Tug of War: Balancing Scale and Efficiency with Paid Media Spend
Every business that runs a paid advertising strategy––whether that’s on Facebook, Google, or some other platform––does so with the aim of building a predictable, scalable, growth machine. And in theory, as long as the return on investment (ROI) remains above a certain level, brands should be willing to invest unlimited amounts into paid ad campaigns.
As a growth marketer, it’s common for founders, CEOs, and other marketing leaders to tell me that they have an unlimited paid media budget, provided the campaign demonstrates ROI above a certain predefined level.
But in reality, scaling a campaign isn’t as easy as that. If it was, everyone would be doing it. That’s why I also hear from a lot of leaders that they’re hitting a barrier, where any spending above a certain level sees advertising costs spike, and profitability plummet.
Scaling a paid advertising campaign––no matter the channel––is hard. There’s a delicate balance to strike between volume and cost per acquisition – and it often takes an experienced growth marketing agency to get it right.
At Tuff, we’ve helped brands from all kinds of industries navigate these challenges. In fact, we’ve tested dozens of different strategies on well over 100 accounts. Along the way, we’ve learned a lot about scaling ad spend efficiently while driving real results.
Here are three of the most important things we’ve learned:
- Diversifying channels is key to success
- Use a variety of metrics to measure the efficiency of different channels
- Model your paid media spend
Let’s unpack each of these three lessons in more detail.
#1 Diversifying Channels is Key to Success
For many brands, paid advertising on Google and Facebook represents the vast majority of their marketing budget. It’s easy to see why – they’re the two biggest platforms (by far), are relatively easy to manage, and can be experimented with at relatively low costs.
Both platforms boast powerful algorithms that connect businesses to their customers at various stages. Google Search is fantastic for capturing high-intent, bottom-funnel traffic that’s ready to purchase. Facebook’s platforms have impressive prospecting technologies that enable businesses to reach new audiences well-matched to their products and services.
Many brands focus exclusively on Google and Facebook. And while it’s true that it’s important to establish profitable marketing strategies on both these channels, there’s a whole world of other channels out there that brands should be experimenting with.
Diversifying your marketing mix helps you mitigate the risks that come with being over-reliant on platforms like Google and Facebook. For many brands, Google and Facebook are like an IV drip that keeps their business going – turn them off, and the business will struggle to survive.
Embracing new platforms helps you address this dependence, but it also enables your brand to reach new audiences, create more consumer touchpoints, and ultimately, drive increased revenue in a sustainable way.
At Tuff, we’ve been testing channel diversification by running paid campaigns on platforms including:
- Snapchat
- Quora
- Spotify
- TikTok
- YouTube
- Programmatic Display
- Google Display
What Did We Learn?
This answer won’t hold true for every business, but for the brands we’ve been experimenting with, we’ve seen particular success scaling media spend on both TikTok and Reddit. Here are some tips for success:
Diversifying Your Marketing Mix with TikTok
TikTok has rapidly grown to become the most visited site in the world, and contrary to popular belief, it’s not all Gen Z users: 59% of TikTok users are aged 26 or over. TikTok users also show a much higher rate of engagement than those on other platforms – we see an Engagement Rate of 5.3% on TikTok, compared to just 1.1% on Instagram.
It’s easy to get started with TikTok advertising. Your TikTok creative doesn’t need to be high production value: users want to see ads that are native to the platform and leverage current trends, sounds, and more.
Dive deeper: How We Achieved a 12x ROAS on TikTok with $7K in Ad Spend
Diversifying Your Marketing Mix with Reddit
Reddit is best-suited to brands seeking to build a loyal community. Regardless of the industry you’re in, it’s almost certain there’s a subreddit that will enable you to advertise to a targeted audience of your prospective customers.
Our tips for success on Reddit? Make sure your advertising is authentic and true to the platform. Imitate the language used by Reddit users, and don’t be afraid to have fun and make jokes. Want an example? Check out this ad from Bud Light. Content on Reddit changes constantly, so make sure you rotate your ads frequently, and take time to interact with users organically too.
#2 Use a Variety of Metrics to Measure the Efficiency of Different Channels
It’s tempting to measure the efficacy of different marketing channels solely through metrics like last-click attribution, which attributes all of the revenue from a sale towards the last marketing touchpoint the customer interacted with before converting. This often shows a strong performance for Google and Facebook campaigns, with a positive ROI that indicates you should increase spend and scale the channel.
But to achieve any revenue at all, you need to create demand for your products and services. That’s done at the top of the funnel. If you’re measuring channel performance based solely on last-click attribution, it’s unlikely you’ll see strong results from the marketing platforms you use early in your customer journey.
Just because a platform doesn’t demonstrate last-click results, doesn’t mean that it’s not an important part of your marketing mix. Instead of using a last-click attribution model, use a metric like Effective Cost Per Thousand Impressions (ECPM) to better compare the performance of different channels.
Customers are exposed to all kinds of different marketing touchpoints as they progress through your marketing funnel. Countless studies back this up: various platforms work in synergy together throughout your customer journey, building brand awareness, educating prospective customers on your value proposition, and driving conversions. Every single touchpoint plays an important role – not just whatever one customers happen to see last.
Not measuring the efficacy of your advertising spend this way can have knock-on impacts that can be catastrophic for your overall marketing mix. In our experience, it’s unlikely that platforms like TikTok, Reddit, YouTube, and Google Display will drive positive last-click attribution – but they are absolutely essential to drive demand.
An Example: Google Search vs. TikTok
Let’s take a look at a trade-off we see all the time: Google Search vs. TikTok Ads.
It’s likely that your Google Search campaigns will have a lot of last-click attributions – after all, it’s a bottom-funnel, high-intent channel: people are literally searching for what you sell. Your TikTok campaigns probably have a significantly lower number of last click attributions – people are unlikely to convert when they’re relaxing, scrolling through TikTok videos on their phones.
So, you decrease your spend on TikTok, and increase it on Google Search, expecting your sales to increase. Easy win, right?
Wrong.
TikTok (a top-of-funnel platform) is giving Google Search (bottom-funnel) a major assist. It introduces prospects to your brand, showcases the value of your products and services, and might even be the reminder that the consumer needed to search for your products on Google.
If it wasn’t for TikTok, and other top-of-funnel channels like it, you probably wouldn’t have the sale at all. So by decreasing your investment in TikTok, you’re effectively shrinking the potential audience for your product in the future – not a wise choice.
How To Measure the Efficiency of Marketing Channels
The key to effectively measuring the performance of different marketing channels lies in regular reporting that uses a variety of different metrics. After all, it’s simply impossible to measure the effectiveness of something as complex as a growth marketing strategy with just a single metric.
We use last-click attribution, first-click attribution, ECPM, and more. Another hack? Ask your customers how they found you. Include a “how did you hear about us?” field in your checkout flow or demo booking process – you might be surprised at what your customers tell you.
Another thing to keep in mind: generating demand takes time. It’s not an overnight process, and you’ll want to give it at least three to five months to start showing results. Over time, a well-executed growth strategy will see your overall marketing metrics improve significantly – from Customer Acquisition Cost (CAC) to Revenue.
Learn more: From Google Ads to Reddit: How We Tested 7 Different Acquisition Channels to Get Better Applicants for Sabio
#3 Model Your Paid Media Spend
One thing every business values is predictable growth. That’s why it’s important to model your media spend.
There’s a wide variety of ways to model spend, but the end goal is always the same: to accurately project future revenue. Now, every approach to modeling comes with a series of pros and cons, and it’s up to you to decide which is the best fit for your business.
At Tuff, we often use historical data and plug it into an equation like this:
Last-Click Sessions x Conversion Rate x Average Order Value = Projected Revenue
Taking this approach to modeling enables us to understand how much traffic we need to drive in order to hit our goals. Once that number is locked in, we can start planning where we need to invest to achieve the desired traffic levels necessary to hit our revenue goals.
Ready to Start Scaling Your Paid Media?
Paid media is unquestionably a major growth driver for brands of all shapes and sizes, but it shouldn’t represent your entire growth marketing strategy. Instead, consider your paid media strategy as just one part of your wider marketing funnel, and work with the understanding that each individual component of your strategy is inextricably linked.
There’s no need to commit to aggressive spending goals upfront – instead, make adjustments to spend as you go along, making sure that you use a variety of different metrics to inform your decision-making.
It’s impossible to guarantee performance, but one thing you can be certain of is consistent learning and improvement. As you analyze the performance of your marketing stack, refine your strategies, and implement best practices, you’ll notice incremental improvements. Over time, these compound to produce a significant impact on your overall marketing performance.
Are you struggling to scale up your paid media channels? Set up a call with our team – solving these complex challenges is what makes us tick.
Ellen is the founder at Tuff and one of the team’s core growth marketers. She is a versatile marketer with expertise in multiple channels – from ppc to seo to email to others – responsible for the experiments and testing. She is happiest when she’s on the ski hill or outside pointing her mountain bike downhill.
