The truth is, $500 is not going to get you very far on most marketing platforms.
Unless you’re incredibly lucky you’re not going to guess correctly the first time you experiment with the variables of [creative]+[placement]+[time]+[advertising channel] and it isn’t enough marketing budget to run even one A/B test and get some conclusive results.
But, instead of thinking about using your marketing budget to acquire customers, what happens if you think about using it to acquire more marketing budget? It’s not a magic bullet but it’s better than nothing.
Here’s my thinking…
Growing marketing budget is easy enough to if you don’t spend customer revenue on running your startup and instead spend it on getting more marketing budget. You do this by making sure you firewall your revenue to spend on marketing, and by making sure the lifetime value of the customers you acquire for $500 adds up to more than $500 once you deduct what you spend on acquiring them.
Budget-constrained marketers, founders new to marketing, or marketers who come to startups via industries with bigger budgets, all tend to focus on not spending their marketing budget.
Instead of worrying about CAC, think, “How can I increase my LTV?” and “How can I reduce the time it takes to earn back my CAC?” and “How can I make another $500 to spend on answering those first two questions?”
Marketing budget doesn’t have to be generated from revenue. Your startup is not the only way you can make another $500 to spend on marketing. Here’s some obvious ways you could make another $500 marketing budget in a few hours.
Now, I’m obviously simplifying things. There are a lot of other factors at play.
But with $500 you will have everything you need, if you cultivate the mindset of “how do I grow my marketing budget” instead of “how to I avoid spending my marketing budget?”
- Alan Jones is Entrepreneur in Residence for Remarkable.org.au, was a founding investor in Pollenizer, Startmate and Blackbird Ventures and is a partner at M8 Ventures. He also prints some cool t-shirts to help refugees. He tweets as @bigyahu
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