that could have value to their audience, and ask them to link back to it. Every link you get is viewed by Google as a vote of confidence.

A great way to get links is to produce original research. You can put this in the form of an infographic or a blog post and share it with others in your field. Orbit Media co-founder Andy Crestodina recommends asking yourself, "What do people in our industry often say, but fail to back up with data?" Then, find the data that either proves or debunks this assertion.

Technical SEO

Technical SEO entails making your site easy for search engines to crawl and index. This includes making sure each page has only one h1 (the HTML tag for a page's heading) and that your h1 includes your keywords. It also includes factors like page load speed, internal linking, site security and mobile friendliness.

If you're not familiar with the ins and outs of technical SEO, it can seem a bit overwhelming. Fortunately, if you've built your site on a platform like Squarespace, Wix or Wordpress, a lot of your technical SEO will already be done for you. However, it's still worth talking to an expert to ensure your site is optimized for search engine crawling and indexation.

Local SEO

If you're a local business, your SEO strategy will be slightly different. First, you'll want to make sure your business is registered with Google My Business. This is a free service provided by Google. You'll fill in details like your physical address, phone number, business name and opening hours. Make sure these details are consistent with the ones you list on your website.

You can also include photos in your Google My Business listing. The more photos you have, the better. This gives potential customers a feel for your business. The photos can showcase your stock, your premises and even events you hold for your business.

Another great tool at your disposal is Google My Business Posts. This allows you to share posts on your Google My Business listing that stay active for seven days. It's a great way to draw attention to special promotions or events.

You'll also want to make sure your business is listed in all relevant local directories. This can include sites like yellowpages.com, your local chamber of commerce, Yelp, the Better Business Bureau and CitySearch. Again, you'll want to make sure your contact information is consistent across all these sites.

Local SEO is a powerful tool for local businesses. Local search tends to be search with high intent. People searching local businesses are generally ready to buy. Making sure you're visible in local search is crucial.

Earned media

Everything we've discussed so far is what's known as owned media. They're the media sources you control, such as your own website and your social media presence. To promote your business, you should also look at earned media, or coverage from outside the channels you own.

Guest posting

Guest posting can be a great way to raise the profile of your business. This goes hand-in-hand with link building. When you find other blogs in your industry (that aren't directly competing with you), try to build a relationship with the webmaster. Offer them the opportunity to guest post on your site, and seek out the opportunity to write guest posts for them. 

Guest posting helps cement your status as an authority in your field. It expands your visibility beyond your own website and social media channels, and puts you in front of a different audience. Best of all, you'll likely get backlinks to your own site.

Writing a press release

You'll also want to build up your presence in the media. Again, this helps position you as an industry expert. If you're producing original research, as we discussed earlier, you can use this original research in a press release.

Here's a tip for catching the attention of journalists: look through the calendar for holidays and awareness days, and think of original research you could produce that relates these days to your industry.

You can also use press releases to update journalists — especially industry trade journalists — on developments in your business. 

Pitching to journalists

Journalists are busy people, and they're actively looking for stories to cover and sources to quote. Making yourself available as an expert source is providing a service to them.

If you're a local business, reach out to your local newspaper to update them on business developments, promotions and events.

If you're an online business, position yourself as an expert ready and willing to comment on industry trends. You can do this by signing up for HARO, or Help A Reporter Out. The platform allows you to find journalists looking for sources on stories, and then pitch yourself as an expert commentator. Paid subscription models allow you to filter journalist queries by certain keywords relevant to your industry, and you can craft a profile to include with your pitches.

Virality

Venture capitalist Fred Wilson once colorfully stated, "Marketing is for companies that have sucky products." While we wouldn't go quite that far, we agree that having a great product does a lot of your marketing for you.

The quality of your product can lead to viral growth, which means you can scale back some of your marketing efforts. A great example of this is DropBox. DropBox did almost no marketing in its initial stages, instead relying on a great product to inspire word-of-mouth recommendations and viral growth. And it worked.

If you do have a great product and you can get it in the hands of a few key influencers, you might be able to leverage off this viral growth. Just remember that companies like DropBox are edge cases. Even companies with fantastic products have poured resources into marketing. For most companies, viral growth will supplement traditional marketing tactics, not replace them.

Viral marketing for innovative technology solutions

Business solutions involving an innovative product require a unique marketing strategy.

Product demand is never consistent, its adoption rises steadily during the early phases, peaks at a certain point and then begins to drop off as new technologies replace it.

Geoffrey Moore updated the technology adoption life cycle to include a “chasm” between early market adopters and the majority marketplace.

innovation solution lifecycle graph

Figure 2 - Innovative solution lifecycle - Source: learn.marsdd.com

What does this mean for you?

A surge in popularity amongst early market adopters (tech enthusiasts and visionaries) does not guarantee that your innovation will rapidly progress through to the peak of its lifecycle. There’s still a sizeable chasm to overcome before the pragmatics are convinced.

Ramping up your marketing efforts could give you the sufficient momentum to cross this chasm.

You could incorporate the reviews from early marketers into your sales campaigns in order to convince the pragmatists to take a risk and consider trying your solution.

This is why it's important to keep track of your product’s position in its lifecycle.

The secret to initiating traction for your new product is to actively offer it to technology enthusiasts and visionaries first.

Since they are the first adopters of innovative solutions, it should not take much convincing for them to try your product, especially if it's free!

The benefit of having technology enthusiasts and visionaries as your initial adopters is that they will naturally become your evangelists and market your innovation for you. 

Technology enthusiasts are not difficult to find. A quick search on social media will reveal an entire list of them in seconds.

Finding early market adopters for innovative solutions

Finding tech enthusiasts on youtube.

Step 1: 

Search for a term related to your innovation followed by “review”

To keep things broad we searched for the term “tech review” in our example.

Step 2:

Filter the results by channels.

influencer marketing youtube search filters

Figure 3 - Youtube search filters

This will populate a list of channels belonging to tech reviewers.

influencer marketing youtube tech reviewers

Figure 4 - Tech reviewers on Youtube

Step 3:

After you have created a list of influences you would like to offer your innovative solution to, reach out to each of them via email.

To reach out to influencers on YouTube, click on the “about” page on their YouTube channel. They'll usually have their contact details displayed.

influencer marketing contacting youtube tech reviewers

Figure 5 - Contacting tech reviewers

In your email, offer your solution for them to review. Just keep in mind that their public reviews will be unbiased, so if they don't like something they will certainly mention it to all of their followers.

But don't let the fear of that prevent you from reaching out to them. Regardless of their review you never know who might watch their video and accelerate the success of your innovation.

Finding tech enthusiasts on Instagram.

FInding tech enthusiasts on Instagram is a very similar process.

Simply search the appropriate hashtag (in our example #techreview) and contact each of the instagram pages that populate in the result list.

influencer marketing instagram tech reviewers

Figure 6 - Tech reviewers on Instagram 

To contact an Instagram page manager, you can either send them an email directly via their profile page, or use the email listed on their profile for business enquiries (sometimes they include a link to their website, which should contain a contact form).

Strategic Partnerships

Developing strategic partnerships is a very effective method of marketing your solution. 

The benefit of strategic partnerships is that you're forming an alliance with organizations that already have a large audience they could market your solution to.

Strategic partnerships also give your venture credibility. If other organisations with more established reputations are willing to partner with you, it’s a very good sign that your proposition is highly trustworthy.

What does a business partnership look like?

It depends on your business solution.

If you're running a software company you could combine your software solution alongside others and offer a discount for the bundle.

In order for such a business partnership work, you would need to partner with businesses that offer a similar solution to yours but isn't a competitor.

If your business solution involves physical products you could form partnerships with specific suppliers and distributors and then demonstrate the resulting cost saving from such strategic partnerships in your business plan - prospective investors will love it.

There are several options for finding strategic partners:

LinkedIn

The benefit to using LinkedIn is that you will be able to directly contact the appropriate decision maker rather than having to plead your case to a receptionist first.

A great tutorial on laser targeted Linkedin search tactics, click here.

Google

Google is a great place to start to give you an idea of all the prospective partners.

Once you have an idea of who would like to contact you can then transition onto LinkedIn.

Meetup

Meetups are a great way of gathering with like minded individuals that are striving towards the same goal.

There are meetups for almost anything, so you shouldn’t have any issues finding the right group to mingle with in order to form strategic partnerships.

Measuring the ROI of inbound marketing

Measuring the return on investment of your inbound marketing strategy can be tricky. Inbound marketing doesn't always generate the same immediate, measurable return of many outbound marketing channels. In fact, inbound marketing can be a bit of a long game. In his book Content Inc., marketing expert Joe Pulizzi found it took around 15–17 months of consistent content creation to reach monetization.

So how do you measure a strategy that seems so abstract? Fortunately, there are plenty of metrics you can look to, including good old conversions and revenue.

First, you need to determine your investment in inbound marketing. The strength of inbound marketing is that it takes very little monetary investment. What you're actually investing is your time. Of course, your time is valuable, so you'll want to attach a monetary value to it accordingly.

If you lack the time or writing skill to produce blog posts, social media posts and press releases, you could consider hiring a freelance writer to do the hard work for you. If you go this route, you'll factor this cost into your investment in inbound marketing.

Next, you'll want to set specific, measurable goals for your inbound marketing strategy. What sort of traffic do you want your site to see as a result of your efforts? What kind of conversion rate are you aiming for? How many new customers do you want to gain from inbound marketing?

There are plenty of steps you can take to boost your conversion rate and help move site visitors down the funnel to convert them into paying customers, and this is where inbound marketing works in tandem with outbound marketing. We'll discuss some of these strategies later. But let's assume a somewhat conservative conversion rate of 3%.

So, if you decide you want to see 150 new customers per month as a result of your inbound marketing strategy, that means you'd need 5,000 visitors per month brought to your site through owned and earned media.

You can track your progress through Google Analytics. If you've set up your website through Squarespace, Wix or Wordpress, it should be easy to set up Google Analytics tracking. Here's the process for Wix and the one for Squarespace. For Wordpress, you can install a free plugin from ExactMetrics.

If your site doesn't use one of these platforms, installing Google Analytics tracking can be a bit more complicated, so you might want to get a freelance web developer to do it. 

Once you have Analytics installed, you'll want to pay attention to your site's traffic, the traffic to individual pages and the conversion rate from those pages. Optinmonster has a great article on how to set up your Google Analytics account to track conversions.

You'll also need to set up your account to track your conversions and traffic from social media. You can do this by clicking on Acquisition in the left navigation bar, then choosing All Traffic, Channels and then Social.

So once you've determined the cost of your inbound marketing strategy, and you've determined the number of new customers you want to see as a return on that investment, you have an idea of the traffic you need to generate and the conversions you'll need as a result of that traffic. Now that you have your Google Analytics tracking in place, you can measure your results against those goals.

Don't get frustrated if it takes time to see the results you're looking for. As we mentioned, inbound marketing is a long game. It takes time and consistency to begin ranking on Google and start seeing significant traffic. But the good news is, those results accelerate over time. And the content you create as part of your inbound marketing has a long shelf life. It will continue to generate returns for years after you create it.

Pros of inbound marketing

  • A fraction of the cost of paid marketing

  • Generates more leads

  • Offers your customers valuable content

Cons of inbound marketing

  • Hard to measure ROI

  • Takes longer to reach monetization

Outbound marketing

Outbound marketing is often called interruption marketing, and for a very good reason. This style of marketing takes your message out to customers and tries to grab their attention wherever they are. 

Outbound marketing is an age-old technique, but technology has opened new channels for outbound marketing that can bring immediate, measurable results and help you target your audience with laser precision.

Offline advertising

With modern online advertising platforms, offline advertising can seem a bit antiquated. But as online ad channels become more popular, offline advertising is becoming less expensive. And it can still be a great way to get your brand in front of a large audience.

Some of the offline marketing channels you might consider include:

  • TV advertising

  • Radio advertising

  • Outdoor display advertising

  • Print advertising

  • Direct mail

  • Branded promotional items (swag)

  • Trade show exhibitor space

While these channels can make it hard to target a specific audience, with a bit of research you can at least narrow your audience down. For television, radio or print advertising, make sure you get audience demographics. For channels like television and radio, audience demographics could change based upon the time of day your ad runs.

For outdoor display advertising, put thought into the geographic area where your ad will be located. What are the demographics of the area? What sort of people pass through the area on a day-to-day basis? Where are passing commuters coming from and heading to? All these insights can help you pick areas best suited to your target audience.

Measuring the ROI of offline advertising may seem difficult, but it doesn't have to be. Simply include unique landing page URLs in your ads for each offline channel and then track visits and conversions to those landing pages.

Pay-per-click

Pay-per-click marketing is, as it sounds, online advertising that charges you per clickthrough. The way the amount you pay per click is determined will depend on the platform, but most come down to a strategy of bidding for keywords.

Search Engine Marketing

Search engine marketing (SEM) is paid marketing through ads that appear at the top of search results pages. For our purposes, we'll focus on Google Ads.

To set up a Google Ads campaign, you'll first want to do some keyword research. Try to understand what people in the market for products or services like yours are searching. Look for searches where competitors' ads are showing up.

You can use some of the keyword tools we mentioned earlier, and you can also use Google Ads' own Keyword Planner tool. Keyword Planner will give you search volume data for each keyword, as well as the average bid for advertisers looking to display ads for that keyword.

Once you have a large list of keywords, it's time to go back through and refine your list. If you're already ranking organically for certain keywords, you'll want to consider whether it's worth paying to appear in the same search results. 

You should also include your brand keywords. These are any keywords that include your brand name or a variation of your brand name. 

You'll also want to remove keywords that don't have high buying intent. The more specific the keywords, the higher the intent is likely to be, and the lower the average bid. This doesn't mean you should automatically exclude more general keyword terms. Sifting out terms with low buying intent is more about spotting the keywords people are likely to be searching when they're still in the research phase of their buying journey, and aren't ready to purchase yet.

Once you've identified the keywords with low intent or the wrong intent, don't just discard them. You'll want to include them in your campaign as negative keywords. This specifically stops you from appearing in searches using these keywords. Remember, you're paying for every click. You don't want to appear in searches and get clicks that aren't going to convert into sales.

Once you have your keywords, you'll need to decide the maximum amount you can bid. As we mentioned before, Google Ads will tell you the average bid for a keyword, but to determine your maximum cost per click (CPC), you'll use this formula, as per marketing guru Neil Patel.

Profit per customer x (1 - Profit margin) x Conversion rate = maximum CPC

Don't worry if that seems confusing. Let's plug in the numbers, and you'll get a more concrete idea of how the formula works.

So let's assume you're selling a $750. You're getting a $150 profit per customer for a 20% profit margin at a conversion rate of 3%. 

$150 x (1 - 0.20) x 0.03 = $3.60

So, using this example, the maximum CPC you're shooting for is $3.60. You can actually set your maximum CPC slightly higher in Google Ads, as some keywords you might pay above your max CPC and some you'll likely pay below. But you'd want an average of $3.60 in order for your campaign to remain profitable.

So, if you have your maximum CPC set at $3.60, does that mean you'll actually be paying $3.60 for every click your ad receives? It doesn't.

This is where things can get a bit confusing. The amount Google Ads actually charges you is based on something known as Ad Rank. Your Ad Rank is your maximum bid multiplied by a metric known as Ad Quality Score. Your Ad Quality Score is a number out of 10 that Google determines based on your ad's click-through rate, the landing page it directs people to and its relevance for a keyword query.

So, let's assume you've done a great job writing your ad and your landing page, and your Ad Quality Score is 10 out of 10. With a maximum CPC of $3.60, your Ad Rank would be 36.

Your actual CPC is determined by both your quality score, and the next highest Ad Rank below you. The formula is:

Ad Rank of next highest advertiser  / Your Ad Quality Score + $0.01 = Your CPC

So let's imagine your next closest competitor has an Ad Rank of 25:

25 / 10 = 2.5 

2.5 + $0.01 = $2.51

Ad Rank also determines the position in which ads appear in the search results. The ad with the highest Ad Rank will appear at the top of the results. And don't be fooled that a high Ad Quality Score always wins. Remember, Ad Rank also takes your maximum bid into account. Suppose another advertiser came along with much lower quality ads that only merited a 5/10 Ad Quality Score, but they entered a maximum bid of $8. Their final Ad Rank would be 40, edging out your 36.

So, appearing in the Google Ads block is a fine balance of crafting high quality ads with great landing pages and high clickthrough rates, and entering a competitive maximum bid.

And what does a high quality Google Ad look like? Here's one of ours that ranks well:

There are a few elements to take note of. First, the headline removes objections by pointing out that freelance graphic designers are affordable and reliable. The body copy does the same, reinforcing the affordability message with "Pricing For Any Budget", and telling users they'll receive 60 second quotes.

Next, the body copy offers guarantees. It tells potential customers they only have to pay when they're 100% satisfied, and that they have 24/7 access to support.

The ad also contains social proof. It tells us that more than 14 million jobs have been completed on the platform, and that 95% of the freelancers are rehired.

It also contains a strong call to action, with the phrase "Get Started Now." Analysis by Wordstream found "get" and "now" were two of the most common words used in successful PPC ads.

Finally, the links at the bottom of the ad make it stand out against other Google Ads, and lead users to helpful content.

When you're writing a Google Ad, make sure to: 

  • Include keywords in the title and description 

  • Lead with benefits, telling searchers what benefit they'll receive from using your product or service

  • Include numbers where possible

  • Offer guarantees

  • Address objections

  • Include a clear call to action

Social Media Paid Marketing

Social media paid marketing works on many of the same principles as other pay-per-click marketing. The strength of social media marketing is the ability to target very specific audience demographics with your ads.

As with organic social media marketing, paid social media marketing comes down to knowing what platforms your audience is most likely to engage with, and the kind of content that gets the most engagement on each platform.

Each social media platform offers different ad formats, but for most of them the basics of a good ad remain the same: use attention-grabbing imagery, use video whenever possible, show people using your product or service, create a killer headline, lead with benefits and provide a clear call to action.

Display advertising

Display advertising is closer to traditional advertising than a channel like Google Ads. You've certainly seen display ads before, lurking down the margins of webpages, at the top below the site's header image or running along the bottom.

The downside of display advertising, of course, is that it can seem obtrusive and annoying. It also has a much lower clickthrough and conversion rate than Google Ads.

But this doesn't mean you should ignore display advertising, because the channel also has significant upsides.

Display ads give you wider latitude to show off your brand and products. Because they're imagery based, like traditional advertising, you can showcase your branding and your offering, and you can even use mediums like video.

You can also target display ads to appear for certain demographics, keywords and websites. You can even retarget customers with display ads. For example, if a customer has come to your website, placed an item in their cart and left before checkout, you can target display ads to appear while the customer is browsing the web, with the aim of enticing them back to complete their order.

Using the Google Display Network, Google's platform for display advertising, you can choose between a cost per click (CPC), cost per impression (CPM) or cost per action (CPA) billing model. Cost per impression means you'll be charged based on how often your ad is seen rather than how often users click on it.

You might choose CPM if the purpose of your campaign is solely to raise awareness about your brand. In a situation like this, you want your ad seen by the largest number of people possible. If your primary goal is to get people to click through to your site, you'll want to choose CPC instead.

The CPA model charges you based upon users taking a specific action, such as signing up for your newsletter or buy your product. This model is low-risk for you, as you're only charged for successful outcomes. However, it also tends to be extremely pricey, so you'll have to weigh up the ROI of CPA advertising.

Email campaigns

Email marketing is an incredibly effective tool. It drives better acquisition and retention than just about any other marketing activity. It also delivers an incredible ROI. A 2015 report by the Direct Marketing Association found that for every $1 spent on email marketing, companies generated an average return of $38.

Building an email list

One of the benefits of email marketing compared to other forms of outbound marketing is that, assuming you're complying with anti-spam regulations, your emails are marketing to an audience that's already asked to receive your marketing materials.

If you're a startup, that means you'll be building your email list from scratch. And that means you need to offer people something of value in exchange for their email address. Consider offering downloadable guides and resources relating to your industry in exchange for email signups (kind of like we've done with this e-book and its resources).

You'll also want to make sure every page of your website offers a field for email capture. Once again, make sure to offer users something of value in return. Your social media accounts should also offer visitors a way of entering their email.

Offline, you can use industry events and trade shows to collect email addresses, of even host local events and collect email addresses. 

Once you've built a healthy email list, you might consider segmenting it for best results. Segmenting your email list can massively increase conversions, but it requires some data about your users.

During the signup process, you can ask users a few demographic questions (though you should be wary of asking too many, as it creates more friction to signing up). This can help you segment your list on demographics such as age, income, education level and so on.

You can also segment your list based on the users' behavior on your website. You can track the pages on which they signed up to get a better understanding for the topics and offers that might be of interest to them. You can separate emails based on users engaging with top of funnel content like your blog versus bottom of funnel content like sales and service pages.

Writing an email that gets clicks

Whether or not you segment your list, your email marketing success hinges on creating an email that people want to open and click on.

The first hurdle after your email lands in a customer's inbox is getting them to open it in the first place. This means crafting an enticing subject line that piques their curiosity.

First, make sure your sender name is recognizable. You want your subscribers to immediately identify the sender as your brand. A no-reply sender name will look spammy, and we're not huge fans of cloaking your marketing email using a first name (it feels disingenuous). We recommend using your brand as the sender name.

Next, keep your subject line short and to the point. Tell subscribers exactly what they'll get by opening the email. Is it useful content? A promotional code? A piece of news about your brand? 

Also, avoid redundancy in your subject line. You only have about 50 characters before your subject line is cut off in most email apps. If you're sending a regular newsletter, including the word "newsletter" in the subject line is a waste of precious real estate. 

Ideally, you want an email subject line that's personalized, that piques the reader's curiosity, that creates a sense of urgency and that promises the reader benefits from opening the email (benefits the content of the email actually delivers on, by the way).

You'll also want to make use of preview text. This is the blurb of text that appears below the subject line in many email apps, including Gmail. Use this to personalize the message and further tell recipients what they can expect from the email's contents.

Once a recipient has opened the email, the next hurdle is to get them to actually click through to your site. There are a few best practices to keep in mind.

First, make sure your email is mobile friendly. It should display well on both desktop and mobile devices, and images and text shouldn't be cut off on mobile.

You'll also want to make sure the text of the email is easily scannable. Many recipients won't thoroughly read your email, so you'll want them to get the gist at a glance.

You should also make use of imagery and interactive elements like video or quizzes. Visually appealing emails have a much better chance of enticing readers to click through to your site.

Finally, you need to provide a clear call to action. The email should tell recipients exactly what you want them to do, whether it's to simply click through to read a blog post or to take advantage of a promo code. Provide them a clear path to click through to your site, and tell them what you want them to do when they get there.

Landing pages

Much of your marketing will rely on the strength of your landing pages. A landing page is the page users are directed to when they click through from an ad or email. The more you customize landing pages to your specific marketing channels, the better they'll perform.

A good landing page starts with a good headline. Your headline is the place to put forward your unique service proposition. What sets your company apart? How will interacting with your brand make your customers' lives better or easier?

Your subhead should go into deeper detail about your value proposition. Remember to lead with benefits. Appeal to the reader's emotion. Don't focus on your product or service's features. Focus on the end result and how the reader's life will be positively impacted.

Also, provide social proof if you can. If you have customer testimonials or reviews, include them on your landing page. If you've worked with any high profile clients, this is the place to name drop them.

You can also use your landing page copy to remove the feeling of risk. Offer a money-back guarantee, free customer support, free shipping or some other way to put your customers' minds at ease.

Finally, provide a very clear call to action. Your landing page should tell your customers exactly what you want them to do, and provide them a simple, straightforward way to do it. Your call to action should be visually prominent.

Measuring the ROI of outbound marketing

Measuring the ROI of outbound marketing tends to be much easier than measuring the ROI of inbound marketing. For digital channels, you'll be able to see how many people clicked on your ads, and which of those ended in conversions. 

If the focus of your marketing campaign is conversions, you'll be able to set up your Google Analytics and your Google Ads dashboard to track conversions through SEM, social media marketing and display advertising. You can also use Google Analytics to track your email campaigns (this is a cinch if your campaigns lead to dedicated landing pages).

For a marketing campaign focused on conversions, measuring ROI is extremely straightforward. You just measure the revenue generated by your campaigns versus the amount you've invested in the campaigns. For marketing campaigns based on lead generation, it can be somewhat murkier.

If your outbound marketing is focused on generating leads (with a sales team focused on turning those leads into conversions), you'll want to measure the percentage of leads that turn into customers, the average amount of time it takes to close those leads and the revenue you generate per lead to determine the ROI of your marketing efforts.

Pros of outbound marketing

  • Easy to measure ROI

  • Immediate results

Cons of outbound marketing

  • Expensive

  • Ads have a limited lifespan

Conclusion

Successful marketing requires both reaching out to customers and enticing them to come to you. It also requires you to engage with multiple channels. 

Once customers begin coming to your door, you'll be in the fortunate position of needing to scale your business. But the way you scale your business requires some strategic thinking. We'll show you how to do it in our final chapter.

READ CHAPTER 7 OF THE ULTIMATE BUSINESS GUIDE

 

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