You are ready to dip your toes into performance marketing, but don’t know where to start

Nobody likes to spend money, but if you do consider spending money on marketing, you might as well do it the smart way. Here are a couple of tips on what to look for when you are spending your first $1000 on performance marketing.

Get your data straight

I'm starting to sound like an answering machine because almost all my posts start with this item. In this case, it’s especially important because you are about to start spending money. You want to turn that $1.000 into $10.000 don’t you? Even if you don’t end up making a profit on your investment, you can’t put a price tag on the data you are going to gather about your customers.

Goals

Be clear about what you are expecting from your investment. Now I am going, to be honest with you. You are going to spend some of your first performance marketing finding out what works and what doesn’t. This money doesn’t directly convert into profit, but the data you will gather will provide you with a lot of value in the long run. Imagine how effective your next dollar will be ones you know what ad works, what audience or what channel. To know what works, you will be needing goals!

A simple sales goal would suffice of course but look beyond those metrics. How much is a new customer worth to you? How much are you expecting them to spend? Are they return costumers or are they, new customers? Are you spending any of your first performance marketing budget on customers that are already spending money on you?.

Don’t overcomplete things, just set up your data the right way, gather as much of your customer information as possible and move on from there.

Ask your customers

Usually, the data will show you the best places to invest your first performance marketing budget. But in case you don’t have any data or you are looking beyond your current data (which is always a good idea), just start asking around. Talk to your target audience, ask them what channels they use on a daily basis, what ads they like from other companies, what they recently used or bought through an ad. A golden rule I like to use is to talk to 100 people and see patterns.

This isn’t a foolproof strategy because you are going to spend money on people who just aren’t relevant to your goal, but at least you get a sense of which direction to look for.

Patience

Performance marketing success doesn’t happen overnight. If you are expecting your $1000 to turn into a money machine, you are better off start watching those “How to make money online” YouTube videos. You are able to spend that first money in about 0,0001 seconds, but your goal is to learn as much as possible with as much valid data.

Start with a couple of channels from your audience list and setup small campaigns with clear goals on effective channels, creatives, and audiences. You should spend just enough to get significant data on your goals.

Experiment first, scale later

As I just said, you are able to spend that first $1000 very very fast. But to spend that first budget as effectively as possible you want to find out what works best before you run out of money so you can spend a big part of your budget to its highest potential. For example, if you found out your target audiences use Instagram and google, start at $200 on both channels and see what happens.

Some scenarios that could happen ;

1. both channels perform as you expect? Great spend the rest of your budget on both channels
2. 1 channel performs better than the other? Increase the budget on that channel, but don’t stop with the underperforming channel, just look for a different angle.
3. Both channels are not adding value to your goal? look for a different way to experiment and run the experiment again at $200 until you see better numbers.

Whatever you do, don’t jump to conclusions just yet. A $1000 dollars will get you some results, but at $200 dollars per channel, you are looking at a very small data set with a lot of room for improvement.

Get benchmarks

Recently my accountant called me and said: “I saw that your Google spend is a big part of your yearly budget, isn’t that a lot?”. I get it, to him it looks like a big number and he doesn’t see the full picture I see in Analytics. I know that this big part of my budget contributes to a big part of my revenue.

With this story, I just want to show you that the numbers you will see on your first performance marketing won’t make any sense unless you know if you are performing to your maximum potential.

Getting a conversion rate of 5%, is this high or low? Besides the fact if this number is enough for you to make performance marketing work for you.

Try to find some benchmarks, even if you have to ask around with other companies in your niche. This will make you help and understand if the results that you are getting are close to the results you should expect.