When Is the Right Time for Startups to Bring on Marketing Support?
One of the most common questions I get from prospects is when the right time is for a startup to bring on marketing support. Timing is indeed critical, so I’ll answer that question while also explaining what you should get out of the investment and how to evaluate potential full-time or external hires.
Exciting side note: Much of this newsletter was inspired by recent conversations I’ve had with Aperiam Ventures co-founder Eric Franchi for a podcast we’ve just launched together called Open Market. The pod is about building companies in the advertising industry (I come at this from a marketer’s POV, Eric from the POV of a founder and investor).
There are lots of advertising and adtech news podcasts but, to my knowledge, no other podcasts sharing practical insights on how to found, build, and grow adtech companies. Check out our first episode (published yesterday). It’s about how to reverse-engineer a $10M adtech exit. And look out for new episodes each Wednesday.
When the Right Time is to Bring on Marketing Support
Adtech startups virtually all start out the same way: one founder hustling to market the company and sell while the rest of the team focuses on building the product (or, as Eric puts it, “one to build, one to sell”). This is probably how you’ll get from $0 to $1M — a founder working his or her network and ideally creating some buzz at events and on the interwebs. This process is as much about learning as it is about actually selling. You have to validate the idea and get some customers before you can professionalize your marketing and sales operation.
The need to validate a startup before professionalizing its go-to-market operation is especially critical as it relates to marketing. Everything a marketer does will be catered to the startup’s audience. So, how can a non-founding marketer effectively serve a startup if they don’t have any customers on which to base their efforts (i.e. if they don’t know whom they’re talking to)?
So, the right time for a venture-backed adtech startup to hire marketing support is around the $1M in revenue or Series A mark (which tend to coincide). At this point, you have a product that a sizable number of customers actually want. You can identify those customers’ key characteristics and articulate precisely how you’re solving their problems as well as what they love about the product. And, as a result, you can start creating content tailored to that audience, its pain points, and the parts of the product that are proven to resonate with it. Plus, if you raise a Series A, you’ll likely have $5-15M to allocate, and spending $120-180k per year (possibly more) on marketing is a reasonable part of the equation.
If you’re bootstrapped, many of the same principles apply, but you’ll likely want to be more conservative with your spending. Yes, you technically could bring on marketing support at the $1M revenue mark. But if you have to support two or more founders and an engineering team on that income, there likely won’t be enough money left to bring on a serious marketing resource. I’d say the rule of thumb here is to wait to bring on a marketing resource until your sales operation is humming and you’ve achieved a stable level of profitability such that you can afford to set aside $10-15k/month for marketing for a year without concerns about compromising profitability.
That said, where does this $120-180k/year go? What do you get in return? Is the help in-house or external? And how do you evaluate potential partners? Glad you asked.
What You Should Get Out of Marketing and How to Evaluate Results
Many businesspeople think about marketing as a lead machine, and there are certainly businesses for which that metaphor is appropriate. Ecommerce works that way. Gaming apps work that way. These are products that typically grow thanks to performance advertising, and if you’re hiring marketing support, you’re really looking for someone who’s going to achieve a sustainable LTV:CAC ratio so you can keep pouring more money into the ever-more-efficient marketing machine.
Unfortunately for those who would like to see the impact of their marketing investments captured on a simple dashboard, adtech generally doesn’t work that way. Adtech companies sell high-consideration, high-value enterprise products that don’t lend themselves to the marketing tactics (such as direct-response advertising or SEO-driven content marketing) whose impact can be captured on a simple dashboard.
Adtech marketing isn’t about enticing someone to click on an ad in a given moment. An agency isn’t going to add an SSP to their already-crowded vendor list because they saw an ad on LinkedIn. A publisher isn’t going to switch their order management system because they read a blog post entitled “What is an OMS?”
Rather, adtech marketing is about building your reputation and relationships so that your target customers know you exist, understand what differentiates you from competitors, and develop an affinity for your company and for the people who work there. In short, adtech marketing is the art of building your reputation and relationships. With an effective marketing program, your salespeople are far more likely to get a positive response and to close deals. Without it, they’ll always be hustling to get attention, and they’ll always be at a disadvantage to competitors who effectively market themselves.
Building your reputation and relationships is essentially a mix of public relations, content marketing, and events. You want to be everywhere your customers are hanging out such that they think, “Damn. I’m seeing this company everywhere.” And when you show up, you want to have a differentiated and galvanizing message. For example, if you’re an SSP (crowded, commoditized market), everyone should think, “Oh, they’re the [insert adjective] SSP.” This is how you carve out space yourself and earn a seat at the table.
So, there are essentially two ways adtech marketing should generate measurable results. The first is leading indicators (or metrics that indicate you’re building your reputation and relationships): media coverage, byline placements, growing social audiences, gated asset downloads, webinar attendance, etc. The second is leads coming through the door saying, “I love your LinkedIn content” or (again) “I’ve been seeing you everywhere.”
How to Assess Potential Marketing Partners or Employees
Let’s break down marketing resource evaluation into two paths: full-time hires and external support.
If you’re looking for a full-time hire, the key is either to find a strategic operator (likely someone at the VP level) or pair a co-founder who understands marketing with a tactical first marketing hire who can execute the vision. What you don’t want to do (and many startups do precisely this) is hire a junior person — say, a marketing manager — and expect them to spearhead a marketing program. “They’ll grow into it.” Maybe! More likely is that they operate tactically despite being expected to devise and implement a strategy, and the marketing program is disoriented and ineffective.
If you’re hiring a senior full-time marketer, expect to pay a $200k salary or equivalent (i.e. compensation and equity). With salary, benefits, and taxes, that hire will likely set you back nearly $300k per year. But, obviously, if that person is actually capable and dialed in, they could make a huge difference to the business, essentially expanding the market for it. The other route is to get this same level of expertise fractionally by hiring an agency that will likely run you $10-15k/mo.
Whether you’re hiring a full-time marketer or an agency, you should be looking for three things:
They have to understand adtech. Especially if they’re external, they won’t have the time to learn the industry in addition to marketing your business. If they’re internal, a non-adtech hire is more feasible, but at the price, I’d much rather have someone who already understands the ins and outs of the industry, possibly already has the audience I want, and can leverage their existing influence.
Their approach should be modern. You want someone who’s going to take advantage of all the channels available to grow the business. I’d want that person hustling every day to build my company’s reputation and relationships. A pencil pusher who’s going to do a white paper and a press release each month ain’t it.
They should be strategic. This means having a bespoke process to develop and amplify the company’s story. It also means having a specific vision for how marketing works in adtech and how to measure results. If they don’t have this vision (and most marketers do not), I would not hire them to spearhead my marketing program.
The main errors to avoid are:
Bringing on marketing support too early in hopes that the marketer will make miracles happen and resurrect a dying or unproven startup.
Hiring a junior person and expecting them to devise and implement a marketing strategy.
Expecting adtech marketing to work like direct-response marketing. Sorry, you’re not going to capture the full value of adtech marketing on a simple dashboard.
If you avoid those errors, you’ll be on the right track. Then, all that’s left to do is to execute. And that’s not hard at all, is it?
