If you are building a consumer internet business, you have probably spent 90 percent of your time on product development, building a team, chasing funding, and defending your decision not to get a “real job” to your mother. If you are lucky, then you spent the other 10 percent getting some sleep. The one area of execution that I typically see startups least equipped to tackle is advertising.
As I have written before, there is a dangerous and false notion that products sell themselves. They don’t. Your product will not go viral and anyone that bets the success of their startup on tweets is a fool (and will eventually have to admit to their mother that she was correct).
Advertising is to be taken seriously and you need to provision for both investment and time to learn how to acquire and retain customers online. There is no question that startups in countries like Asia have an engineering bias – and that’s a good thing. But we are far behind our counterparts in Berlin, London, New York, and Silicon Valley when it comes to the quality of our UX (user experience) and marketing execution.
I spent over a decade spending an average of US$20 million a year in advertising for my previous employer (now current competitor). That marketing investment was almost entirely online and distributed into 15 different geographies across Canada, Europe, the Middle East, and Asia. Having benefited from that responsibility at a young age I learned a thing or two about online consumer behavior, building a brand online, and of course the ins and outs of digital advertising on a global scale.
I also learned that messing up once in a while was normal, and success in achieving marketing ROI (return on investment) is done through the systematic process of spend, track, learn, adjust, and then scaling the investment when you see returns. Even today, I accept that 70 percent of my teams individual advertising campaigns will either fail or break-even, but it is our job to ensure that the 30 percent that work get the majority of the investment and can scale up fast.
It’s not dissimilar to the portfolio theory of a venture capitalist. They know most of their investments will fail but their ability to rapidly identify and ramp up investment in the winners is the name of the game. Treat your marketing tactics and campaigns the same way. Without some level of risk there will be no reward.