Fixing Paid Advertising

Do you think this could solve your campaign issues?

Hey reader,

Do you wonder why some businesses, regardless of their size, seem to miss the mark with their advertising strategies?

It's a widespread issue that’s far from only affecting small businesses
and among a variety of sectors, it’s a common challenge
with B2B SaaS companies too.

Even with the best marketers and the biggest budgets in the world, without people actually needing, wanting, or understanding your solution you might as well light the money on fire 🔥.

No wonder many businesses tend to cut marketing budgets first 👇

if you can’t your marketing activities to bottom-line revenue, it might as well be considered a cost centre.

Let’s see how you can change that.

But first, a quick question: Do you know what turns a $5 million ad spend to $9?

I’ll let you know at the end of today’s course.

Before we get started, if you find these insights valuable, the best way to support our work is by inviting your friends to become Dot Connecters so they too can learn how to Connect The Dots between marketing activities and financial goals.

Topic Of Today

🎙 Episode Highlight: Rethinking Ad Strategies

📚 Deep Dive: Fixing ad spend with PMF

📌 Actionable Advice

📚 Homework

💡 Pro Tip

📽️ Connecting The Dots w/ Sam Kuehnle 📽️

I. 🎙 An Episode Highlight: Rethinking Ad Strategies

Sam talks about a belief that most likely got its wings from when social media platforms and search engines became the most used channels… well for pretty much everything and thus performance marketing spread worldwide 👇

the belief that a large ad budget is a silver bullet for growth. 🧛🏻‍♂️🐺

Key Takeaways:

Market understanding over Ad spend:
It's not about how much you spend on ads, but how well you understand your market. As long as you have no clear idea of who, why and how would buy your service, you are effectively pouring gasoline on your money.

The illusion of quick fixes:
Attempting to "buy" product-market fit through aggressive advertising or targeting multiple segments without a clear strategy may bring great results… but it will be unnecessarily more expensive and in many cases more time-consuming.

II. 📚 Deep Dive: Fixing ad spend with PMF

As you already figured it out, the key then is to understand your market (at least) somewhat, before you start pouring money into ads for ‘testing’.

Now of course I’m not suggesting that you have to wait years before you run your first ads.

Testing however should not be done with 0 insight and little to no idea on what exactly you are testing.

What I often see as a mistake (and what Sam is pointing out in this episode) is that many will be trigger-happy when it comes to ‘testing’ with paid ads.

Sure they provide a quick feedback loop. But if you are focused simply on engagement numbers to decide your course of action, you might as well end up running ads about puppies & kittens.

this will always get great engagement

Do you want to stop wasting your ad spend?

Then start spending time understanding your audience’s most specific and most relevant (for you that is) issues on the deepest possible level.

Understand what job your service is doing for them, what outcome they are looking for and what triggers them to take action.

You’ll still need to test & tweak things.
But with a clear strategy out of the gate, you can spare a lot of time & money.

Now let’s dive into steps to reaching Product-Market Fit (in the B2B realm) with the help of Lenny’s Newsletter.

  1. Time to PMF: Based on the experiences of the 24 top B2B startups today, it takes on average 2 years from idea to PMF, with a significant period spent iterating the product based on customer feedback.

  2. Focus on one customer: Start by making one customer truly successful with your product. This initial success is more telling than widespread, shallow usage.

  3. Financial commitment as a signal: Getting one… and then more customers to invest significantly in your product is a strong indicator of PMF. But it’s not the final destination. It’s one thing to pay for something and another to keep paying for it even when something is temporarily wrong.

  4. Shift from Push to Pull & Organic Growth

    Inbound Interest and Organic Demand: A key indicator of PMF is the shift from having to actively sell the product to experiencing organic growth and inbound interest.

    Customer Engagement and Feature Requests: When customers actively request additional features or are asking about previous features it signals deep engagement with the product.

  5. Consistent Growth

    Sustained Growth Rates: Consistent growth in user base and revenue, as seen is often a sign of solid PMF. As long as it’s not paired with a maybe smaller but still significant churn on the other end.

    Reaching Revenue Milestones: Reaching certain ARR milestones can also indicate PMF, showing that the product met a significant market demand.

III. 📌 Actionable Advice:

Check yourself before you wreck yourself:
Before you throw money on your flaming ads…take a step back to deeply understand your market.

Identify the specific (reeeaal specific) problems your customers are facing and how exactly your product solves them. What is the job your service is doing for them. This then will help you pour money on fires that fuel your growth instead of providing a bit of heat for a while.

Evaluate your Product-Market Fit:
Regularly assess where your product stands in terms of market fit.
Are your customers deeply engaged?
Would anything change for them if suddenly they couldn’t use it?
Are they requesting features or expressing specific needs?

Use these indicators to gauge how well your product aligns with market demands.

IV. 📚Homework:

1. Assess your Market Fit before ad spending:

Reflect on your current understanding of your market.
Are you clear on who your target audience is and what specific (and I mean reeaaally specific) jobs your solution delivers for them?

If not, hold off on large ad spends until this becomes clearer.

2. Evaluate your Ad strategy:

Review your past and current advertising strategies. Are they based on a deep understanding of your market, or are they more of a 'shotgun' approach? Identify areas where you might be spending without a clear strategy or target.

3. Analyse customer feedback for PMF indicators:

Look at the feedback from your customers.
Are they deeply engaged with your product?
Are they requesting features, indicating a deeper investment in your product?

This feedback can be a goldmine for understanding your product-market fit. If you don’t yet have customers, focus on getting the 1st one that is deeply engaged.

4. Reflect on your Growth Strategy:

Consider how your business has been trying to grow.
Are you relying heavily on ad spend to acquire customers, or are you seeing organic growth and word-of-mouth referrals?

This reflection can help you understand if you're truly meeting market needs or just pushing for growth.

5. Document your observations & plan adjustments:

Based on your assessments, document your observations and plan necessary adjustments.

This might involve shifting ad spend, redefining your target market, or altering your product based on customer feedback.

💡 Pro Tip:

The market is dynamic, and so should be your approach. Be ready to pivot your strategies based on new insights and feedback. This agility can save you from prolonged ineffective ad spending and help you adapt to your market more swiftly.

Also beyond just selling your product, focus on building relationships with your customers. Engaged customers can provide honest feedback, refer your product, and become long-term advocates. This approach often yields better results than impersonal mass advertising.

Fun fact answer:

A time machine. (I’m sorry)

The first-ever television ad was only 10 seconds long. It aired on July 1, 1941, during a baseball game on a New York City channel and was for Bulova watches. The ad cost was $9, and it has a simple message: "America runs on Bulova time".

Now compare that to ad prices during the Super Bowl today. Messaging didn’t change much though.

Isn't that just fun?

Keep learning and growing! 🚀 ❤️

New episodes of Connecting The Dots & Business Companion are coming out regularly, so stay tuned.

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And why they are actually not.

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A quick guide to refresh your creative thinking.

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