Solving the Low-Budget Online Marketing Dilemma I wrote a book! Click for details. Subscribe

By Jason Cohen on<br>May 14, 2013

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Solving the Low-Budget Online Marketing Dilemma

by Jason Cohen on May 14, 2013<br>Low on cash but need marketing results? Here are four specific things you can do to grow on a budget.

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Stop me if you’ve heard this one:

Your bootstrapped startup is finally off the ground. You’re able to spend $6000/mo on AdWords to drive leads. Sure the conversion rates could be better, and sure it’s not the best ROI on Earth, but on the balance it’s making money.

You don’t have a huge budget, but you can plough some of your winnings back into advertising.

You’ve heard banner ads don’t work well, but they’re cheap, so you start throwing $600/mo into an ad network and trust your web analytics to tell you whether it’s working. The jury is still out, but it’s not looking good—there’s been only two signups in the first month. Maybe your ads suck?

You’ve heard affiliate programs can work wonders, so you sign up with an affiliate provider and figure you can afford to pay $50 per signup. A hundred affiliates take the bait, but two months later, half of them haven’t sold anything, and most of the others have sold only once. Two are producing five signups a month, and it’s only cost you $1000 so far, so it’s not all bad, but it’s not moving the needle.

So now what? Should you work on optimizing AdWords since they’re working, or optimizing banner ads since they’re not working? Should you cut off the affiliate program since it’s a waste of time, or redouble your efforts in affiliate management? Should you optimize these existing channels or try to find a new, more productive channel?

These aren’t hypotheticals—I talked to no fewer than four startups in the past few months in exactly this position, with these advertising channels, with about the same costs. And my own company WP Engine wasn’t dissimilar two years ago.

How can you tell what’s eventually going to work? Maybe you can’t.

Here’s some tips:

“Maximum inventory” is the answer to “Should I optimize?”

A common question is: “Should I spend more time optimizing AdWords? Or find more keywords? Or focus on another marketing campaign completely?” A common—and unacceptable—answer is “It depends.”

I approach it as a matter of inventory. In advertising, “inventory” means “all of the available advertising space.” In a magazine, that means the total square centimeters of space allocated to the adverts.

In AdWords, that means the maximum clicks you can get across all relevant keywords. If you’re the #1 spot for a keyword, you’re already getting the maximum number of clicks for that keyword, and therefore you’re already at the maximum available inventory. (Of course there’s more inventory for other advertisers, but AdWords allows you only one slot, so this is the maximum available to you.)

So, how much additional inventory is available for you in AdWords? If you’re in lower spots for most keywords you care about, or if there are other keywords you’re not yet bidding on, there’s probably a lot more inventory you could be taking. That implies it’s wise to optimize—there’s more sales for you there, and it’s easier and cheaper to optimize an existing campaign than to start up a new one. You might even experience some cost savings (per signup) as part of your optimization—bonus!

If you think there’s 2x or more inventory you could go get, I say go get it.

However, that’s not the case for us at WP Engine. At the instant of this writing, we’re the #3 spot on AdWords and the #3 organic spot for “WordPress Hosting” which is one of our most important keywords, and #1 for “Managed WordPress Hosting” which is perhaps our most accurate keyword. And traffic on related keywords diminishes quickly and therefore improving on those is even less interesting.

We don’t have a lot of inventory left. We believe less than 2x. Therefore, even if we spent tons of money on human analysis and were willing to lose money on every sale, it still wouldn’t be an area of significant growth for us.

Once you approach inventory limits, you need to find other campaigns which can double your business.

No benefit of the doubt

When you try a new campaign and it utterly fails, the temptation is to keep spend low and optimize. You think:

I might be just a clever turn of phrase or an eye-catching design away from changing that click-through rate from 0.1% to 1.0%, and then I can ramp up spending and have a new advertising channel.

After all, this same messaging worked great on AdWords, so I know it’s reasonably well-tested. Something small is probably holding me back.

And I recognize my marketing prowess with this company is nascent, so of course campaigns will suck at first but improve with iteration. So let’s iterate!

I’ve found that this line of thought is usually wrong. I don’t have data to give you, it’s just been my...