John Wanamaker once said that half of the advertising budget he spends is wasted, he just doesn’t know which half. When it comes to early-stage companies, the most important thing is to create a strategy that wastes as little advertising budget as possible. Here’s how to achieve that!
WHAT IS AN EARLY-STAGE COMPANY?
The answer to this question is quite easy – early-stage companies are startups. But strategies in this article aren’t exclusive only to those types of companies, they can also be applied when launching new products because they have one thing in common – they are new on the market and they need to maximize efficiency of their advertising in order to create the initial traction.
Before we dwell into advertising strategies and promotion of products and services,we need set up the basics:
- target audience
- creative/communication concept
When thinking about goals, it’s always important to start with the big picture and move towards smaller pieces. Think about your mission and vision and how they impact your business. Never create business goals that are in collision with your mission and vision. This is highly important when you consider your employees’ and partners’ motivation as well as trust you want to gain from your customers. When you have your mission and vision in mind, start thinking about goals for your business. And yes, they should be SMART. Some examples of business goals might be:
- increase revenue by 10% in 2016 through this and this product sales
- increase the number of sales transactions by 7% in next 6 months by using a webshop
- decrease costs by 8% by moving all sales online in next two years
- increase profit margin by 4% by increasing sales of a specific product
- increase market share by 2 points with the launch of a new product in next 3 years
As you can see, most business goals are usually oriented towards making more or spending less money, and they are a starting point for your marketing goals. For example, if your business goal is to increase the number of sales through your website, you might think about moving your marketing efforts online. Or if your goal is to increase market share by 2 points with a new product, your marketing will definitely be more focused on that new product.
Keep this in mind because every campaign you create has to contribute towards achieving marketing goals and ultimately your business goals.
Don’t ever say that your target audience is everybody who wants to buy your product or service. Your product or service is not for everybody and you need focus, especially in the early stages of your company.
- To define your target audience, ask yourself a few questions:
- What markets are important for me?
- For which markets do I have enough money?
- What languages do I know and are they spoken in my desired target markets?
- How old are the people who might be using my product or service?
- Are they mostly women, men or maybe both?
- What do those people do in their free time?
- What other products or services they might be interested in?
- How much money do people have to earn per month to buy my product or service?
With these few simple questions you will already have a much clearer picture of your target audience.
CREATIVE / COMMUNICATION CONCEPT
In his book “Start with Why”, Simon Sinek argues that people will believe in one’s idea if they are given a reason to. Hence, they will also buy products or services from those in whose idea they believe in.
Even if you are a new company, never disregard the creative idea and the way you communicate. In early stages, probably your idea and the flare you have for it is the main thing that will sell your product or service.
Obviously, creating an idea or a communication concept isn’t an easy thing to do, but if you answer a few simple questions while keeping in mind your goals and target audience, you might come to it:
- What is the objective of my communication? What do I want to achieve?
- What issues does my target audience have and are they connected with the industry of my product or service?
- Do I have any insight into needs or behaviors of my target audience that are connected with the industry of my product or service?
- What is the main idea that can fulfill objectives, solve issues and build on insights I might have?
By following this process, you can create a basic communications standpoint. You’ll definitely have to evolve it as your product pivots and you gain new insights, but it is a good starting point.
CAN WE START SPENDING SOME ADVERTISING BUDGET?
As Barack Obama said – yes, we can! But since it’s real money we are talking about now, you have to be extremely smart about it.
For early-stage companies I would suggest using the RACE framework as a starting point for your advertising. It is a cyclic way of understanding advertising and modern consumers. Every one of your consumers is in a different phase at a certain point in time and with that they have different needs and have to be approached in a different way.
RACE framework consists of four stages:
In the reach phase you want to build awareness about your product and service. Here, you are targeting potential consumers who still haven’t had any interaction with your brand. With that in mind, you should focus on first interaction points people will have with your brand. Some examples are:
- social media
- social media advertising
- display advertising
- mass media (if you really have a lot of money to spend ☺ )
However, to ensure maximum efficiency, you need to set up KPI’s for every advertising action you might carry out. And each of those KPI’s has to be in line with your marketing and business goals. Some KPI examples for this phase might be:
- number of new visitors on website
- reach of ads within target audience
- number of fans / followers
- audience share
In the act phase your main goal is to achieve engagement between your brand and your target audience. Your efforts should be focused on educating customers about your products and services as well as creating a feeling of trustworthiness by showing benefits and references. Channels you might use here are:
- social media
- offline presence (point of sale)
- fairs, conferences, events
As mentioned before, you shouldn’t forget KPI’s since they show you if your advertising efforts are successful:
- bounce rate on website
- time on site
- number of downloads
- number of people entering your offline store
- number of qualified leads
Here you should focus on the first sale or the first product trial. In this phase you have potential consumers who are already educated about your brand (product or service) and it’s up to you to give them enough incentive to become your customers.
Some channels you might use in this phase:
Just like in previous phases, you need to have KPI’s that will be aligned with your goals. Some of them might be:
- number of first sales
- number of product trials
- conversion rate
- average first sale value
Your customers in this phase have already used your product or service at least once. What you want to achieve is repeated sales and eventually turn them into brand ambassadors. Everybody knows that it’s much cheaper and more efficient to keep your current customers happy than to acquire new ones. To do that, you might use following channels:
This phase also has a couple of KPI’s you need to set up in order to measure efficiency:
- number of active customers
- revenue increase percentage
- increase in the number of transactions
- customer advocacy
- brand mentions
BUT THE MOST IMPORTANT THING IS…
To have passion! Believe in your product or a service, but be extremely smart when it comes to advertising. One piece of data always trumps opinions of thousands of experts.
Is your company or a product in early stages? Do you need help with creating efficient advertising strategy? Contact us!