A Startup Marketing Budget
I’ve spent more time than I would like to admit meeting with startups on a regular basis to talk through their marketing budget. Usually, from my experience founders start by spitballing for a few months, spraying money at ad words because an advisor told them that’s how to grow the business.
Probably the worst advice to give an engineering-heavy team.
Subscription as a service (SaaS) riding tandem with proper analytics is by far the most powerful combo for startups on the revenue side of the business.
The combo will help you identify WHERE customers are coming from. (example: SEO vs PPC)
I start by structuring a very simple $5 bid across 5 channel campaign. Keeping campaigns simple make tracking easier for everyone.
Tiering growth from day one needs to be a primary focus. ($2k month 1, $3k month 2) This creates the up and to the right curve needed in the early days. Once you reach $5k a month you should be testing product market fit and seriously evaluating your strategy to move forward.
I’ve seen many people slip at the $5k mark and continue down channels with customers segments that aren’t right for their product.
I put together a skeleton 6-month marketing budget I propose to early stage startups getting into a new market or launching a new product.
For the sake of simplicity, this budget is based on a product that is $50 per month.
Month 1: $2,000
Projected clicks (based on $5 per click): 400
Projected signups: 80 (Aggressive) = $4,000 Revenue
Projected signups: 40 (Conservative) = $2,000 Revenue
Month 2: $3,000
Projected clicks (based on $5 per click): 600
Projected signups: 120 (Aggressive) = $6,000 Revenue
Projected signups: 60 (Conservative) = $3,000 Revenue
Month 3: $4,000
Projected clicks (based on $5 per click): 800
Projected signups: 160 (Aggressive) = $8,000 Revenue
Projected signups: 80 (Conservative) = $4,000 Revenue
Month 4: $5,000
Projected clicks (based on $5 per click): 1,000
Projected signups: 200 (Aggressive) = $10,000 Revenue
Projected signups: 100 (Conservative) = $5,000 Revenue
Month 5: $6,000
Projected clicks (based on $5 per click): 1,200
Projected signups: 240 (Aggressive) = $12,000 Revenue
Projected signups: 120 (Conservative) = $6,000 Revenue
Month 6: $7,000
Projected clicks (based on $5 per click): 1,400
Projected signups: 280 (Aggressive) = $14,000 Revenue
Projected signups: 140 (Conservative) = $7,000 Revenue
These are very bucketed amounts for the sake of simplicity but this shows how to start with a basic plan.
Many founders are uncomfortable with spending money on marketing in the early days but with a SaaS model you need to begin calculating your customer’s lifetime value (LTV) and cost of customer acquisition (CAC) to know where to scale your efforts.
Have fun growing 😉