A recent survey showed that only 28% of consumers had never heard of the brand Peloton. In case you’re one of these people, it’s that trendy stationary bike everybody was talking about in 2020. The one that had this terrible ad nicknamed the Peloton Wife, which Ryan Reynolds made a parody of later. Well, they have a 72% brand awareness “score”. This is what we would call a successful brand awareness campaign. But it came at a hefty price. The brand spent $324 million in marketing last year. That represented more than a third of their total revenue for the year.
Was it worth it? Probably, since Peloton reached its first $1B quarter revenue in 2021. But it doesn't have to be that way. You can have a successful launch without spending the GDP of Malawi in marketing. In fact, there are ways to launch a product successfully with any kind of budget. The secret is to know how to distribute your funds in the most cost-effective way to get the highest ROI possible. Here’s how.
Have you heard of the Iron Triangle? It’s a business model that determines the constraints of managing a project according to 3 opposing forces: speed, time and scope. The model is simple: you can only choose two of these three forces, and can never have all three at the same time. "Good, fast or cheap, choose two" is the saying. It looks something like this:
That same model applies to marketing campaigns. If you have a limited budget, you have to choose between quick results or good deliverables. For instance, you can decide to spend your entire $2,000 budget into a single Facebook ad campaign. You will definitely get immediate reach and eyeballs on your brand. But without a proper marketing plan, most of these views won't turn into revenue for your business. On the other hand, you can use your budget to build a thoughtful content and distribution strategy. That strategy will get you much higher ROI in the end, but it will take time to get there.
So all of this to say, with a $2,000 marketing budget, you have to pick your battles. And out of the 3 forces, I recommend letting go of Time. Accept that your growth will take longer if you don't have the budget for it, and use that budget in the most clever way possible in the meantime. Build customer funnels that follow a customer from first contact to conversion. Have marketing materials available for them at every step, ensuring that they stay connected to your brand. (Side note: I gave a talk on This Week in Startups recently about the power of customer funnels.)
Try to do as much as you can in-house to save money, unless you're not a good marketer. Then don't. Instead, outsource the work to professionals, even if that means only doing one piece of content instead of five. Do less, but keep quality high.
This is where things can get interesting. At a $20,000 or even $10,000 budget, you can build a robust customer funnel that generates revenue for your business. The question is how can you spend that budget since there are hundreds of funnels you can build. Several factors determine the funnels that will generate the highest ROI.
First, your target market. Are you targeting businesses, customers, both? What about your geographical market? Are you launching in a developing market, or a mature one? What tools do people use to connect with brands there? Is it a "reading" crowd or a "watching videos'' crowd? For example, it would be a terrible idea to use Facebook ads if you're trying to launch in China. Know your market and learn what content they want to consume and what tools they use to consume it.
The second factor is your industry / competition. What are your competitors doing to attract customers? Should you do the same thing, or try a different strategy? Sometimes, riding the marketing wave of your competitors makes sense. Monday.com is a good example of that, trying to steal the thunder of Airtable on search results:
The third factor is your goal. Are you, like Peloton, trying to gain brand awareness? Or is it about acquiring new customers? Sometimes these two strategies can go against each other. For instance, if you share a social media post that teases a piece of content that lives elsewhere, people are more likely to click on it than like or share it. If instead what you want is to create engagement on social media, you should share the full piece of content directly on the platform. That also means people will be less likely to click through to your site. So figure out what's the highest marketing priority for you and build your funnels around that goal.
Once you have your framework for your funnel, it's time to design them. At this level of budget, you can afford to create valuable content in video, audio and written forms. You can also include a solid distribution strategy with social media, ads and landing pages. The goal is to guide your leads through the onboarding process.
For example, if you start with a social ad, make sure it redirects to a piece of content that provides value. From there, offer visitors to subscribe to a piece of content. That way, in case they don't convert, you still have their attention. Later, email them with a link to a landing page that explains the benefit of your solution. If they don't convert then, keep engaging with valuable content, and add retargeting. The point is, keep them engaged until they move forward or tell you no.
At that level of budget, you can start fine-tuning your marketing for optimal ROI. First, you'll have much more resources to do research prior to your launch. Do an in-depth competitive analysis, user studies and persona research. You have the means to get to know your target customers from head to toe before you even start engaging with them. Once you have all the research, hire the best marketing leaders out there to build you a robust strategy. Plan on A/B testing different campaigns to figure out what's getting you the best results. And of course, track performance with precision so that you can use the data to your advantage.
With $200,000, you also have the potential to significantly increase the quality of your marketing assets. Video production is a good example of that. When you have a small video budget, it's harder to create fictional stories. Fictional stories require actors, sets, props, lighting, sound, which can get very expensive. That's why most companies with smaller budgets go for typical "product videos." Think Kickstarter videos for example. The founder is in their office talking to camera about their product, and you see someone interacting with the product in a few shots. Those videos are cheaper because they don't require you to create a "fake world" for characters to evolve in. But at a $30,000 to $50,000 video budget, you can start playing with sets, actors and building fictional stories where your product plays a central part. You can also hire a bigger film crew with lighting technician, director of photography, sound engineer... which will bring the quality of the final result to a whole new level.
A higher marketing budget also makes content distribution much more effective. With the amount of content that is shared on the internet daily, it's hard to rise above the noise. But when you have a significant ad budget, it's a different story. It's a cheat code to get you in front of the line. Of course, if your content isn't good, it won't be enough and we go back to that Facebook ad example I mentioned above. But if you're sharing content that is meaningful, exciting or beautiful, they'll engage with it right away. Going back to that Peloton Wife video, it was arguably a bad video. But it was very meaningful. As a result, hundreds of people created parodies of it on Tik Tok. Talk shows had whole segments about it. And in the end, it created incredible brand awareness for the brand. But that's also because Peloton had the ad budget to put in on our YouTube homepage in the first place.
Whatever your budget is, you should always do marketing. The quality of your product will simply not be enough to grow your revenue. Don't believe me? Look at the Pepsi Challenge. Pepsi was able to prove through this experiment that their product was better than Coca Cola. Yet, Coca Cola owns 43.7% of market shares in the carbonated soft drink market. Pepsi? 24.1%. Why? Because Coca Cola has a marketing budget of $4 billion.... a year. Which, for reference, is the GDP of Barbados.
Doriane Mouret is the co-founder and CEO of Gravitr, Earth’s biggest marketing agency. We match businesses that need marketing with experienced on-demand CMOs to build their plan, and world-class experts to implement it. We automate all the annoying parts of managing marketing campaigns so that the humans involved can focus on their craft. The results? Marketing campaigns that get you actual ROI within weeks, not months.