A Healthy Startup Marketing Budget

We’ve spent more time than we would like to admit meeting with startups on a regular basis to talk through their marketing budget. Usually, from our experience founders start by spitballing for a few months, spraying money at Google ad words because an advisor told them that’s how to safely grow the business. No strategy, just put keywords in and publish.

Probably the worst advice to give an engineering-heavy team.

No-a-days subscription as a service (SaaS) riding tandem with proper analytics is by far the most powerful combo for startups on the revenue side of the business.

The combo will help you identify WHERE customers are coming from. (example: SEO vs PPC)

Advice:
Start by structuring a very simple $5 bid across 5 channel campaigns. Keeping campaigns simple to make tracking easier for everyone.

Tiering your growth from day one needs to be a primary focus. ($2k month 1, $3k month 2) This creates the up and to the right curve needed in the early days. Once you reach $5k a month you should be testing product market fit and seriously evaluating your strategy to move forward.

This is the entire basis to Slant’s business. We tier growth to build a safety net base growth rate for your company.

We put together a skeleton 6-month marketing budget we propose to early stage startups getting into a new market or launching a new product.

For the sake of simplicity, this budget is based on a product that is $50 per month.

Month 1: $2,000

Projected clicks (based on $5 per click): 400

Projected signups: 80 (Aggressive) = $4,000 Revenue

Projected signups: 40 (Conservative) = $2,000 Revenue

Month 2: $3,000

Projected clicks (based on $5 per click): 600

Projected signups: 120 (Aggressive) = $6,000 Revenue

Projected signups: 60 (Conservative) = $3,000 Revenue

Month 3: $4,000

Projected clicks (based on $5 per click): 800

Projected signups: 160 (Aggressive) = $8,000 Revenue

Projected signups: 80 (Conservative) = $4,000 Revenue

Month 4: $5,000

Projected clicks (based on $5 per click): 1,000

Projected signups: 200 (Aggressive) = $10,000 Revenue

Projected signups: 100 (Conservative) = $5,000 Revenue

Month 5: $6,000

Projected clicks (based on $5 per click): 1,200

Projected signups: 240 (Aggressive) = $12,000 Revenue

Projected signups: 120 (Conservative) = $6,000 Revenue

Month 6: $7,000

Projected clicks (based on $5 per click): 1,400

Projected signups: 280 (Aggressive) = $14,000 Revenue

Projected signups: 140 (Conservative) = $7,000 Revenue

These are very bucketed amounts for the sake of simplicity but this shows how to start with a basic plan.

Many founders are uncomfortable with spending money on marketing in the early days but with a SaaS model you need to begin calculating your customer’s lifetime value (LTV) and cost of customer acquisition (CAC) to know where to scale your efforts.

LTV should always be 3X the CAC. Memorize that.

We would love to know your budget and what works for you!