Bursts of Color - Performance Marketing (Guest Interview)
I’ve seen many open job reqs for Performance Marketing lately, so I chatted about this with my friend and colleague Brian Osborn, who has been VP Marketing for brands including Walmart, Hatch, Shutterfly, PayPal and (of course) Yelp. He kindly let me paraphrase our conversation for today’s post below.
Performance Marketing can mean a lot of different things. How do you break it down?
Brian: I generally think of Performance Marketing as including three major buckets of paid advertising:
Brand building channels, of which Meta/Facebook is the big one, like network TV back in the day. It's great for telling your story, but not usually efficient for acquisition. I think Instagram, Snap and TikTok are all in this bucket too.
Acquisition channels, of which Google is consistently the best channel I've seen, both in small doses and at scale. It's a unique channel in this regard. If Meta is the new network TV, Google is the new direct mail.
Retention channels including retargeting and email. You already have these customers, and now you're trying to upgrade them. In general neither Google nor Meta is great for this.
How about organic (free) channels like SEO, UGC, viral TikTok posts or PR?
Brian: These are all earned media, as compared to the paid media we talked about earlier. Of course if you can get the free stuff to work, that's great and you should double down on that.
However, keep in mind that each channel requires a different skill set - SEO is all about site architecture and meta tags and such, whereas TikTok videos are basically grassroots content creation that require imagination and storytelling. So this is why you need to test these hypotheses before you hire someone.
What should I know about performance marketing leaders, and when is the right time for a startup to hire a full-time, experienced performance marketer?
Brian: Most performance marketing leaders will have a particular depth of experience based on spending several years on one channel and approach (e.g., Google Ads, TikTok videos, App Store Downloads, etc). And they are expensive. These days an experienced person often starts at $250k salary plus equity.
As a result, you should not try to hire someone full time until and unless all of these things are true:
You have done enough marketing experimentation to know what kind of performance marketing expertise will work for your company.
You are clear on what business KPIs you are expecting marketing to drive.
You have sufficient resources so the new leader will have a meaningful budget to invest. While this “minimum budget” varies widely, it’s usually at least several times the marketing leader’s salary.
If I want more attention on marketing, but am not ready to hire that expensive full time leader, what are my choices?
Brian: I think about these early stages of marketing as a set of science experiments. So to staff this experimentation, you probably want to move gradually from a lighter to heavier touch like this:
Founder-led marketing. This is what it sounds like: literally trying stuff yourself until you see some signs of success.
Junior employee with close oversight from a founder. Provides some arms and legs, for instance to help scale from 10 to 100 search terms.
Consultant. Get someone to spend half or full time for 1-3 months.
Small agency. Once you find a channel that is working well, a small agency might be able to help oversee and scale this for a while. Breef is a platform for finding such agencies.
Full-time performance marketing leader. As discussed earlier.
Since I should be getting better at marketing over time, can I assume that my ROAS (return on ad spend) will come down with economies of scale in the future?
Brian: No. In fact, CAC (customer acquisition costs) and LTV (lifetime values) often degrade with scale, so you will need to forecast for that. Yes, you'll get better at marketing. But you can usually find the really eager "early adopter" customers efficiently in the beginning, and these people often spend more with you too. As you scale up, you need to reach a broader audience, who are almost always harder to reach and often spend less on average.
However, while CAC will probably go up over time, you may be able to help bolster LTV by retention, upselling and cross-selling efforts.
You'll also need to build multiple distribution channels, so that's a different kind of expense. In the beginning it's great to have even one channel that works well, but once you get to any kind of scale, you don't want to be reliant on a single platform for all of your customers.