How to Not Waste Millions on Your Startup’s Marketing

By Martina Lauchengco & Anamaria Nino-Murcia

Backblaze blew through a million dollars failing their way into niche markets. Before they were acquired by LinkedIn, IndexTank spent $10,000 a month on PR that got them no press. When they first started, Lark invested $200,000 in “brand-building activities,” but couldn’t measure its ROI. These startups succeeded despite their expensive marketing mistakes but most don’t.

How can so many tech startups spend a ton on marketing and get so little for it?

The problem is most tech entrepreneurs misunderstand the scope of marketing.

The Lean Startup movement fundamentally changed how we create great products: put it out there à get feedback à improve. You can’t blame entrepreneurs for thinking the same must be true for marketing.

Marketing does get massively better the more you test and learn—the issue is simply at what cost and over how much time. Most startups don’t have a ton of time or money to waste when proving their market. They also look at the wrong indicators for marketing success.  This leads to misfires on everything from whom they hire to what they choose to do and say to how much money they’re willing to spend and on what.

So, what are these costly startup marketing mistakes and how do you avoid them?

Mistake #1: Holding up unicorns as proof that “great products don’t need marketing.”

Only 39 companies are “unicorns”—companies like Instagram, Dropbox, Pinterest, Splunk, Workday and Twitter—US-based software companies started since 2003 and valued >$1B. That’s .07% of venture-backed consumer and enterprise startups. Aileen Lee’s analysis of unicorns unveils how most of our assumptions focus on the storied outliers, not the norm. Even if you do exactly what unicorns did so well—discovering and focusing on product-market fit—you can’t assume you’ll grow without constantly nurturing every aspect of marketing strategy.

Building a great product is insufficient marketing. Branding, advertising, great SEO, or a viral app on their own are equally insufficient as well. It takes a thoughtful, systematic mix of all of these to survive and thrive in a dynamic market.

Mistake #2: Dismissing marketing as advertising, direct sales, and booth babes.

A physicist turned Product Marketer recently told us, “I’m immune to marketing.” What she (and most engineers) actually mean is they don’t respond to hyper-promotional cheesy campaigns and never click on SEM links or banner ads. Other engineers we work with find the notion of marketing uncomfortable, crass, tacky, or downright evil.

Whether you think you’re “above” marketing or you just shy away from it because self-promotion makes you cringe, you are missing the point that marketing encompasses so much more. It’s 4 P’s: product, placement, price and promotion. If you love Dropbox, it’s because of their marketing mix: a great product, available on every major platform, free, a consistent brand, clear calls-to-action, and made viral with clever sharing ideas. Good marketing uses all four levers together to drive a business. 90% of what engineers reduce “marketing” to is just the promotional lever. If you don’t understand the mechanics of how all four interrelate, then you can’t address root causes when your growth isn’t what you want it to be.

Unfortunately, a common reflex is to buy your way out of this trap.

Mistake #3: Buying your way into market fit.

In the early days of one online backup provider (we’re keeping them nameless but they’ve gone public), they stumbled on an acquisition strategy that worked really well: radio. Their strategy was “We’ll take anyone’s money that’s green.” Since they were buying most of their users, they didn’t know how much of their success was right product vs. right audience vs. messaging or choice of channels. They didn’t know how to grow short of having tons of money. Eventually, their cost of acquisition became so high, they needed to keep a customer for more than four years to recoup their per user cost of acquisition.

Don’t let the ability to acquire users blind you into thinking you have a sustainable marketing strategy. What you have is effective paid acquisition—just one and the most costly—form of marketing.

Mistake #4: Relying on buzzword bingo to attract attention.

How many times have your eyes glazed over while hearing some variation of this? “We are a totally disruptive, cloud-based, mobile network leveraging the power of the social media and quantified self to transform data into the next generation intelligence platform.”

Startups have a horrible habit of choosing jargon over clarity in the hopes that the right buzzwords trigger interest from investors, customers or media. What people really want to know is why you matter and why they should care. State what you do simply. Be clear instead of comprehensive. Make why you matter important through a true story about how you improve the life of a customer and why they love you.

The real test of good marketers is if they can deeply understand the technology enough so they can paint a picture of why you matter simply and clearly – not just resort to what they think the world wants to hear.

Mistake #5: Assuming marketing people “don’t get it.”

“The marketing team is useless!” is a complaint we hear far too often. What startups typically get for the kind of money they’re willing to spend (not a lot) is access to very junior people with limited skills. So, the group or person they hire fails to do anything impressive. Personalities clash—further fueled by differences in communication styles, gender dynamics or power struggles—and then team conflicts emerge. This reflexive startup pattern perpetuates long-standing biases and entrenches a counter-productive marketing vs. engineering culture.

Both sides are at fault. If the person leading your marketing strategy isn’t influencing the product or how you see the market, you’ve hired the wrong person. Good marketers should know their job isn’t just to promote technology—it’s to understand it well enough to make it meaningful. A good marketer should also be able to translate market intelligence into clear recommendations on what to do and why.

Technical leaders also have to accept that within each promotional discipline (SEO, events, advertising, branding, email, marketing analytics) the tools and trade are highly specialized. You would never ask a DBA to program a mobile app or be a senior architect for infrastructure. The same applies for marketing. You can’t take someone who has worked on just one piece of marketing and assume they’ll be successful at helping you navigate all that it is. In the early days, you need a marketing architect—a generalist with a broad mindset who is deeply passionate about what you’re doing—as your first hire. If you start there, you’re well on your way to better marketing.

Mistake #6: Trying to run marketing yourself.

The cost of marketing always seems astoundingly high to engineers—they unfairly compare the investment level required to building a product. Often, they resist bringing marketing in-house and try to do it themselves. Marketing activities seem easy to implement, and many of them now are. (It doesn’t take a genius to pay for $500 of Facebook ads.)

But to our earlier point of what you really need – a marketing architect — doing marketing well is hard. It requires having someone on your team with experience and know-how—and no, that college summer intern does not count.

Doing marketing yourself and “just learning as you go” slows your rate of market adoption. “Spray and pay” wastes time and money. An experienced marketer – even if they’re doing something new – will look at best practices of others and see what makes something work, not just copy verbatim (which is what you’ll try to do). Nothing works the same for everyone; each company and market circumstance is different. If simply copying worked, we could automate marketing, and so far, none of the companies whose marketing you admire has been able to replace great marketers at the helm.

Mistake #7: Assuming marketers don’t fit into agile development.

Agile means product teams often don’t know their roadmap. Marketers typically have much longer lead times, and if direct sales are involved, the ability to adapt and change quickly slows even more.

In the agile world, marketers actually have to be embedded in product teams—just as any other voice of the product is. The more customer-centric or market-sensitive your business, the more important this is. Capital One—hardly a startup but a company that fully embraced agile and is highly market driven in a commodity business—has the right idea. They embed marketers in their core teams and call the type of marketer that works well for this ‘nerdy marketers.’ They’re data-informed (not just data-driven). They get their markets. And they’re part of the product conversation, especially as it relates to features and market timing.

Too many tech startups spend significant money on marketing only to get little or nothing in return. We hope that by knowing the most common mistakes that affect startup teams, you can avoid them in the first place.

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