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Startup Studio: Scaling Your Startup Using Digital Marketing

Startup Studio: Scaling Your Startup Using Digital Marketing

SPEAKER 1: Thank you all for
coming to our Startup Studio event today. I don’t know how
many of you have been to the last one we did,
we did a branding Startup Studio, how many of you, show
of hands went to that one? We just want to see
the overlap here. Great. And how many of you is this
your first Nelson Center event? OK, well welcome. Thank you for
being here with us. If you want to learn more,
you can check out our website at entrepreneurship.brown.edu. You can also sign up for
our mailing list there. And so, we welcome you to
the Startup Studio event. These series of events
are more tactical based. And so we’re happy to welcome
Soren Ryherd from Working Planet, a local digital
marketing agency, to talk to you today. So, here’s Soren. SOREN RYHERD: Thanks very much. So if you did attend
the branding event, this is going to
be very different. And I’m going to give
a little bit of intro of where I come from, how we
approach digital marketing, and why to me this is a
really interesting topic. Going to talk a little bit
about the state of digital, but honestly I’m going
to fly through that part. I mean, I’ve been working in
digital marketing for 15 years. You guys have been
living in a digital world your entire lives–
you probably have a pretty good idea of the
scope of the digital world, but we’ll go through
it so that we have a good common baseline on that. And then what I
want to really dive into is if you’re
working with a startup, how do you scale growth? How do you not lose your
friends and family round or your seed round by giving
it all to Google or Facebook? Managing that risk and finding
that growth path is often difficult. And I want to go
through some common pitfalls that we’ve seen with startups
that we’ve either known or worked with over the years. So maybe I can give you
a little bit of advice to help avoid throwing
money away and being faster on your course to
success with a startup. And then– leaving a lot
of time for questions– may totally deviate from
the path in the middle. If it makes sense to
engage in discussion, I’m really fine with that. I actually love
talking about this. So if it can be more of a
discussion, that’s awesome. Let me just set my timer. One of the things about
digital is that there are low hanging fruit. And we are going
to talk about that. There are really
good common places to start in the
world of digital, but we’re also going
to talk about all of the options
that are out there. So my background–
I got into marketing in a very circuitous path. Actually my co-founder at
Working Plan is my wife. We met in graduate school at
a NASA research fellowship, we were writing algorithms for
processing satellite imagery. This is not the normal
path into marketing, it’s just my path
into marketing. I left graduate school and
abandoned my doctorate– I don’t advise
that, but I did it– in 1995 to work for
an internet startup. Imagine how risky it was
at that time to do that. My wife ended up working for
a think tank in Cambridge doing atmospheric modeling
for about six years until she too was bitten
by the startup bug. We worked at a bunch
of different startups until 2003 when we saw
Google being a thing and decided that this was a
math problem that needed solving and that we figured out
that we could do that. We are a media buying company. We put the math behind
digital advertising. And that is the one
problem that we solve, which is how to scale
profitable customer acquisition through paid
digital advertising. We believe that internet
marketing– or any kind of advertising and marketing–
is a financial investment in a financial outcome. That is the reason
businesses do it. And that you should be very
explicit about connecting the dots between that investment
and the eventual return you get from that investment. We’re also– oddly
for a marketing firm– we’re an Agile shop. If you guys are familiar
with Agile at all, I am a huge proponent of
Agile and DevOps in marketing and speak a lot about that. I won’t be talking about
that today, even though it is one of my favorite things. But if you have questions later,
I’m happy to talk about that. So we are actually
based down the street. We are headquartered here in
Providence in Wayland Square, about seven blocks from here. But we work with organizations
all over the world. We do all of the global
advertising for Harvard Business School online for
their professional education programs, we’ve worked
with Habitat for Humanity nationally for
more than 12 years, and we work with
a lot of startups. We work with startups in New
York, Austin, Silicon Valley, as well as more
established companies all over North America and Canada. And one in Switzerland,
oddly enough. This year, digital
advertising will surpass all other
advertising spend for the first time in history. About $143 billion will be spent
on online advertising in 2019. It’s not only the
biggest bucket, it’s rapidly becoming
the only bucket. And digital might not mean
what you think it means. I think when people think
of digital advertising, they think immediately of
search advertising and display advertising, but
it’s so much more. It definitely includes
all of those things, but now digital includes
billboards or what’s called out-of-home
advertising, which is now being fueled by AI driven
programmatic exchanges in the digital world. The buying and selling of
it happens exactly the same as search advertising. It can include over-the-top
cable advertising, connected TV– if you see a TV style ad
on your phone or your laptop, that is digital advertising
even though the format might be more like what
you’ve experienced with classic television. And the forms are blending. What we’re really
seeing is that AI driven programmatic
exchanges in particular are picking up all
of the inventory. In the early 2000s, that
was display advertising. You used to have to
broker with publishers in order to place your ads. Almost none of that is
done that way anymore. It’s all done in auctions. You’ll probably recognize most
of these, the big players– Google, Facebook by the
end of this year I’m pretty sure Amazon is
going to be number three. Amazon is rapidly becoming
a very large and powerful ad network. But there might
be other ones here that you’re less familiar with. If you haven’t heard
of Acuity, it’s a programmatic ad
platform for managing those AI driven exchanges. StackAdapt, which
is a technology focused specific ad network. And then things that you
probably are more aware of from a consumer point of
view– things like Spotify and Pandora– but those are ad digital ad
networks as well now too. And we’re actually
managing internet radio in very similar ways that
we manage and optimize search campaigns or display
campaigns or paid social. In fact, the growth of
marketing has been so massive that in a very short
period of time, we’ve gone from a relatively
accessible handful of technologies– so in
2011, there were about 150 either ad networks,
or marketing tools, or tools that were
used to manage your either website or your marketing
program– whether that’s paid or unpaid digital marketing. In 2017 that broke
the 5,000 mark. I’ve heard that for 2019,
when this comes out– this gets updated every year– it’s going to be somewhere
between 8,500 and 9,000 players. There is no possible way to
know everything about everything in digital marketing. And the good news is
you don’t need to, you just kind of need
to know where to start and you need to know
some fundamentals about marketing in general. Whether you end up for your
startup using a particular set of management tools, particular
database, a particular CRM, whatever it might
be, it’s really going to be based
on your own needs. But overall, the
big players have stayed reasonably consistent
over time– or at least the big categories, which
I’ll get into in a minute. The most important
thing to understand about digital advertising from
a buying media point of view or being an advertiser
as a startup, is that all of
digital advertising is sold in an auction. So if all of your
perception about advertising comes from watching Mad Men,
you need to let that go. I mean one, there’s
not that many Martinis. But secondly, it’s not
bought and sold that way. And it was no wonder
that all of those people had so much time for
drinking and affairs because there wasn’t that
much that you could do. You placed an ad, you got the
most eyeballs for the lowest cost that you could. You tried to make
sure that there might be a demographic fit– and that meant age,
location, gender, and that was pretty much it. There are now
thousands and thousands of ways to target
advertising well beyond the demographic
characteristics. But that’s what you
had back in the day. If you negotiated really well,
you got volume discounts. That doesn’t work. None of that works in digital,
there’s no volume discounts. The volume is at the
top of the auction. That’s what you’re bidding
to get in front of. The more you bid, the more
eyeballs, the more placement you can get. So you want to be very
careful about what you pay. The auctions are driven
by a competitive landscape that can vary every single day. So the most important
thing to understand in digital advertising,
if you are buying media, is what is it worth? Because the most powerful
thing about the auction is it allows you to pay what
the audience is worth. So the heavy
lifting that we do– and that any
company trying to be profitable with
digital advertising is going to try to
understand– is what is my audience worth to me? The digital world
is more diverse and it gets more
diverse every day. One of the most
interesting things to me is that the last year
saw more innovation from existing players
than we’d seen since probably the first
five years of digital. We saw Facebook and
Google and now Amazon and others coming out with
new platforms, new programs, new ways to target audiences,
new ways to buy and sell media. It continues to be a
rapidly evolving game. But as long as you
understand the basics of the auction and the basics
of how to measure your audience, you can really take advantage
of almost any kind of auction. Because the mechanics
are surprisingly similar across all of the
different types of media. What does differ a lot is the
ways that people consume media. And I think one of
the traditional views on advertising was that
individuals would consume advertising in one
specific channel, and that’s not true from
a user point of view. But it was definitely
true from the way that the companies
measured their advertising. Online advertising was
different from the print advertising they may
do or TV, and they were evaluated in isolation. And even in digital, it was
very tempting for companies with different ways of budgeting
in different departments to separate out the different
types of advertising they were doing and trying to
measure their effectiveness independently. This led to something
which I’m happy to talk about but I’m probably
not going to go into too much detail called
the attribution question. Which if you’ve ever heard
that referred to in digital, simply means if
people are engaging in different media
in different ways, leading to value being
created as a customer, how do you give credit
to any of those programs that they interacted
with along the way? It’s a very interesting,
very complex puzzle that everybody in digital
is trying to answer. Google– they don’t
give a lot of advice on what’s good or bad when
it comes to the attribution question. Because Google pretty much
is going to take your money, that’s their job. So there’s a lot of complexity. But if you dig
into the complexity you have good
measurement, you can take advantage of the
complexity in order to find novel ways
to create value. And I’ll give an example of
that with one of our clients where we were seeing
a lot of traction with the Facebook
advertising we were doing, but we knew that a
lot of the people who were interacting with Facebook
were not clicking on the ads. They were coming to the website,
they were doing a brand search on our client’s brand, they’re
going directly to the website, and they were engaging. So it’s creating a lot
of value, but the click based data that we had was
not particularly revealing of the value that
was being created. So we figured out ways
to do geographic tests and in this case we tested Texas
versus Florida and Georgia, thinking that those would be
somewhat similar, at least in population. And what we found was that
half of the value being created from the Facebook
advertising was not being recorded in our data. And we then went to a couple
of different locations in the Northwest, replicated,
got exactly the same results. So we knew this wasn’t
a geographic trend, it happened to be
something that was real or was happening with the way
that people were interacting with Facebook advertising. So what that meant was
that our data was not giving us the whole picture. So I think one of the things
that you should realize with digital
advertising is there’s all the data in the world. We’re swimming in a sea
of data, but the data has very specific gaps in it. The good news is, like
that Facebook data, those data gaps are biased
in consistent and predictable ways. And as it turns out, as we
measured that same effect across client after
client after client, the magnitude of out-of-channel
behavior from Facebook was strikingly consistent. Almost in every case
we measured, about 50% of the value that was
being created by Facebook was happening out of
the channel measurement. So data is your
friend, but you have to be very careful about
how you use the data. Very quickly going to go into
a bit about all of these. When it comes down to the
different types of advertising, some of these are
really well-known. So search, social advertising– I think everybody knows
those because you’re being presented as consumers
with that constantly. So you probably know what a
sponsored tweet looks like and what search advertising
looks like when the ads come up when you do a search on Google. Some of these might be a
little bit less familiar. So when I talk about
programmatic advertising, programmatic advertising
is display advertising. The initial big
bucket of programmatic was display advertising. Programmatic simply
means that there is an ecosystem of technology
that matches ad placement inventory on a publisher site
with an advertiser and the ads that they want to place. And the programmatic
part simply means that we are not
physically making those matches by choosing which
publishers and characteristics and doing a manual
connection, that there is artificial intelligence
that is acting to create that dating game. That literally programmatic
is the Match.com, it’s the eHarmony
of advertising. Basically we’re trying to get
advertisers and the consumers on sites all over the
internet to be matched in a way that resonates
in value being created for the advertiser. And so largely, the
artificial intelligence is going to be using
learning algorithms to determine where you
can make a connection that creates value. So it actually will be using
measurements on your website to see when somebody engages– that they’re either
creating a sale or they’re filling out
a form– and there’s some engagement piece
of value that you’re providing through tracking code
to the programmatic networks that it is leveraging to learn
over time how to best spend your ad dollars to
create that value. The programmatic networks
are extremely powerful and the programmatic
exchanges, which is what the collection
of advertisers are called in the
programmatic world, is starting to include lots
of things that are not just display advertising. And so that’s where we’re
starting to get access to connected TV ads,
where we’re getting access to out-of-home digital
billboard advertising. NBCUniversal last year announced
that as of mid this year, 100% of their TV
inventory will only be accessible through the
programmatic exchanges. So classic television, cable
advertising, all of that is now being bought and sold in
an auction because the auction is a win-win for both
advertisers and publishers. It’s a win for the
advertisers because you get to choose what
you want to pay based on your understanding
of value, and it’s a win for the publishers because
it’s a race between advertisers to pay the most that
they’ll be willing to pay for the inventory
available on their network, whether that’s a
website or a TV channel or whatever it might be. Another one that might
not be as familiar is affiliate advertising. Raise your hand if
you’ve been familiar with affiliate advertising. One, three, five, seven,
you’re ahead of the game. OK. Affiliate advertising is
simply you’re paying somebody when you get a sale for them
introducing your product, service, company,
to their audience. Anybody watched
a YouTube channel and they’re plugging
Audible.com? Familiar at all? Yeah it’s super common. Audible is probably
the number one company in the world to take advantage
of affiliate and influencer advertising. Basically, they’re paying
a fee to that advertiser in order to create sales. And all of those people
are providing a link to Audible.com, they
get a share of revenue off of that that is preset
before any sale has been made. Affiliate marketing is actually
great for early stage companies because if you can create
a compelling offer, one, you can test to see if people
who already have existing audiences are able to
connect your brand to people that might be interested in it. Second, there is no risk. You’re setting the
payout ahead of time so you can, based
on your finances, determine what it makes sense
to you to pay the affiliate for that sale being connected. It is probably one of the safest
forms of digital advertising. The trade-off there is it
does take some management. You really have to work
with your affiliates, you have to understand when
to let an affiliate go, you have to make sure
they abide by your rules, and all of those things. But it can be a very
good early stage use of digital
advertising, or advertising that is really deployed
in the digital universe. Another one that’s not really
mentioned up here explicitly because it falls into a couple
of different categories around display advertising
and programmatic, is re-targeted advertising– what Google calls re-marketing. And so if you’re not
familiar with this, you certainly are
familiar with the effect. You go to a website and that
company’s ads follow you all over the internet. Familiar? Yeah, I’m sorry. We make that happen. The reason is that
follow on conversation is highly valuable. And so it’s a way
to stay connected with an audience that has
already visited your website. And there’s lots of variations
on how this gets used, and frankly there’s a
lot of inappropriate ways it gets used. There’s a technical
term that we use called crossing the freak out
line, which is when you provide too much information about
that user back to them in some ad out in the internet. So you’ll know when a
company has done this because you’ll go
to their website, and you check out a pair
of sneakers or something. And then you go and the
next website you visit presents you with a
pop-up ad saying hey, you added this pair of
sneakers to your checkout and it’s only this much. And I you’re coming
from this location, why haven’t you bought yet? And so that’s a really bad
thing to do as an advertiser. So we try not to do that. But the targeted advertising
can be very, very powerful. Any questions about
any of these that are not as familiar that you
have any questions about? I’m not going to go
into a lot of detail about the individual
formats of advertising. The one thing I will mention
that is a huge trend right now is that many, many of these
platforms are allowing video– for often the first time–
to be used in advertising as a standard out format. And we’re just seeing this
massive escalation of video. And if you’re a longer term
Instagram user, you kind of you have seen this transition
where there wasn’t video for a long time in Instagram
and now it’s everywhere. That’s the type of
thing that’s happening in all kinds of
places where we’re starting to see
banner ads and display ads that are video based. And more ad platforms are
supporting the use of video. Google actually just announced
that within the next month, they’re going to make video ads
a standard ad format for all of their display network, not
just YouTube advertising which has traditionally been where
they’ve used video ads. AUDIENCE: Can you talk
about the different views of these different marketings
or maybe different types of products? For example, with
software versus hardware– just in what situation it
is best to use which kind. SOREN RYHERD: Yeah,
I’m going to go into some good starting
points in a minute. But you know what we’ve learned
over time is that all of these are good for everybody. And I think that there used
to be a very strong viewpoint that if you had a B2B
business, that you would do a very specific type
of advertising that was very different than if
you had a consumer focused business. And the reality is, we
manage all of those. And the tactics that we use
and the networks that we use are not that different. There are a few that
have a slight bias. LinkedIn for example, because
you can target an industry and job description,
is probably going to be more useful earlier
on with a B2B business than with a consumer business. But honestly, we do a lot
of consumer advertising on LinkedIn. And we do a lot of B2B
advertising in social media. So that the
preconceptions about where you can find your
audience just don’t really hold up when we get
into the actual use of the different platforms. I think that there are some
specialty networks, one on the slide that I
had earlier, Capterra in the bottom corner
over there, that’s a software clearinghouse. If you’re a software
company, Capterra is going to be great for you. If you’re not a
software company, it’s probably no use at all. So there are examples like
that, that are just completely specialty types of networks. But most of the time
there’s probably a way to find the audience
that you want to speak to in almost any of these buckets. It’s really whether
the math works with that audience, in that you
can pay the competitive price that the auction
demands and monetize that audience at a rate that
makes sense for your business. But I will say that’s why
we find B2B businesses that do really well with some of
these more consumer focused networks. As often they have
a customer value that allows them to monetize
an audience that makes sense to them. Any other questions? So one of the
recommendations that we make for any company
starting out, and it’s one of
those things that you should do sooner than later,
is begin your house email list. So a house list is
the list that you own. You’ve earned them over time,
they’re your connections that you meet, you know, people
who come to your website, subscribe to your newsletter. Supporting that out of the
gate and then using that and starting to get even a short
monthly newsletter out there to your investors, supporters,
customers, friends, family is one of the
most important things that you can do. There’s a startup
here in town called Splitwise that has done
an amazing job of this. They do a quarterly
update on just what they’re doing as a company. And it’s kind of their friends
and family investor list. And they just get out there
and expose their metrics and say, hey, here’s where
we are on our growth path. And I know for a fact
it has led to that being shared with people, that has led
to investment in their company. All kinds of really
interesting things happen when you just
get your story out there on a regular basis. And we’ve talked to companies
that are many years into it, even very well-established
companies, that haven’t even thought about creating
a house email list. Like email marketing
was something to be done down the
road and honestly it’s so low cost and so little time,
it is hands down something that you should start out of
the gate, even if it’s small. Because by doing
it, you will also think about how to do it better. And you will start
creating mechanisms on your websites for
people to just sign up for your newsletter. You’ll start having
a conversation that is more than just the initial
visit of your web visitor to your website. So it’s a really good thing
to do out of the gate. Not paid advertising, but
something that is on the list that I would highly recommend. AUDIENCE: Question
regarding newsletters. SOREN RYHERD: Yeah. AUDIENCE: I understand
there’s a tipping point where sending newsletters
too often will actually lead to people unsubscribing
because they feel guilty that they can’t
open it and read it as often as you’re sending it. SOREN RYHERD: There’s not. Yeah, that’s totally false. AUDIENCE: OK. SOREN RYHERD: Yeah, sorry. That’s my opinion, but it’s
based on a lot of data. People believe
that because people don’t like getting email. Does anybody here
subscribe to email or just get it from
a major retail brand? Yeah. How often do you get it? Raise your hand if you get any
emails from a brand that you more than once a day? Right. Do you unsubscribe? Always? Are there ones that you haven’t? AUDIENCE: Yes. SOREN RYHERD: If it’s a
brand, you’re interested in, you’re going to stay
along for the ride. What you learn is that it’s
OK to not open every email. And I think it’s a very
different dynamic in terms of what you put into your
email calendar for what content you want going out. If you’re doing something
it’s once a month versus doing something is twice a day. You’re probably also a really
different type of company. I mean most software companies
for example, probably not going to put out a daily email. But if you’re a consumer
brand, there really isn’t an upper
threshold that we’ve seen that will start
eroding your email base faster than you’re building it. AUDIENCE: And then
just a quick follow up. That newsletter should be
also listed in your website? Or should it be
attached to the blog? Or keep it separate
from your website? SOREN RYHERD: I like
having a newsletter sign up that’s a persistent nav element. So if it’s in your
footer, in your header, I think that’s really good. It depends on the site. Our company, we actually
own a number of retail sites that we’ve created
ourselves that is a laboratory for us
to work on because we like to walk the walk. And we do a really
common thing which is you get to the site
in about 40 seconds later you get an overlay
that says you get a discount to subscribe to our newsletter. That’s a really good
tactic for a retail brand, I wouldn’t necessarily recommend
that for like a B2B software company. But you can do something
somewhat similar to that. People don’t get pissed off at
marketing the way that people think they do. And certainly not at
the level of sensitivity that most CEOs are concerned
about their own company’s advertising. It’s amazing. People may not pay
attention to marketing, but they usually will
tolerate it for the most part. If you don’t
tolerate, you’re going to put up an ad blocker, right? So you know what? If you put up an ad blocker,
you put up an ad blocker. I get asked a lot, do you
worry about people putting up ad blockers? I really don’t. If you’re going
to do that, you’re not going to be engaged
in the advertising anyway. And you don’t want to advertise
no matter how targeting it is to be in my face. So, fine. You will be reached by
advertisers in other ways, whether it’s through
influencer advertising, whether it’s through
PR, whether it’s through things that are not
avoidable through ad blocking– there’s still ways
to reach an audience. I tend not to worry about that. Sorry, I went a
little off the topic. Other questions about
email marketing? By the way, on the
email marketing thing, one of the companies I
mentioned up here is MailChimp. Has anybody here
ever used MailChimp? Yeah, quite a few. Super easy and
what I will say is they’re not the only
company out there that is a really good,
easy to use email platform. And they’re not what you would
use later stage as a scaling company. At that point,
you’re going to need to get a marketing automation
tool like Marketo or Pardot, HubSpot, some of
these other tools that are out there where you can
really do more automating, much more very diverse
segmented nurturing program through email. But in the early stages,
MailChimp is really good. But one of the things I
love about them is they have more resources online. Whether you use them
or not, check out their online resources
for how to do email. Some of the best
stuff out there. It’s really good. So once you got your
house list set up and you’re thinking about
paid online advertising, the first thing
that you should do is know what it is that
you’re trying to do. And that sounds really basic,
but it’s really tempting to go out and try
stuff without being really explicit
about what you want from it at the end of the day. And the thing is that digital
advertising can be expensive. If you’re paying money to
do digital advertising, it can add up really quick. You’re entering an
audience that has, in many cases, 15 to 20
years of competitive bidding and optimization behind it. It’s not unusual for
us in the campaigns that we manage to run
into cost per clicks that are $20, $30, $40 per click. If you’re going to pay
that you need to know what you want to learn and then pay
the least amount that you need to learn that specific answer. So for these particular
questions, which are really common ones that
I’ve kind of pulled from our history of
working with startups, you really want to know what
it is that you want to learn and how you’re
going to measure it. And that can be really simple,
like we need ten beta customers of this description. You have a wall chart and as
you get them, you list them. You know where you are, you’re
visualizing what’s out there and how far you are. This is not a
technical description, just know where you are so that
as soon as you hit number ten, you turn off your ad spend
the second you hit number ten. I need to know if people
will pay this for my MVP. At that point, all
you’re trying to learn is if people will pay money. You’re not trying to make a
profit on it at that point. Those are two very,
very different things. Number two and number three
are so completely different in what you would do to
answer that question that they are worlds apart in the problem
you’re even trying to solve. The second one is
so early stage. I just need to know
if this idea has value and I want to prove it by
seeing if people pony up. You could spend 10x what
they actually pay you, and that’s super
valuable as an answer because what you’ve learned
is people will give you money. Probably the most important
thing any business can learn. Whether you made any money
on that is irrelevant. You will figure out how
to make money on it. But if you figure
out that nobody is going to pay
you money, you need to retool and figure out why
and then do a series of tests to try to get to the next point. The next one though,
you’ve already figured out that people will pay you. Now you’re in scaling mode. I need to build
programs that can get us the most customers
at this very specific return on my investment. And at that point, you
need to learn other things. You need to have KPIs
that you understand around what’s the latency from
the time of investment to the time of revenue. What’s my expected
payoff period? So we work with
a lot of software as a service companies with
a recurring revenue model. Our KPI with them is
months to break even. What does the
months to break even have to be so that as
I’m investing and adding to my monthly recurring
revenue that I know this is going to pay off? And I’m not going to
go out of business because I’m going to blow
my entire runway before we get to profitability– or to the next
round, or whatever the next thing is in the
growth of the startup. The thing about digital
marketing is it’s massive. It’s the entire world out there. And one of the things
that we see people do is try to ask, how
big is the market? That’s a very dangerous
question to try to answer with paid advertising
as an early stage company. The answer to that question
actually is really easy and you know it before
you’re starting it. It’s more than you can afford. That’s how big the market is. What you want to do is
use a spoon, not a bucket. Be very specific about the
audience you’re going after, be very critical about
how you pay for it in order to minimize
your risk in using up all your cash to not
really learn something at the end of the day. You can always find
a bigger audience. I’ll give one generic example. We’ve worked with a
number of companies that came to us because they
couldn’t profitably spend any more in their advertising. They’d really tried to scale up,
their marketing hit a plateau, they couldn’t find any more. And they came to us and said,
we’re already maxed out. We are talking to the
complete market opportunity that we can talk to. And in every one of those
cases, we’ve 10x their campaign. Because they didn’t
think about how to break through the
constraints to solving the math to allow them to speak
to a bigger audience. The bigger audience
always exists. It’s amazing, it’s a world
of how many billion people? Your audience globally
is probably bigger than you’re thinking of and
it can be pretty amazing when you start getting out there. But in the early days, you don’t
want to know how big it is. You just want to get the
easiest, lowest hanging fruit that are going to convert you. You guys already had
a thing on brand, but an early stage
tactic that I love is do advert paid search
advertising on your brand. When we talk about
starting points, this is one of the most
overlooked and easiest things you can do. You will be getting out
there trying to create buzz around your brand. You’re going to do it
lots of different ways, and it can be different
for every startup. You may do guerrilla
marketing techniques or you may try to do
content and create content, put your blogs and
everything out there. Everything you’re going to do to
create a buzz around your brand is ideally intended for people
to search for your brand. If people search on your
brand and they can’t find you because you aren’t ranked number
one organically in Google– or somebody else is– or your
brand name is an English word or words– one of our clients is
named OffshoreCompany.com. It’s a keyword, their
brand is a keyword. So that’s a really tough thing
to actually get ranking on. So what you want to do is
just get your ad out there. And that way, you
have the ability to say what’s valuable to
your audience in the way that you want to say it for
very likely, very little money. Typically brand keyword
traffic is extremely cheap, unless there’s a
lot of competition around that concept. That usually happens later on. It’s one of the
easiest thing to do. By the way, this sounds like
something you do short term just until you get that ranking,
but actually one of the most powerful things you can do–
even if you have the top organic ranking on any keyword– is continue to
place the paid ad. Because what you
do is typically you raise the conversion rate
of all of your audience going through your paid
and your organic listing by about 15% to 20%. And so you just increase
the credibility, credibility equates
to a conversion, improvement, more people
will buy from you. So if you’re thinking about
social media marketing, there is a safe haven and
that’s lookalike audiences. Lookalike audiences are
leveraging what you already know about your
customers in order to create an audience through
their artificial intelligence that is similar to
what you already know. And you don’t have
to actually describe the specific characteristics
about your audience, their AI will do that. So if you have a prospect list
or you have a customer list already, even if it’s
relatively small, you can upload
that into Facebook, they’ll match it
to their user base. And they will
create an audience– and you can slide
scale how big or small that is compared to the
characteristic that it’s matching on. Basically, the way that
works is that you can say, I want to do a 1%
match, which means that this audience that
I’m speaking to is only 1% away from the collective
characteristics that we’re describing by the
common elements in the audience that put up there. You can stretch it
out and the audiences get bigger the
less defined it is. But it is the easiest way to
find cost effective success in the social networks. Most networks are now allowing
for lookalike audience creation because it is such
a powerful tool that they know, to
their self interests, that you will be able to pay
them more money because you have an audience that
you’re willing to pay for. So it is, hands down, our
number one starting point when we go into the social networks. Another thing that’s a
really good early starting point, search is a really
good starting point for almost any new business. Because are speaking
to a demand that is clearly being stated by
somebody doing a search. But what you do– again,
don’t go for volume, go for something
that’s really explicit. If you have a startup where
you’re disrupting a market and nobody knows that you exist
or that your offering exists, go for keywords to describe the
problem that you’re solving. Because if people are
out there searching on how to solve a problem,
then that’s your audience. And in fact, I
know some startups who actually mind the
keyword queries around how to in their space
to think about how to position their startup for
how to speak to their audience. Because their messaging
then defines the problem that people are already stating. So you can really use this
in a lot of very good ways. There’s also some
particular websites– like Quora.com which
is its own ad network, eHow.com which can be accessed
through the Google Display Network– where you can explicitly
target this type of query in non-search traffic as well. So there’s really
good, early stage ways to get in front of an
audience that are clearly asking for a solution to the
problem that you are solving. I use these guys
PhoneWagon, they’re a call tracking startup. So basically they have code that
lives on people’s website that dynamically generates
phone numbers, they then tie those phone numbers
to the keyword query that led to the search,
that led to the call. Gives you the same
kind of data on phone calls that you get from
people doing search. Really cool data
source for marketers. So what makes good
keywords for them? How to track phone
calls on the web, call tracking marketing
tool, and– this one I love– CallRail, which is their
biggest established competitor, alternative. Because they’re half the price,
if not a tenth the price. PhoneWagon is incredibly cheap. If you have calls, I recommend
PhoneWagon, by the way, as a call to action
on your website. The other thing that is newer
in most of the ad networks is AI bidding. And Google and Facebook
are really touting this, but I want to put a word
of caution out there. It can be your friend, but it
can also be very dangerous. So AI bidding allows them
to mine all of the signals that they get off of users,
beyond what you’re targeting. So typically, say in search, you
would just target on the query that people are
typing into Google. AI bidding allows
Google to then use all of the other things
it knows about that user to determine whether
or not to put an ad in front of that user. So, what it is doing is
optimizing to say, conversions. And you can put in the cost
of conversion that you want. These AI tools will
get better over time, they are still in
fairly early stages. So one of the things
that we’ve learned is if there’s anything
around conversions or actions that you’re trying
to optimize to, using the AI bidding
in AdWords or Facebook, you really need a
history of conversion already in order to
fuel the AI learning. If it’s learning from
scratch with no history, you’re probably going
to spend a lot of money on the learning curve. And they don’t yet really have
a good way to get past it. I fully believe they will. I think two years from
now I might come up here and say exactly the opposite. But right now, if
you don’t already have a history of
measured conversions in Google’s tracking
or Facebook’s tracking, they’re probably
going to founder for a long period of time. You’re better off really
doing manual bidding, do a little bit
of math yourself. And by math, what
I mean is matching what you pay in the
auction to the value. So here’s the key. It’s the super simple equation
that is behind any bidding tool ever, that has ever existed,
and is out there now. Which is your bid price is
your target cost of acquisition times your conversion rate. That’s it. I will say that again. Your bid price in any auction is
your target cost of acquisition times your conversion rate. If you have $100
cost of acquisition and you have a 10% conversion
rate, 10% of 100 is $10, you can spend $10 per click. That simple. So that back-of-the-envelope
math can really help you in thinking about what you
should pay out of the gate by just throwing some darts, or
it can help you evaluate what your programs are over time just
by looking at whether or not it makes sense from a
math point of view. That make sense? I answer a lot of
questions on Quora. And one that was asked
recently is what kind of math do you need to learn in order
to be a digital marketer? And the obvious
answer is statistics because everything we do
is based on statistics. But I actually said algebra. Because that equation of
balancing cost of media, conversion rate, and value
is the core to everything. That your cost per
click equals your target times your conversion
rate, that’s a basic seventh grade
algebra equation– which for you guys was probably
like fourth grade algebra. But it’s super straightforward. The cool thing, which
also comes from algebra, is that if you’re trying
to balance the equation, you can balance any
element as the variable to balance the equation. If your cost of media
can’t be changed, raise your conversion rate. Do landing page testing. Address the math that way. If you can’t address
either of those, address your customer value. Can you upsell? Can you bundled programs? Can you charge them more? When I talk to CEOs,
nine times out of ten, if we’re talking
about pricing, I’m going to tell them
to raise their price. Because almost
immediately, they’re going to be able to make
the math work better for the people that are willing
to pay the additional price. It’s why I like
working on luxury goods because there’s a lot of margin. Common pitfalls, don’t do too
little for not enough time. I’m going to do this for a
week, we have 30 clicks– what did we learn? Nothing, you didn’t
learn a thing. You have to do it
for a period of time until you have enough
data to actually answer the question that you asked. And they have to know what that
question is in order to know whether you’re there yet. Sometimes that
takes a long time. Sometimes it doesn’t. If you can bias your questions
to take less time and money early on, you can more
quickly learn and advance. You have to think about what
that means in terms of how you think about digital marketing. Another common pitfall,
which is the reverse, is going too big, too fast. Google and Facebook will
take all your money. They’re really,
really good at it. Trust me. In 2005, we had a
company come to us– it was a debt services company,
single person company startup. Google rep set up
his Google campaign, turned it on, spent
$5,000 an hour. He checked in later
that afternoon, then he hid in the closet for about
a week, then he called us. Good news is he figured out
he had a market opportunity. Bad news was he used up more
than all the money he had, so he had to go back,
borrow a bunch more money, figure out how to
avoid bankruptcy, and a whole bunch
of other issues that he had hoped to avoid. Story was good in
the end, we actually grew his business, still
a single person company, sold it about a year later for
about a half a million dollars. So, good to know your
market opportunity, but you can do it in
a less risky fashion. So just mind your
budgets on that. One of my favorite
ones though is this, using early data to pivot. And so how many here
are aficionados of Lean? Lean Startup? Anybody? Nobody? Nobody knows Lean? OK, billionaire MVP? It’s so obvious that nobody’s
raising their hands, OK. So in Lean, you
talk about pivoting. OK, I learned all this, now
I have to take that feedback, I have to pivot. We have seen startups pivot
on extremely early data. Your early data does not
mean you need to pivot, it might just mean that
you need to tweak and test something a little bit more. And that’s it. So go a little bit
further before you say my one week’s data is
enough for me to pivot on. It’s probably not the case. And very lastly, if you’re
going to charge, charge. Don’t think that putting your
offering out there for free gets you any education at all. It doesn’t. We worked with a startup
that got tens of thousands of users on their free
product and thought they were on their way to raising money. They put up their paywall– crickets chirping. Not a single person
purchased from them. Tens of thousands to
zero is a big difference. So put your paywall up earlier. If you’re developing
an MVP, charge people. It’s the best way to do it. I know we’re up against time
and I really want to do it. Last thing I’ll say is, don’t
assume your early numbers mean anything. Things can always be
changed and tested. Repeat testing,
hypothesis testing is the key to success on this. And that’s really it. So, know your goals, know
what it takes to learn. Keep testing. One profitable thing pays
for a lot of testing. And, I’m at the end. Any questions? [APPLAUSE] Yeah. AUDIENCE: You mentioned
influencer marketing a few times. SOREN RYHERD: Yeah. AUDIENCE: Can you
talk a little bit more about that, how you find
the right influencers, and how to reach out,
and the entire process? SOREN RYHERD: So
there’s two big answers on that for how to find
influencer marketing and affiliate. For affiliate marketing there’s
two big networks, ShareASale and CJ Affiliate, used to be
called Commission Junction. You can go create an
offer, load it up online, and they do all the other work. They’ll help you
broker the payouts, they’ll help you do
all of that stuff. For things like influencer
marketing say with podcasts, podcasts are actually a
little bit behind the game. You actually have to
reach out directly to the talent and
broker a deal with them. So most all of the US
based podcasts are still pretty traditional. You have to set up a deal with
that person and figure it out. So it’s a little
bit more manual. The UK is actually
a little bit ahead of the US in terms of that,
but we’re getting there. Next? Any other questions? Yeah? AUDIENCE: Can you also
talk a little bit more about B2B marketing because
you’re saying you can also use social media platforms– SOREN RYHERD: For B2B? AUDIENCE: Yeah,
how does that work? SOREN RYHERD: Yeah,
there really isn’t any difference in the mechanics,
you just have different data. Typically with B2B, you’re often
working with lead based data. This can happen
in consumers too. But a lot of your data is going
to be post-lead data– so lead quality data, things like that. If you can work a little
bit deeper in the funnel and match that back
to the audience, it’s easier to get an
idea of what’s working or what’s not working. I think that B2B marketing
is no different than consumer marketing in that you still
have to focus on your value proposition. You still have to come up
with messaging that resonates with the end user. There really isn’t
any difference in terms of tactics with B2B. Like I said, a couple
of things might be a little earlier
stage like LinkedIn, but when it gets down to
the tactical media buying, it really isn’t that different. The data side might be
a little bit different. Yeah. AUDIENCE: As a media
buying company, what do you look for in a
website that will make you say, my clients need to
be on this site? SOREN RYHERD: I don’t look
at anything on the website, surprisingly. There isn’t any predetermination
of where you should or should not be when it comes
to digital advertising. It’s really about
using what works, and what works for
us is a math problem. We will test almost everything. There are earlier or later
stage things that you can try. I think one of the
things that I really like to do with early stage
audiences that are not technical audiences is to
use Bing instead of Google as the starting point. I actually just wrote on
Quora about this yesterday. A lot of companies ignore Bing. They only have about 12% of
the market share for search. A lot of people in
a technical audience don’t use Bing very often. But the quality outside
of technical audiences is just about as good as with
Google, in terms of conversion. But it’s much less
competitive, your dollar just goes a lot further in Bing. So for early testing,
Bing is not a bad place unless you’re, like I said,
if you’re speaking to computer programmers, don’t use Bing. AUDIENCE: Thank you. SOREN RYHERD: Sure. I’m going to hang out
for a bit if anyone wants to chat about anything
but thank you very much. I really appreciate. [APPLAUSE]

2 thoughts on “Startup Studio: Scaling Your Startup Using Digital Marketing

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