Top 5 Mistakes Startups Make When Launching Performance Marketing

Avoid These Performance Marketing Pitfalls To Help Your Startup Find Sucess & Grow Faster

Launching a startup is an exciting yet daunting experience. With limited resources and an urgent need to acquire customers, performance marketing becomes critical to a startup's go-to-market strategy. However, inexperienced startups often make mistakes that lead to sub-optimal performance and burn through valuable resources. In this blog post, we highlight the top five mistakes Hyper routinely sees made by startups when launching performance marketing campaigns and offer suggestions to avoid them.

Launching Without An Attribution Provider

We have seen this with nearly every client we've worked with as they try to avoid "nice-to-have" investments in measurement tools for short-term cost savings. Typically the rationale for attribution being non-essential early on is that there is a perceived workaround by agglomerating, say, GA4 with the SDKs for XYZ ad networks. 

Aside from the inability to allocate budgets intelligently, this approach can lead to inaccurate post-backs to ad networks, hampering performance and inhibiting their ability to optimize ads. This is often the case when some small tests have been run solely using Facebook ads and SDK as a starting point for growth. The issue then compounds when the team wants to test another channel because they have yet to consider how these campaigns fit into their broader performance marketing strategy.

As for why this happens, in some cases, it's a lack of strategic foresight. But often, there's a predisposition that attribution tools are cost-prohibitive. Indeed, an attribution provider can be a heavy line item on your operating expenses when viewed as a luxury tool rather than a prerequisite. It's also true that you can make the numbers work. Have a conversation with the top providers. In most cases, they will work to scale with you.

Making Creative an Afterthought

Startups often go all-in for expenditures like product development, hiring top talent, and stockpiles of cold brew but bypass a proper cost-benefit analysis on investment in creatives for performance marketing. There is no single lever more critical than high-quality creative for user acquisition efforts to succeed and acquire customers with efficient unit economics. 

We often encounter, "We'll figure out creatives later." Or even worse, the fallacy of "I can't afford to make this investment right now." However, we usually counter with, "You can't afford NOT to make a baseline investment in creative assets." 

The irony here is that neglecting creative investment will lead to sub-optimal performance that may cost more than investing in bespoke assets tailored to the needs of performance marketing from the start. 

Trying to Optimize Down Funnel Too Quickly

Startups often assume (sometimes exclusively) that they should bid or set campaigns to optimize for purchases out of the gate. You should refrain from thinking that just because you can bid/set campaigns to optimize for purchases, you should do so immediately. You're more likely than not shooting yourself in the foot. This is because the ad network will struggle to optimize from a lack of learnings and meeting thresholds for conversion post-backs.

Startups should start at the top of the funnel and progressively bid their way down. For example, let's say you're a fashion app. Start by optimizing your campaigns for installs. Get some volume in, stabilize your CPIs, feed the network's signals on quality, and then take a single step down the funnel to an event like registration or content. Then rinse, repeat, and continue to optimize your way down the funnel. As you scale, you will likely find that certain events perform better with specific audiences. You will still judge all your campaigns against core down-funnel KPIs like customer acquisition cost (CAC) and return on ad spend (ROAS). It's ok to simultaneously bid across the funnel with multiple campaigns with intelligent segmentation. Hopefully, you will discover some interesting patterns that surface further growth opportunities.

Check out Hyper's case study on our work with Kixeye to learn more about combining segmentation and cross-funnel optimization.

Spreading Budget Too Thin

We see this mistake a LOT. Many startups have relatively small budgets and attempt to diversify their channel mix too broadly, too early. Typically, the scenario goes like this. You raise a bit of cash, and then you get a bunch of sales reps pitching their "exclusive" ad placements with the declaration that XYZ company uses us. You think, ok, XYZ is who I want to be when I grow up. Let's test them too.

The problem is that spending too little on a single channel prevents the network from gathering a base of consolidated learnings from which to find initial success. To be clear, I'm not saying that you should avoid diversifying and testing channels early on, but that you should start with 2-3 channels max. With your initial channels, keep focused and have purposeful intent to minimize overlap in the types of media you choose. For example, don't go all-in exclusively with a mix of paid social channels. Instead, choose a single one and layer in a search channel to capture customers with intent. You can then compliment this mix with a reputable DSP. Chances are that the "exclusive" inventory you passed on will be ready and able to sell you impressions on most exchanges.

Letting Aggressive Projections Make You Trigger Happy

It's great that you have a business plan and target acquisition costs, but remember these are not projected from actuals. At best, they're from comparables or derived from your previous experience. Which, depending on the context, may or may not even be relevant. Accordingly, don't be stubborn and expect these assumptions to be accurate or attainable in the actuals of your initial cohorts.

Startups must remain experimental and calculated, not impulsive. You're launching a new product, and with that comes the need to be agile across the board. The problem is that you will see false negatives, not opportunities, by being too rigid early with your assumptions when analyzing campaign performance. Optimizing with this mindset will likely cause you to kill channels or potentially lucrative campaigns prematurely.

Check out Hyper's case study on How we helped Carry1st acquire their first million users.

In conclusion, launching performance marketing can be a challenging task for even experienced founders. However, avoiding the mistakes mentioned in this article can help you set a solid foundation for success. At Hyper, we understand the challenges that startups face when launching and scaling their marketing efforts. If you need help with performance marketing or building your growth team, Hyper is always here to assist you. Contact us today to learn more about how we can help your startup grow and thrive.

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