How you decide to invest in marketing channels can make or break your business.
That sounds like an obvious statement, but not a lot of people think about it critically. Rather, marketers get trapped in the fervent anxiety of needing to be everywhere at once. This is both ineffective and stressful.
It doesn’t help that there’s a new blog post out every day about how you’re missing out on [X] and this company is killing it by doing [Y]. FOMO is real.
Okay, so it’s important to capitalize on effective channels that are conducive to growth at scale. How does one do that, though? Do you just throw stuff at the wall and see what sticks, or is there a process?
An Overview of Common Digital Marketing Channels
First, let’s lay the landscape for the marketing channels most companies are using for growth, as well as which companies are capitalizing on these channels.
Not all of these will work for your business, but it helps to know what’s out there when determining a marketing strategy.
Note: if you’re pretty experienced in marketing, you can just skip the channels below (unless you want a refresher). It’s going to be an overview, and if you’re just interested in testing and exploring new channels, jump to the section below.
You’re undoubtedly familiar with paid acquisition, as it’s the digital equivalent of traditional advertising. You have traffic, and I pay for placement in front of your audience. This is generally split into two areas, though they’re often used together to some varying proportion:
- Search Engine Marketing
- Social and Display Ads
Search engine marketing is intent-based keyword bidding on search networks such as Google Adwords and Microsoft Bing. Marketers spend a ton of money on search ads, and as you can assume, Google owns a large part of the market. SEM is great because you can capture people as they’re searching for a solution, which is often some of the highest intent traffic you can find.
Then there’s the social and display side, often deemed as higher funnel than intent-based search ads. Though, increasingly, you can target with great granularity (especially on social) and set up custom audiences to create a holistic full-funnel paid strategy. In addition, display allows you to target niche audiences based on interests. For instance, you can advertise on specific subreddits, which are sometimes incredibly cohesive tribes:
If you can make the math work on paid advertising, it’s in infinitely scalable channel. This usually means you have a high lifetime value and it’s relatively cheap to acquire customers. If that’s the case, and it’s cheaper for you to acquire customers than what they’re worth to you, it’s a feedback loop you can continue to invest in.
Here are some resources to learn more about paid acquisition:
- Customer Acquisition Master Course (includes SEO)
- When Does Paid Acquisition Work for SaaS Startups?
- How to Master PPC Targeting and Choose the Right Ad Platform
Google gets over 40,000 search queries per second (on average), which translates to 3.5 billion searches per day and 1.2 trillion searches per year.
Do you think you could turn some of those queries into customers?
For specific businesses, particularly those in spaces where there is a naturally high volume of bottom-of-the-funnel searches (like Yelp, Airbnb, Indeed, or Thumbtack), SEO is an obvious choice. Content sites are also naturally great sites for SEO (we get a large part of our traffic from organic searches).
Once you’ve put in the work, you continue to reap the rewards. With paid acquisition, if you cut off the flow of investment, you cut off the flow of customers. SEO is a long-term play, which is a benefit in a way, but it also makes it hard to experiment and know if it’s working in any short time frame.
Of course, the “O” in SEO stands for optimization, so ongoing maintenance increases the effectiveness of this as a channel.
Here are some resources if you’d like to learn more about SEO:
- Customer Acquisition Master Course (includes PPC)
- The Intersection of SEO and CRO (and How to Maximize Long Term Growth)
- Moz Blog
- iPullRank Blog
I’m not aware of any companies who aren’t doing email marketing, at least in some way or another. There are many who aren’t doing it well, but to me it seems this is a natural extension of any other acquisition channel, and a super important lever for retention and relationship building.
Email is absolutely still one of the best ways to convert new prospects while retaining and engaging existing customers when it’s personalized.
Some businesses are built on the back of email. For example, Groupon wouldn’t be a company without email marketing:
I’d also consider other triggered communications like push and text notifications in this category.
You could read about email marketing for days, but here are a few resources to get you started:
Content marketing is a centralized channel that also has overlap with others, such as SEO, social media, and public relations. It is essentially the creation and sharing of online content that seeks to educate, inform, and entertain potential customers throughout the funnel.
This article – the one you’re reading – is a form of content marketing. How meta!
This is, of course, an effective channel for us (or we wouldn’t do it). Others have had success with content, too, such as Kissmetrics, HubSpot, Crazy Egg, and Buffer.
Content marketing is kind of a wide field. It’s sometimes not entirely clear where content marketing starts and where SEO or PR end. For instance, Mint’s early acquisition strategy was targeting blogs for guest posting, mentions, and sometimes paid appearances. So is this content marketing? Who knows. But it was effective.
Content won’t work for every business, and don’t let those selling content marketing services and software try to convince you it will, but it does work more often than not for companies that do it right. Especially if you’re in the “marketers selling marketing to other marketers” space, it’s quite easy to get links, readers, leads, and ROI from content.
There are the tangible benefits of leads, but there are the intangible benefits of developing as an industry thought leader and proving your knowledge, making it easier to build partnerships, find customers, and build out other channels (such as sales).
Resources for content marketing:
Virality and Referral
Virality is the key lever of many of the most famous growth examples: Dropbox, Uber, Facebook, Hotmail. So, clearly it’s successful if you can make it work.
Just think about it. If, for every customer you acquire, you can acquire 1-10 more with viral loops, you can spend a lot more on acquiring that first customer, right?
That’s the dream. In reality, viral marketing tends to only work really well for a few types of companies, and usually referral ends up being an effective yet much smaller part of someone’s growth strategy.
Resources on virality/referral:
If you can make sales work, this is another eminently scalable channel for startups. Of course, at the start it is anything but scalable – it tends to be the founders cold calling and pitching.
This, too, though is worthwhile, as it’s some of the best feedback and early validation you’ll ever get.
For certain businesses, though – usually B2B with a high enough price tag and lifetime value – sales is a must. I can’t think of many successful companies who don’t incorporate sales at some point in their growth.
Some resources for sales:
Business Development & Partnerships
Whether it’s building integrations with popular technology, co-branding marketing materials, or striking mutually beneficial deals with large companies, it’s clear that business development and partnerships can be viable growth channels.
It’s rare that partnerships are a company’s sole or highest performing channel, but sometimes the rare partnership with Google or Microsoft will lift a startup to the top of the world. Additionally, some companies have partnerships and integrations baked into their offering, like Segment and Zapier.
Resources on partnerships:
- From 0 to 2 Million Daily Active Users: A Guide To Growing via Partnerships
- How should startups approach strategic partnership negotiations?
If you can jump on an emerging channel, you have a clear advantage. Especially if you’re a startup with an uphill battle against entrenched competitors with size and money advantages, being scrappy and finding underutilized or new channels is your lifeblood.
It’s also fun being on the cutting edge. Not only that, all of the stable channels we rely on for growth now were once novel and emerging channels.
As a growth marketer, you have to be on the constant lookout for new trends and marketing opportunities. Keep an eye towards AR and VR and the corresponding applications, as well as any new or niche advertising opportunities.
Most Common Mistake: Spreading Yourself Too Thin
Channel overload – are you overwhelmed? Don’t be. You don’t need to go all out in all of these channels. Unless you’re at a certain threshold in your company’s growth, it’s not smart to invest in too many channels at once.
Of course, you can dabble and experiment with different channels. But the biggest mistake is thinking you should be in all places at all times.
It’s very likely that your marketing will work on a power law, where a few channels drive almost all of the results. It’s your job to find these channels and exploit them and optimize them to tap their full potential.
You know that multitasking is bad for your productivity. Well, it’s also usually a bad idea when it comes to marketing strategy. In general, really nailing one or a few marketing channels will beat being mediocre in many places.
How to Start Choosing and Experimenting with Marketing Channels
As I’ll reiterate, your marketing strategy will change with the stages of your company. At the beginning, it’s very likely you’ll be worried more about traction than scale.
How do you get started and pick your first real marketing channel?
As Sophia Eng put it in our growth marketing certification program:
You can start to get a feel for the landscape by looking at your competitors and seeing what they’re doing. Use tools like SpyFu, Ahrefs, SEMrush, to get a quantitative look at their SEO and PPC strategies. You can do a lot of qualitative competitive analysis, too.
Past that, though, you’ll want to use the Bullseye Framework (from Traction), which consists of 5 steps:
So brainstorm a few tactics for each channel (don’t shy away from channels you think won’t work), rank and prioritize them (usually with “effort” and “potential”), run small scale experiments, and focus on the one that works.
Sounds simple enough, right? It’s basically the application of agile marketing and experimentation to channels themselves, rather than just the website or product.
There many frameworks out there for how to double down on channels and pick them for the long term. Here’s what I like to follow…
Choosing Growth Channels: ROI & Scale
How do you know a channel works for you? If you have high ROI and the channel is scalable.
Brian Balfour asks a good question in this video: are you looking for traction channels or growth channels?
They’re not necessarily the same thing, though they sound synonymous.
You can find traction doing things that don’t scale – writing guest posts, cold emailing potential users, engaging potential users on forums – to validate initial assumptions and aid early product and market development. But to choose a growth channel, you need to weigh two factors:
- What’s the ROI?
- Does it scale?
According to Andrew Chen, there are only a few channels with which you can scale a startup:
- Paid acquisition.
- Other (such as the rare partnership with Microsoft or Oracle that propels a startup to the top).
What all of these channels have in common is that they’re feedback loops (you can continue to pour fuel into the fire and achieve compound growth instead of linear), and they have a high ceiling for saturation (there’s a lot of room to grow and scale this channel).
- Your business has a high Lifetime Value (LTV) per user. This allows you to spend a lot on customer acquisition.
- Your business has a high viral co-efficient (or a network effect) that lets you acquire users cheaply without worrying much about revenue per user or cost per user.
And you can imagine a Dropbox or a Tinder for the second one. Friends tell friends, and you actually get more value out of the product if more of your network is using it, therefore they can multiply their spend by customer referrals.
These two levers echo what Andrew was trying to say and what I mentioned above: to scale, you must choose channels with ROI and with the ability to scale.
What to Do When a Channel “Clicks”
When a channel works for you, throw more resources at it.
Redesignate budget from channels that are not performing as well. Share the data with the other teams and help them understand the performance of the channels.
Of course, continue to monitor the performance regularly as competitors may bid up the cost of the keywords, or you may begin to face audience fatigue (ads become less effective with time and repeated exposure, usually).
If your ROI is slipping, consider modifying your strategy and always be testing and innovatingse. Not all channels can scale up and maintain their ROI. Tactics and channels evolve (as you can see below):
Only One Channel vs. Barbell Strategy
As mentioned, it’s important to focus and not to overexert yourself and spread yourself too thin. But does that mean you only need to focus on one channel? Some think so.
As Justin Mares writes, “At any stage in a startup’s lifecycle, one traction channel dominates in terms of customer acquisition. That is why we suggest focusing on one at a time, and only after you’ve identified a channel that seems like it could actually work.”
I, however, believe there are interactions between channels that, while hard to quantify, produce better results when combined than when isolated. To be fair, I’ve done a fair amount of attribution modeling and have worked for only a few companies, but it’s hard to imagine only focusing on one channel at a time. We at CXL certainly spend the majority of our time on 1-2 channels. But we leave room to experiment with other strategies and emerging channels.
Which brings me to what Andrew Chen calls the Barbell Strategy. This is where you balance the channels you know you can acquire customers with and the channels that are moonshot growth opportunities but are harder to predict:
This is the strategy investors use to mitigate losses while still opening up opportunities for exponential returns.
There’s a lot of thought that goes into choosing the right marketing channels, and rightly so: it can make or break your business.
It depends on a lot of factors: the team, the product, the stage of the company, the market. But there are a few tenets that we repeatedly find to be true in choosing and scaling channels:
- Choose channels with high ROI that have the ability to scale.
- Focus on few channels rather than spreading yourself too thin.
- Adapt and experiment. Channels and their effectiveness change.
- Look for emerging channels. The blue ocean is where you can find cheap customers at scale and beat your larger competitors.
The post How to Choose Digital Marketing Channels for Long Term Growth appeared first on CXL.
Source: Conversion XL