From ProductHunt to PR to Slack groups, there are so many tools available to help you tell the world about your product without spending a dime on promotion.
However, once the dust settles and the hype around your launch dies down, it’s time to put a plan in place for paid marketing.
Of course, this decision leads to two big questions: at what point post-launch do you start putting money into paid advertising, and which paid marketing channels should you invest in? If you want to take your product launch plan to the next level, here’s what you need to do to build a successful paid marketing strategy.
The Value of Product Marketing
Many companies view product marketing as simply a way to inform potential customers about their product. The truth is that this type of marketing goes much deeper than that. Product marketing drives sales and profits by identifying the right product and getting it to the right customers.
Establishing this product-market fit is the only way you can grow your company. To get there, it’s key to know your audience inside and out and have a deep understanding of how your product meets their needs.
Without this knowledge, your marketing “strategy” is more like throwing a bunch of tactics at the wall and seeing what sticks. To avoid wasting precious resources, you need to have a data-driven strategy in place before venturing into paid marketing.
Creating a Product Launch Plan
When Should You Dive in to Paid Marketing?
Figuring out the right time to start paid marketing strategies is key for any growing company. Start too early and you’ll waste your money, start too late and you hinder your ability to scale.
So when should you start putting money into paid advertising? Many companies choose to get into paid marketing right off the bat to help boost awareness from the beginning. If this is your company’s second or third product launch and you’re experienced with paid marketing tools, you can choose to go this route.
However, if you’re less experienced in this area, the best time to start your paid campaign is after you’ve completed the organic marketing activities for your product launch plan (though you should have a paid marketing plan in place beforehand).
These key components of an organic launch include:
- Researching your end user and developing a deep understanding of their needs and goals
- Drafting key messaging that effectively communicates your product’s value proposition
- Defining key performance indicators (KPIs) such as number of leads generated, new users, downloads, video views, etc.
- Building out your sales funnel
- Marketing your product through organic promotion channels (e.g. social media, blog posts, YouTube, etc.)
Following the completion of your organic marketing campaign, sit down with your team and analyze the results. You should be able to answer the following questions:
- Where did your campaign succeed and fail?
- What did you fail to anticipate?
- What did you learn?
In short, you don’t want to start paid marketing until you have solid product-market fit, a proven offer that converts and customers who are willing and ready to pay for your product. Following your launch, if you see that positive word-of-mouth is spreading, product usage is growing, you’re attracting attention and quickly converting leads into customers, this means you’re on the right track and it’s time to keep the momentum going with paid advertising.
Determining a Paid Marketing Budget
It’s a common adage in the business world – “You have to spend money to make money.” While this is true to an extent, when it comes to marketing, you don’t need to splash all of the cash to see results.
A good place to start is by defining your Customer Lifetime Value, or CLV. In layman’s terms, this is how much money you will make from an average customer over the lifetime that they are a patron of your business.
The basic formula for this is as follows:
(Annual Profit per Customer) x (Average Customer Lifespan in Months/Years) - (Customer Acquisition Cost) = Customer Lifetime Value
This is important because without fully understanding your CLV, it’s incredibly difficult to accurately determine what your target (or maximum) customer acquisition cost (CAC) should be in order to remain profitable.
Once you determine your CLV, you can figure out how much you can spend on acquisition within that figure and how much you want to allot to specific categories like branding, website management, social media, and paid advertising.
However, if you’re company is at a much earlier stage, it might be more effective to calculate a ballpark churn rate instead. The customer churn rate is the percentage of your customers or subscribers who cancel or don't renew their subscriptions during a given time period. This is an important metric for companies with subscription plans.
To calculate customer churn rate, designate a time period and figure out the total number of customers you have and the number of customers who left during that same period. Then, divide the number of customers who churned by the total number of customers, and multiply that decimal by 100 to calculate your churn rate.
(Customers lost / total customers) * 100 = Churn rate %
Generally, an acceptable churn rate is 5-7% annually but ideally, you want your rate to be as low as possible. If your customers don’t stay with you long enough to at least recoup your average customer acquisition cost (CAC), you could be in trouble.
The 3 Phases of a Paid Marketing Campaign
So you’ve reviewed your product launch marketing campaign. You have a solid understanding of your brand, product/service, market, prospects, users, clients and partners. Your brand is growing organically and you’ve developed a detailed marketing budget.
Guess what? You’re now ready to add gasoline to the fire and drive paid traffic into the top of your funnel. To start, you want to build out a standard three-phase marketing campaign so you can test, validate, and eventually scale your paid marketing efforts. This can follow a standard 30-60-90 day structure.
Phase 1: Test
Go back to your product launch plan organic marketing report and look at your funnel analytics. Which landing pages brought you the most conversions? This is where you want to direct your paid traffic. You can also take this analysis a couple steps further. What elements on these pages did customers respond to? Would customer-specific landing pages help convert target demographics? For example, if you’re marketing a design tool, you might consider creating a landing page for UX designers, one for graphic designers, etc.
Now look at your customer base to determine which channels might work best for reaching your target audience. With paid advertising, there are a variety of different placement types:
Since you don’t know exactly which type of ad targeting is going to work, this is the time to try several different placements and see what happens. However, the insights you’ve gathered from your organic marketing efforts should give you an idea of where to start.
The last thing you should do before launching campaigns is setting targets that you can easily measure. For instance, depending on your offering, this could be cost-per-acquisition, number of leads generated, or conversion rate. Be sure to track this data for each channel individually and not overall so you can see which placements are the most successful holistically.
Phase 2: Verify
After 30 days, analyze the results of your testing period based on the KPIs. Based on these results, eliminate the channels that are providing a low return on investment (ROI).
While you might be inclined to start putting more ad spend into the winning channels, you don’t want to do this yet. Instead, keep the ad budget in the remaining channels the same for another 30 days so you can accurately compare your data. This way, you can ensure your test results are valid and aren’t due to the newness of the campaign or an external factor like seasonality.
Phase 3: Scale
Once you’ve reviewed the results and can confirm which channels are consistently producing strong results, this is the point where you can double down on what works, scale your paid marketing campaign, and test out other channels.
Of course, the work doesn’t stop here. As you start to scale up spend significantly, it’s important to keep your ad creative fresh and continue trying out different types of paid advertising to see what works best for your company and audience. For example, if podcast sponsorships felt too risky at the beginning, perhaps three months in would be a great time for a brand campaign on relevant podcasts.
Testing is Key
Marketing is an experimental and iterative process. It can often take several touch points before someone is convinced to start a trial or get a demo from sales. This is why testing and accurate data collection is key.
All marketing is about driving results, whether that be brand awareness, lead generation, or conversions. However, successful product marketing requires an additional focus on understanding why and how you get results.
You might not hit it out of the park with every campaign, but if you aim to quickly understand if something is working or failing, you can easily adjust your efforts to optimize campaign performance.