[Issue 36] Where to Spend Your Marketing Dollars
Finding a marketing budget is only the first challenge; knowing what to do with it is where the rubber meets the road.
[Photo by Kelly Sikkema on Unsplash]
The Odysseus Files, Issue 36
Playing Your Own Game, Part 13
A Dream Come True - But What’s Next?
You’ve put in the work.
You’ve spent time optimizing your business model, structuring your offers to maximize revenue, and clarifying your brand positioning.
The resulting increased average customer lifetime value has created an expanding amount of marketing dollars you can afford to invest in growth.
Which means you can spend more on acquiring a customer, creating the conditions to outspend your competitors to acquire higher quality leads.
The higher prices you can charge provide an improved profit margin - further strengthening your business’ resilience and ability to adapt to evolving market conditions.
Sounds like a dream?
This is where we left off last week: doing the deep, foundational work that puts us in a place to increase the resources available to invest in growth.
But we left off with a question: once you’ve started doing this work and getting results, where should you be investing your newfound marketing budget?
Identifying Marketing Budget Priorities
Back in Issue #30, I said there’s no such thing as a sustainable traffic source.
Algorithms update. Regulations and shifting consumer behavior compel third-party platforms to evolve their relationship with data. AI is changing the nature of search. Paid ads fluctuate in cost and effectiveness (and are infected with high rates of ad fraud and misrepresented attribution data).
The answer to what you should put your dollars towards isn’t as simple as picking your favorite tactic and chasing it endlessly (even if it works for a while, eventually your results will start to slide and you’ll experience diminishing returns).
So, how do we approach this?
Author and speaker Andrew Davis, in a video series on the weaknesses in paid media, argues that factors like product innovation and customer experience go further towards long term growth than any advertising.
Research from the Harvard Business Review agrees.
Meanwhile, in the positioning literature of authors and consultants Jack Trout and Al Ries, they argue that a brand is not built with advertising, but with PR. Advertising is simply a tool for reminding a customer base about the brand’s promise.
Combined with our usual focus on starting with the foundation, we can connect the dots to arrive at a few broad guidelines to help prioritize marketing spend.
(For reference, let’s back up from the assumption that marketing equals digital ads, social media, search, and any of the other digital tactics we have available. Instead, we’ll use the traditional “4 Ps” of marketing: product, price, place, and promotion.)
Product
Your brand positioning, business model, and offer structure will provide clarity on what types of products you should be offering. Instead, here our focus is more on innovation.
Just like big companies have R&D departments that do research and product development, you should be allocating some of your resources towards product innovation.
This could look like:
Experimenting with the packaging to increase the perceived value
Developing a system for rapidly testing new product ideas
Releasing updated versions of a particular product (e.g., 1.0, 2.0, etcetera)
Testing upsells, cross-sells, down sells, etcetera
Collaborating with other creators on products that are mutually beneficial to both audiences
Big brands that stay ahead of their industries do so by constantly releasing new products that break the perceived boundaries and excite loyal customers (ensuring they’ll never wander to a competitor).
Set aside part of your budget to replicate this concept. It will pay dividends in customer loyalty and brand reputation, resulting in your business regularly coming up in conversations within your field.
Price
This may be less of a financial investment. But because strategic pricing is important both for reinforcing your positioning and for enhancing your profit margins, it’s worth allocating resources, time, and energy towards testing and refining it.
You can do this by:
Spending a small amount of ad dollars to test two different price points with your market
Moving up or down the pricing scale by breaking a larger offer into smaller components (to test a low priced product) or vice versa, by combining smaller products into a larger package
Place
More accurately, distribution.
This is a sticking point for creators: they have the tendency to make up for a lack of attention or engagement by creating more, when really they need to be distributing more.
Invest creative energy and financial resources into enhancing your distribution. Focus specifically on the idea of creating assets - things you create once that you can leverage over and over.
Spend some money upfront to build systems and flywheels that increase the output of everything you do. As an example, you could hire a VA to help repurpose content on different platforms, spreading the impact of your content without requiring more of your time.
Promotion
This includes what we typically think of when we refer to marketing: advertising, PR, sales or discounts, etcetera.
In this arena, rather than approaching it like most digital marketers (that is, to pick the cheapest ads), think in terms of quality over quantity.
We know a few principles that will always apply:
Other people talking about us is more powerful than talking about ourselves
The cheapest customer is a previous customer
Investing more in getting a customer tends to result in getting a higher quality customer
Because there’s no such thing as a sustainable traffic source, we have to prioritize adaptability
This translates into a few key focuses:
Use today’s version of PR to build your brand. This means some mix of guest posting/appearances, interviews, media mentions, collaborations, cross-promotions, etcetera. Also, while “PR stunt”-type activities may not be ideal, if you can get creative about getting attention in a way that is authentic to your brand, do it. There are many stories of people who landed thousands of dollars in free publicity just by getting a bit creative.
Invest in a loyalty program. Spend on creating a “wow” customer experience that is paired with rewards for certain behavior: whether purchasing more themselves or getting others to join your world.
When you do invest in paid traffic tactics, don’t worry about landing the most affordable CPMs; instead, experiment with unconventional ways to get in front of your audience. Especially if they end up costing more per customer, they’ll help you stand out and make a bigger impact.
Experiment with brand advertising. Unlike performance marketing (e.g., running Facebook ads to drive leads to a landing page), brand advertising is simply focused on planting your message and brand in front of your ideal audience enough times that it starts to shape their perception of you. This results in you being top of mind when the time is right. So even though it’s much harder to directly attribute results to dollars spent, it’s a long term approach to “softening up” your market and preparing them to buy from you at some point in the future.
Finally, be ready to experiment with different traffic sources. Don’t become too dependent on any single one. Keep trying new approaches. Not only will this combat ad fatigue in a given media channel and dodge the worst effects of the algorithms, it will also help you stay focused on getting your message in front of the same person over and over, in fresh ways, rather than trying to spread it across too many people, where each will only encounter it once.
As a final piece of advice, prioritize brand consistency in everything you do. Consistency - from product and pricing to distribution and advertising - is a proven revenue driver.
It also puts constraints around your marketing and product development, forcing you to stick with a focused message. This focus eliminates the need to start from scratch every time you go to create a new piece of content or run a new ad campaign, saving you time, money, and energy.
You can stop worrying about whether or not you’re doing the “right thing”: let the objectives you’ve set and the message you’ve created take the reins.
P.S. - How to effectively allocate marketing budget always has and always will be a debate. Hopefully this has been helpful in framing the issue in your mind. If building a marketing investment model that works for you still feels overwhelming, feel free to reach out. I’d be happy to brainstorm ideas with you.