Investing in the Right Marketing Channel

The best marketers think like investors.

They don’t just try a channel. They invest in a channel.

If they see returns, they invest more.

Their North Star is usually Return on Investment. They understand that each investment they make into a channel has a cost.

To make sure you pick the right marketing channel in 2024, think like an investor.

Here’s how:

This newsletter is kindly sponsored by - Inflection.io. A big thanks to them.

Inflection.io has another gem, this time an Ultimate Guide to PLG Communication which is a huge 70-page guide on all things PLG email.

It's full of examples on everything from onboarding to adoption to expansion.

Download the guide

Acquisition Channels

There are 4 main ways to get traffic and awareness of your product.

Most fall under these categories:

1. Content

2. Virality

3. Sales

4. Performance Marketing

Some are better suited for companies than others.

Now we are clear on this, here’s how to apply the mindset of an investor to picking a channel:

1. Forecast Potential Outcomes

The best investors look at historical performance to help inform what to invest in going forward.

Whilst past performance doesn’t guarantee future results, it’s a great indicator.

You should do the same to think through your marketing channels.

If you can’t hit your goals on a spreadsheet, you definitely won’t in real life.

You need to at least model out different possible scenarios.

Think of best case, medium case and worse case scenarios. Plan accordingly.

Here is a Notion doc I use to model out different potential channels. Feel free to use and model out different scenarios.

Start with:

Benchmark data

You can get benchmark data on Conversion rates, Growth rates, Activation and more.

This data can help you know where you stand in the market.

It’s a good start, but it can be a little misleading as it’s not specific to your product. So focus on getting your own historical data.

Your historical data

This is the best type of data for your model.

Look back at last year. Do you have accurate data to fill out your model?

If you don’t, part of your focus should be on running short, time-bound experiments to get this data.

2. Move with conviction

Be very confident in decisions and small channels you invest in Vs investing in channels you are unsure about.

Pause ones that don’t see results quickly. Reallocate the budget into ones that do.

To do this, ask yourself questions:

• What channels or marketing activities had the highest return on Investment?

• What activities showed promise and positive signals?

• Where did we spend the most time with the lowest returns?

Rule of thumb: If you can pause a marketing channel or activity and there would be near 0 impact on revenue, traffic or conversion, stop working on it.

3. Remove emotion

Emotion causes people to buy high and sell low.

It causes us to stop running paid ads because of one week of bad performance.

It causes us to persist with creating blog content no-reads.

Remove emotion from your decision-making.

Don’t discard a channel because of a short-term blip in performance.

And you don’t have to waste on initiatives that don’t lead to results just because you’ve already invested in them.

4. Invest in one boring channel that compounds

Don’t always try and beat the market.

Often the best move is just to invest in one safe asset that you know will compound over time.

Smart investors tell you to patiently invest in index funds.

Smart marketers tell you to patiently build your email list.

If you keep adding to your email list, you will slowly accumulate a large base of relevant people you can reach out to with offers.

Over time, you won’t have to rely on new marketing channels when your list is big enough.

Nurture your asset.

5. Make small bets on emerging trends

Many of you know that some people are “crushing it on Tiktok” or “Tiktok isn’t just for kids” but most of us haven’t even:

1. Downloaded it

2. Posted on it

3. Ran an ad on it

Tiktok isn’t exactly emerging anymore but many of us haven’t got any Skin in the Game.

You don’t have to go all on new channels all the time - that’s not wise.

But you should allocate a small amount of time into testing emerging channels with a small budget so you understand the platform, nuances and any potential opportunities.

You won’t see exponential gains without any risk.

Finding the right channel isn’t a perfect science - nor is investing. But if you apply the right principles, you can ensure you get better return on investment from the channels you pick.

If you want more help thinking through your marketing channels for 2024, book a call for a free strategy session.

Cheers,

Theo