What are the factors determining if your business is ready for paid media
The allure of paid media grips most young entrepreneurs as the logical next step after producing a product. Seasoned investors push paid media as the best growth channel for young brands. There are countless case studies in the ecosystem that tout insane returns that changed a small business seemingly overnight. Paid media works but only if you’re ready for it.
Unfortunately most young entrepreneurs fall victim to “survivorship bias”. All of the amazing case studies, videos, and webinars we consume online tend to only speak to the good outcomes and overlook the bad ones. This creates a false sense of security that getting into paid media is a sure thing. Let me tell you right now, it is not.
Obviously this course is all about Facebook and Instagram advertising, but these concepts speak to paid media as a whole. Make sure your business is ready for paid media before wasting money on a channel that will not help you.
Let us take this opportunity to educate you on some truths about paid media in scaling a small brand.
Paid media will not create product/market fit.
Paid media is expensive.
Paid media will not fix your site issues.
Paid media is only as good as the creative behind it.
Product Market Fit
Let’s discuss the most intangible concept in this rant - product/market fit. If you do not have this you will be lighting your money on fire with paid media. This definition of product/market fit is specifically written for online store operators. I would argue you have product/market fit when strangers are organically and consistently buying your product. You do not have product/market fit after a survey. You do not have product/market fit when your gut tells you that you are onto something. Until strangers (not friends or family) are consistently buying your product, your business is too young to even think about paid media. Paid media WILL NOT sell a bad product or fix your offer. Ads won’t sell things people don’t want.
Paid Means Money
You’re not the only person thinking about advertising their brand on Facebook & Instagram. It is an extremely competitive and a pricey way to gain more traffic. It is not cheap and small budgets do not do anything. The algorithm needs time to learn and small budgets (sub $100) truly are just wasted ad spend. In reality, if you can’t afford over $1000/mo. USD to advertise your products, you truly are wasting your time and money. We would argue $3000/mo. USD would be a better position to be in.
While we’re on the topic of money and investment - if you’re starting from scratch you need to be prepared to essentially throw money at the wall and see what sticks. Some people might call this wasting money. It’s an unfortunate reality in starting a paid media account; if you don’t have any data to start with, you are going to have to test a lot of stuff and that costs money and most of the time it isn’t profitable. Are you willing to throw thousands of dollars at figuring out who your audience is?
If you have a low average order value, paid media might not be the right move for you (instead focus on raising AOV). Acquiring a customer on Facebook and Instagram costs money and smart marketers are often happy with acquiring them for $20-50 depending on the brand and product. If you’re selling a cheap product, you’re more than likely going to have a bad time advertising on Facebook and Instagram.
Another important piece of the puzzle is the online store experience. Brand matters. The experience matters. The best ads in the world won’t convert if the website is a piece of garbage. The user experience needs to make sense and be easy to use. The website, brand, and product need to look professional. The website needs to be fast and mobile friendly. Again, people are not dumb. When a website feels cheap they assume everything else is. Your website needs to be complete, include shipping & return information, and the product pages should answer every question they could have about the product. Including social proof such as reviews and testimonials will be of great benefit.
An easy way to know if your experience is up to par with where it should be is by looking at your conversion rate. Anything less than 1% suggests something is wrong with the user experience or the product itself. It truly varies industry by industry, but you typically want to have a conversion rate of at least 2-3% before getting into paid media.
An often overlooked part of scaling a business with paid media is fulfillment. If everything works, can the systems and processes within your business support the additional sales? Do you have enough inventory to sustain the interest? How long is your lead time to procure additional inventory? Do you or your 3PL have enough employees to pick, pack, and ship the additional products? If everything works and your sales double overnight, can your business even support that level of demand? To be honest, most can’t because they don’t think about it. These questions need to be answered before you start talking about scaling a business with paid media.
Most brands fail at Facebook and Instagram ads in thinking that a couple of photos or one video will change the game. The brands that are winning with Facebook and Instagram ads are producing 15x more creative than the average advertiser. Creative truly matters. What separates a winning ad from an okay ad is often the creative. Before you get started with paid media you need to build out a creative production system within your business. You need to be able to produce new, unique photos and videos on a predictable cadence to keep your ads fresh and engaging. A photoshoot once a year will not cut it.
A better way to approach getting started with Facebook and Instagram ads is by already having data to begin with. Retargeting is much more profitable than prospecting. If you have organic sales and traffic coming in, you can retarget those visitors and cart abandoners for easy wins when you first start with paid advertising.
In summary, if you answer “no” to any of the following questions you are probably not ready for paid media
Can you afford to invest thousands of dollars in paid media?
Do you have product/market fit?
Do you have a professional looking store?
Can you produce creative on a regular basis?
Can you fulfill more orders than you do now?