Marketing 101 for Entrepreneurs: How to Get Cheaper Advertising With Better Conversion Rates
Every entrepreneur should learn the fundamentals of advertising
You’ve launched your startup and now you need to get customers. Great! But how are you going to advertise?
If you’re advertising online, you’re stuck with an ad duopoly: Google and Meta. I could spend thousands of words arguing whether or not that’s a good thing, but let’s skip that argument and jump straight to what matters, which is how to properly leverage the two platforms since, no matter how much I write, those are the tools we’re stuck with.
The challenge for most entrepreneurs using Google Ads and Facebook Ads for the first time is that entrepreneurs aren’t usually digital marketing experts, and the platforms are an unholy mix of confusing and powerful. They’re confusing because the dashboards and instructions sometimes feel like they were created by aliens. And they’re powerful because, once you start running ads, they have the ability to send thousands of people to a website almost instantly.
That ability to drive enormous amounts of traffic seems great until you discover you’ve spent lots of money and gotten very few customers.
This is exactly what was happening to an entrepreneur I’ve been working with for the past year. He finally launched his startup, began buying online ads, and quickly spent thousands of dollars without getting any sales.
Wasted advertising dollars
“Why didn’t anyone ever tell me marketing my startup was going to be so hard?” the entrepreneur huffed as he came into my office, sat down, and took out his laptop. “And expensive,” he added with a sigh.
The entrepreneur had come to my office asking for help with his digital ad campaigns that weren’t getting any conversions. The petty part of me who enjoys a good “I told you so” moment wanted to mention how, before he’d even launched his startup, I was advising him to stop worrying so much about his product and focus more on developing a viable customer acquisition strategy because that was going to be the hard part, but it didn’t seem like an appropriate moment. Instead, I asked to see his website.
The entrepreneur turned his computer toward me, and I began clicking through the company’s site. It was well-designed and clearly organized. After a couple minutes of browsing, I looked up and said, “This all seems good. I don’t notice any glaring issues with your site or landing pages.”
“So why isn’t it converting?” he asked.
“Let’s look at your ads,” I said. He opened his Google and Facebook ad dashboards. I could immediately see he’d already spent a few thousand dollars buying clicks. “And what’s happening with all this traffic once they get to your site?” I asked. “What do your conversion rates look like?”
“That’s the problem,” he replied. “We’re spending all this money on advertising, but nobody is buying. So what’s wrong with our website?”
“I don’t think your website is the problem,” I told him. “I don’t think you’re properly segmenting your audience. You’re doing needle-in-the-haystack marketing.”
Needle in the haystack marketing
To explain needle-in-the-haystack marketing to this entrepreneur, I began telling him the story of a wedding I’d recently attended.
Like most weddings, it featured lots of people who didn’t necessarily know each other, and that meant lots of casual conversations with low-stakes questions like “Where are you from?” and “How do you know the bride and groom?”
During one of these conversations, someone asked me where I was from, to which I answered: “North Carolina.”
“Oh, you’re from North Carolina,” he said. “My cousin lives in North Carolina. Do you know…” and then he said the name of his cousin.
Mind you, the state of North Carolina has 11 million people in it. If we imagine I know roughly 500 people where I live (which is probably an overestimate), then my odds of randomly knowing someone’s cousin who happens to live in the same state are somewhere around 1 in 22,000.
For the sake of comparison, the odds of dying in a plane crash are around 1 in 11,000 (as-in, you’d have to take 11,000 flights before one would likely be fatal). The odds of being struck by lightning are around 1 in 15,000.
In other words, asking me if I knew someone just because we lived in the same state was a fundamentally absurd question even if, to the person asking, it seemed perfectly reasonable.
I shared the story with the entrepreneur I was meeting because he was doing the same basic thing. “Just because companies like Google and Meta make it easy to buy ads that get lots of people to your website, it doesn’t mean you should immediately spend thousands of dollars buying ads,” I warned him. “You’re advertising backwards. The goal of your ad campaigns shouldn’t be to get as many people as possible to your website. Your goal should be to only attract the right people. If you don’t focus on getting the right people, you’re going to pay for lots of website visitors and spend all your time trying to find the ones who might become customers. It’s like trying to find a needle in a haystack.”
Everyone isn’t your customer
The entrepreneur nodded his head. “That definitely makes sense,” he said. “And it’s clearly what’s happening. But how do I create ads that filter potential customers?”
“Easy,” I said. “Be as specific as possible in your ads.” I then went on to tell him about a similar experience I’d had at the same wedding. I was talking with someone else who asked about my job. After I told him I taught entrepreneurship at Duke, he asked if I knew another professor at Duke.
To be clear, Duke still has a large number of faculty — somewhere around 3,000. But, if I know roughly 100 other faculty, my odds of knowing the professor this person had asked about was roughly 1 in 30. And, by the way, I did know the professor.
In this case, the information about where I worked was a filter the person I was talking with could use to better understand my social network. While it wasn’t a surefire way of identifying a mutual connection, it created significantly better odds than simply asking if I knew someone based on living in the same state with its millions of residents.
The same is true in marketing. Most entrepreneurs mess up their first attempts at marketing because they think their core metric is to get in front of as many people as possible. But that shouldn’t actually be your goal. In marketing, your goal should be to get in front of as many of the right people as possible. You do that by intentionally filtering your audience with more details and information about what your product is and who it’s targeting. Be hyper-specific in your ads so that people who see them know whether they’re the right potential customers before they ever click. This will produce a lower number of higher quality potential sales leads. A.K.A. — cheaper advertising with better conversions.
