So in the early days of a B2B start-up, marketing spend isn’t that complicated. Marketing itself might be a bit of a mystery in the early days, but the spend part typically isn’t. Because you make small bets.
A few thousand on Adwords, or Reddit ads. The smallest possible booth at just one event. Some joint marketing with partners. Maybe a few podcast ads in your industry.
You try it with very small dollars, and if it actually works, you do more of it. And in the early days, most things don’t really work in marketing, so you often stop after an experiment.
But as you scale, and as you acquire a mini-brand and then a real brand in your industry, it changes. Many things in marketing start to work. And you also see that some things do work that didn’t used to. Billboards? They seem dumb in the early days to most, but later you may find many of your top prospects saw them. A massive presence at a big industry event? Seems like a huge waste when you’re small. But later, you may see strong ROI from taking over the place. And other things like webinars, paid channels, etc. do work, but sometimes take 2x-10x longer to convert that a high-quality in-bound lead.
So as you scale, and even hire a CMO, the marketing job becomes making a series of bets out of a fixed budget. Many B2B leaders spend 10%-30% of their new bookings on marketing, sometimes more if they are well funded. So if you want to add say +$30m in new bookings this year, you might spend $3m-$10m on marketing. That’s your head of marketing’s budget.
And the clock starts to tick. Because in the end, a head of marketing has a year or so to develop pipeline for sales. If they don’t generate enough, they are often … fired. Fair or not.
Some of that pipeline has to come fast, but you’ll need to develop it over the course of the year. And you’ll need to reinforce that pipeline so more of it closes. So you make a series of bets, some short-term (growth and digital and SMB), some more medium-term (enterprise leads, field marketing), and some to support momentum (branding, PR) across the year and beyond.
But unless it’s a rocketship that truly exceeds expectations, the job quickly gets hard. If various marketing initiatives don’t achieve quick results, you can cut them all off. But then what if that leaves you with no new pipeline at all? If you say no to everything in marketing, you can lose your job by spending too little. By the same token, a new CMO with a proven playbook often wants to quickly deploy capital in marketing initiatives that worked in their last role. They can be tempted to almost overspend, as they know the clock is ticking.
I don’t have a magical answer here other that to understand the CMO’s job is complicated and a slow race against the clock. It’s why so many get fired around months 12-14. When it becomes clear their spend didn’t deliver the results intended, or when their lack of spend did the same.
My net net recommendation is just to help your CMO / Head of Marketing to do a little opposite of what they plan to do. What I mean is:
- If they are slow to spend anything and you have marketing dollars to spend, push them a bit to take more risk, and accept slightly lower ROI. The ROI on everything doesn’t have to be 10x. Even 1x is pretty good as you are scaling. It gets you customers you wouldn’t otherwise get.
- And if they are quick to spend their whole budget, make them justify it more. Make them sign up for clear goals for the spend. You only need to hold them to aggregate results. But this will force the marketing team to shoot less from the hip, and importantly, force rank priorities more.
And a few related learnings:
- You probably have to be the marketer for Free and often, the smallest customers. Most (not all, but most) marketers will focus their spend on landing bigger customers. It’s natural.
- You can’t expect your CMO to be passionate about marketing initiatives that aren’t their thing. Ask all your CMO candidates what the top 3 things they enjoy doing in marketing. That will be mostly what you get.
- Brand marketing works. But like most things, it has to be done right. Once you have a mini-brand in a space, invest in that brand. Give your CMO the root to do so. But also challenge them to prove their ideas have a shot at working at your start-up.
A related post here:
(hard job image from here)
