How to decide on your marketing channels14 min time well spent

14 min time well spent

On my journey as a growth marketer, I’ve always been obsessed with finding the right marketing channels for companies. Every growth marketer will run into testing new marketing channels. That’s why I want to give you all my learnings from:

  • Selling & executing online marketing services to SMBs
  • Working at a pre-product/market fit startup
  • Testing new marketing channels at an extremely promising scaleup
  • Consulting tech companies on their overall marketing strategy

This is only a guideline, nothing is set in stone and everything (well, almost everything) is possible. Through my experience with testing channels, I found out that some make sense and some don’t. I want you to know which channels make sense based on your customer, business model and competition. I’ll give you the questions and guidelines. you have to think about the answers.

Ready to find out more about potentially interesting channels?

Begin with your audience

A channel in itself is not the end goal, it’s a way to reach your end customer. So (like every good marketer) we begin with our ideal customer and reverse engineer our way back.

Ask yourself:

  • Who’s your audience?
  • What’s their personality?
  • Where do they spend their time?
  • How busy are they?
  • When do they need your product?

Now you need to know how problem/solution aware they are of what you offer. Marketing is a completely different game based on this. You simply can’t tell people ‘We’re the best marketing intelligence platform’ if they don’t know what marketing intelligence is. Nor will the slogan ‘Here’s why you need car insurance’ help since it’s mandatory.

I recommend you to read my article “One simple framework to use before talking about marketing channels” to dive into the below framework.

If people are not actively looking for a solution, all ‘pull’ related marketing channels won’t work. Why? Pull (as opposed to push) marketing is built on the fact that there is demand for your product. If people don’t look for a solution, there’s no (active) demand for your product. You’ll have to actively push it in order to get it under the noses of your customers.

There are way more channels than just displayed here.

Invest in both pull and push, but depending on the awareness of the customer, you might need to invest more in one then the other.

If your audience is actively looking for your solution, where are they doing it? On Google? By asking friends/colleagues? Are their industry-specific comparison websites?

Often it is easier to target the part of your audience who is actively looking for a solution. They’re motivated enough to fix their problem. You’re capturing demand and thus using pull marketing.

You’ll use push marketing channels if your audience is not actively looking for their problem or you want to increase the demand for your solution.
For push marketing, you’ll need to find out where your audience spends their free time (B2C) or during work/job-related activities (B2B).

Now look at yourself

We’re going to add some more possible channels to the mix based on your customer lifetime value (LTV, the total amount a customer brings you). The size of your LTV will allow you to use certain channels or not.

We’re going to zoom in on two things, your LTV and the amount of cash you have in the bank.

Your LTV

How much do you want to spend on acquiring a customer? Normally everybody preaches the Customer Acquisition Costs (CAC) to be 1/3rd of your LTV. But, dependent on how much cash you have in the bank and how aggressive you want to grow, this might change.

Now take your target CAC. This is your first constraint. Depending on the size, some channels will be allowed and others won’t.

Take LinkedIn ads, it costs you on average €5 for a low-intent click. With an LTV of €50. You have to have a 10% conversion rate, just to break even in the long term. Spoiler alert: you won’t make a profit.

Here are the rules of thumb:

Shout out to Jake Stainer from Outreach Humans for this framework. I just added the referral & content marketing part.

Why are there rules of thumb for given channels? Simply because of the ‘nature’ of those channels and the intent of the people on those channels.

Because of the high costs of certain channels, mid-stage companies can decide to go up-market. Targeting bigger clients with more elaborate service offerings (and thus a way higher LTV). This allows them to use new channels that couldn’t be used before.

In the end, it all comes down to this simple graph:

Framework from one of StuDocu’s investors, Christoph Janz from Point9 Capital

The more a customer is worth, the more you can spend on acquiring them.

Cashflow

Payback period

The payback period is when your investment returns it’s money.

Some channels give you fast results, others are slow. If you have some cash in the bank (because you might be heavily funded) you can permit a long payback period.

Next to this, if you’re a SaaS business or there are repeat purchases, a customer is worth a lot more than what they initially bring.

Since cash is oxygen for a business, you want to know how long you can hold your breath. To find that sweet spot between having enough breathing space and fueling your growth.

It’s up to you and the finance department to talk about what the payback period should be. If you’re heavily funded in an extremely competitive winner take all market (like food delivery) you might want a payback period of over a year with almost 1:1 CAC:LTV ratio.

Depending on what finance will tell you, here are some channels for:

Disclaimer: dependent on the length of your funnel and price of your product some channels might be faster or slower. I’m merely pointing out the average with the image above.

Upfront costs

Channels like events, offline marketing, TV, video, influencers can have quite high upfront costs. You often have to go big in order to create enough touchpoints, memorability and awareness in order for it to drive results. You need some cash in the bank if you want to start with these channels. Don’t put all your eggs in one basket if you’re a startup.

Scale

At what stage are you right now as a company? Do you need your first or second channel that you will really exploit over the long term (and thus scales with you)? Or do you just need to diverse your channel mix? There are only four channels that truly scale:

  • SEO
  • Paid advertising
  • Sales
  • Virality

All famous startups and companies scale through one of these channels.

Channels like affiliate, content marketing (which isn’t used for SEO), youtube, social, email are great channels, but they don’t give you the same long-term sustainable, big results as the four channels mentioned above. You need at least one channel that truly scales.

Now look at the channels you have

Will you encounter your competition?

I hope by now you’ve got a list of channels who are interesting for you based on your audience, CLTV and cash.

Now the question is can you compete? On channels like Google Ads you’re directly bidding up against your competitors. If your competitors are bigger or more heavily funded, they’ll probably outbid you, making it harder for you to compete.

Check how competitive the channel is and if you can compete there. Here are some ways to find out if you’ll encounter your competitors:

Pssst, hey you, don’t be shy to join the conversation ;).

If you find tons of competitors on the channel, it’s per se bad. It often means it’s a profitable channel (why else would they keep pouring effort into it?).

The barbell strategy

How’s the mix between short term results and long-term results? Channels with fast results will often diminish over time and could be less scalable. Make sure you balance short term and long term strategies. This also means you balance low hanging fruit / fast payback channels (performance marketing) with longer (more sustainable) tactics like building communities or SEO.

Testing your channels

Three main assumptions for every channel

You got your list of channels you’re dying to dive into. Before you go all in, you should test them. When you test a channel, there are three main variables you should be aware of:

  • The text (and creative)
  • The audiences you can target
  • The warmth of these audiences

Test different variations of all of the above. You might test a channel, get bad results and jump the gun by saying ‘this channel totally doesn’t work for us’ (been there, done that) without actually knowing whether that’s true or not.

Take it easy

I made the mistake of going into 4 channels at once… This is very bad for your stress levels. Don’t forget you have to:

  • Create creative copy adjusted for the channel
  • Design (or outsource) the creatives
  • Dive deep into the targeting options
  • Keep a close eye on the costs
  • Get the tracking up and running

You have way more focus, an eye for detail and resources if you take one channel at a time.

Specific examples of channels that fit with their companies

So you’ve now been bombarded with theory, let’s see how it corresponds with some tech companies.

StuDocu

Offering: A platform where more than 12 million students a month share and consume their study resources (past exams, summaries, lecture notes, etc.).
Audience: Students (B2C)
Personality: Very social people with tons of leisure time. Needs to get the job done (studying for an exam) either as soon as possible or as extensive as possible (dependent on the ambition of the student).
When do they need StuDocu? While they’re studying for exams or working on assignments. During this process their heavily behind their computer to look up and gather their resources.
LTV: €25-€50
What’s the competition doing?

  • All competitors are using SEO
  • The competition with the higher price range (Course Hero) is active on campuses with campus ambassadors
  • Very general PR activities

Channels for StuDocu:
Channels allowed by the LTV: SEO, referral.

The main key at StuDocu, since we have a very low LTV, is scale. If a project “only” reaches ±50,000 people, it’s not worth it. We have to think in scalability both in how can we automate our work as much as possible and how can the channel reach as many channels as possible.

SEO is our biggest (and only) big channel. Since all our content is user-generated we rank a lot on long-tail searches without us having to do anything for it. Also, unlike our competitors, all our content is immediately free to reach, while the content of our competitors is gated (you need to pay for it). This will be our strength vs our competitors in search. The fact that SEO is our only channel (and we’ve been hit by 2 algorithm updates + a black-hat backlink attack) is why we’re focusing heavily on finding new channels this quarter.

PR is an unscalable channel we use (for a little bit), with the first successes. We have a global audience and have a built-in feature to send surveys to the students, so we do huge research at scale. We just launched the first Global University Ranking where we gathered the opinions of 100,000(!) students to rank their university on things they find important. Something truly different than all the other (boring) university rankings based on the research a university produces. This is both for our brand and to support SEO in backlinks.

Channels that are on our backlog:

  • People who also help students study for their exams are tutors. Can we build an affiliate program (at scale) that give cash rewards to tutors for creating signups?
  • Campus ambassadors for real ‘feet on the ground’. For now, this project is on hold. Our main competitor from the US does this, but also has a higher price range and is only active in the US. We’re active in almost every country in the world. Due to our global presence, we’re unsure if we can really do this at scale.
  • Some way to leverage fraternities, sororities and student associations to spread our product to their members.

3D Hubs

Offering: Manufacturing platform where engineers can outsource the production of their parts.
Audience: Engineers (B2B)
Personality: Engineers don’t see that KFC is finger-lickin’ good. They see dead chicken bits coated in herbs, spices and flour, fried in 350 degrees oil until the skin is crispy. Extremely rational, introverted people who are anti-marketing, want to make decisions based on the logically best option and have a real passion/pride for the complex products they make.
When do they need 3D Hubs? An engineer works for around ±3 months at a project an when the whole project it’s done, then it needs to create the parts itself or outsource the production.
LTV: €1000 – 10,000
What’s the competition doing? The competition is heavily funded and outbidding 3D Hubs on channels like SEA. The SEO & content game from the main competitors is rather okay, from other competitors it’s very weak.

Channels for 3D:
Channels allowed by the LTV: SEA, SEO, Facebooks, Instagram & LinkedIn Ads, Events, Content marketing.

Since engineers are very rational people, anti-marketing, introverted and they only need us during a short timeframe (when they need their parts sourced) they’re searching on their own terms. This means pull marketing channels like SEO, SEA or industry-specific portals to find and compare manufacturers (like Thomasnet) are a great match. However, since their main competitor got an investment of 90 million and is outbidding heavily on Google Ads, this channel should be used with caution.

Push marketing channels (LinkedIn, Facebook and Instagram) are less of a fit. Engineers don’t like to be sold to and there’s only a small timeframe they actually need your product. Since the main competitor is so heavily pushing, there’s still an opportunity to go with top of funnel awareness for branding, like Display.

Events have been done in the past, but they haven’t been able to prove to be ROI positive, since the LTV is very much on the edge regarding the success of this channel. It was a pure branding play. When times got harder (read: when corona hot) this channel had to be dropped (also in the form of webinars).

Finally, to prove to the rational engineer that you’re the best choice, content marketing is key. Case studies, guides, specific “how-to machine this” articles all do well to establish trust with the audience.

Hubspot

Offering: CRM SaaS product for sales, marketing and customer support.
Audience: (Inbound) marketers, sales leads, CxO’s & customer support leads.
Personality: Can’t say this: I have no sources about this.
When do they need Hubspot? When their current systems don’t do enough of a good job with capturing, engaging and nurturing those leads.
LTV: €5000+
What’s the competition doing? Their competition is extremely broad, so assume they’re everywhere.

Channels for Hubspot that work:
LTV allows Hubspot to use: LinkedIn, events, social ads, SEA, SEO, content marketing.

They’re famous for inventing inbound marketing. They were the first to rank for tons of informational and transactional keywords because when they started, there wasn’t as much competition. Now if you want to rank for their keywords, you have to fight against Hubspot and their competitors with an extremely high amount of authority and brand recognition. So when they started SEO, no competitor did it yet. Also, they’re ‘eating their own dogfood’ and thus specialised and doubled down on inbound marketing, something they help their clients with.

They also have their own event called INBOUND and are active with LinkedIn ads and have Facebook/Instagram ads.

What a lot of people don’t know is that they get around 40% of their revenue through channel sales. These are often agencies who are experienced with Hubspot and implement and manage it for their clients. Smart, bold move of Hubspot. Agencies are in a lot of contact with potential customers, use the software themselves and can get bonuses and extra support from Hubspot.

Note: they’re already well ahead of the marketing game, so of course they are active on almost all channels. The main insight I find is that they’re using the channels their customers use most and they’re solution helps with most and they found a smart way to leverage agencies.

That’s it. You made it to the end. You’re a legend, you know that right? If you’re stuck with your channel mix, shoot me a message with some feedback about the article and I’ll come up with some channels for you to test.

More channel resources

If you’re a B2B marketer and want to dive deeper into the testing part of marketing channels, then use https://reach.g2.com/event/niels-zee and I got a special webinar about ‘How to run experiments as a B2B company’. Enjoy.

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