This is the question to answer when starting your first customer acquisition campaigns. Long before receiving the first injection of funds, you must create a strategy that provides valuable learning and be as efficient as possible.
Nowadays there are a large number of channels in which to invest in advertising in the hope of gaining loyal customers for new companies.
The questions then are:
- What channels should a startup take advantage of?
- How should you create a budget?
- What tests are most important in the early stages?
Let's answer these questions with a simulated budget of $10,000 for the start of paid acquisition efforts.
Which channel to start with?
Without knowing anything about the startup or what you are looking to sell, it is safe to say that Google or Meta will be excellent paid channels for initial testing. They represent the duopoly of paid advertising for a multitude of reasons, including the fact that they both contain strong targeting capabilities, varied campaign types, and the audiences that come with them.
In the early days of a startup, it's important to be as efficient as possible, not only with these types of budgets, but also with your time.
To avoid making assumptions, these questions help determine which channel to select for the startup:
- Within which channel can my target audience be found?
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Let's say you own a marketplace startup where people sell their luxury watches from brands like Rolex or Patek Philippe. The target audience of watch buyers can be found on Meta or Google, and this market is not based on discovery.
An example of a based startup The discovery would be a new type of sock that contains pockets. It's an extreme example, but it's used to show the fact that someone won't be searching for this and you need to put it at the front of their social media feed so they "discover" it.
Once the channels are selected, the following is a simulated example of how to spend the first 10,000EUR.
How to Allocate Your $10.000 Mock Marketing Budget
Allocating your first €10,000 in ad spend isn't too complicated, but there are a few variables you need to take into account to take advantage of this money. It is imperative to ensure that the €10,000 includes the following:
- Two channels.
- Campaign Test.
- Message tests.
- Creativity tests.
How to spend your first 10.000 euros on paid ads.
In the early days of the startup, it is important to be as efficient as possible, not only with this €10,000 budget, but also with your time.
With the setup above, you will test two channels, two campaign types, and two message types at the same time. This generates great learning potential. A complete guide on messaging or campaign types for each channel cannot be written in this article; Instead, it is important that the mindset focuses on diversifying spend across the three most important pillars of paid advertising: channels, campaign types, and assets.
Imitate when the budget is reduced
When you have such a tight budget, unlike advertisers who spend millions a year, you simply have to imitate. There are powerful resources to help with ideation and inspiration, such as Meta Ad Library and the TikTok Creative Center.
Both ad libraries allow you to search for competitors and industry leaders to draw inspiration from, both in your messages and your advertising concepts. It is imperative not to reinvent the wheel when the budget is so tight. Instead, it is better to successfully imitate what other companies have spent thousands of budget on testing, even after having obtained much larger budgets.
Select winners fast
It's key to track all paid acquisition testing in a simple spreadsheet so you can look back and know what was successful when there is time to fix. Many times spending on early customer acquisition campaigns is very inefficient and there are no established results to know which configuration will work best.
As a startup growth leader, you should always be working to create a brief that describes the hypothesis for each test you run. Getting into this habit with your first spending budgets will make your later tests much more analytical.
When looking at all the metrics on the ad panels for early testing, the ones that matter the most are CTR (click-through rate), CVR (conversion rate), and CPA (cost per acquisition). Whether testing messages or campaign types, the focus should constantly be on these three metrics, although ultimately only one is chosen to determine the winner.
Typically, the lowest-of-the-funnel metric, such as CPA, should be used as the determining factor in choosing winners. Leveraging CTR and CVR insights should help guide assets and messaging, even if they aren't the ultimate deciders.
There is no pre-set delta needed to announce a winner during testing, but it is imperative to clearly define how future winners will be determined for consistency. It is advisable to use a statistical calculator (there are many online) and use a significance level of 10% to 20%.
The following budgets
After spending the first €10,000 on ads, you should have a lot of new data if you followed the mock budget plan above. Each test should lead to a better ROAS (return on ad spend) and increase over time.
Throughout testing, budget iterations can be performed if the goal is to create greater knowledge. For example, if one of the channels performs terribly and the other becomes more optimistic, then a cut in spending can be made.
When projecting the next €10 and other future items, the same principles are maintained, including constant testing to outperform permanent campaigns. Two main conclusions are that it is mandatory to constantly launch new tests and that it is essential to document everything when running a paid customer acquisition campaign.
