Startups

How to spend your first $10K on paid ads

Comment

ten carrots arranged in tally mark-style
Image Credits: Westend61 (opens in a new window) / Getty Images

Jonathan Martinez

Contributor

Jonathan Martinez is a former YouTuber, UC Berkeley alum and growth marketing nerd who’s helped scale Uber, Postmates, Chime and various startups.

More posts from Jonathan Martinez

This was the question I had to answer when kickstarting the first paid acquisition campaigns at Postmates back in 2018. Long before we received our massive funding infusion, eventually totaling to $763 million through six rounds, I was responsible for creating a strategy that would provide us with valuable learnings and be as efficient as possible.

Today we have a plethora of channels where we can send our advertising dollars in hopes of landing loyal customers for our startups.

The questions then become:

  • Which channels should a startup leverage?
  • How should a budget be created?
  • Which tests are the most important in the early stages?

I’m here to answer these and other questions while also creating a mock $10,000 budget for the start of your paid acquisition efforts.

Which channel to start with

Without knowing anything about your startup or what it seeks to sell, I can confidently say that either Google or Meta will make for excellent paid channels for initial testing. They represent the duopoly of paid advertising for a multitude of reasons, including that they both contain robust targeting capabilities, varied campaign types and the audiences to go along with them.

For the sake of not making any further assumptions, I’ve compiled a list of questions you should ask yourself when determining which channel to select for your startup:

  1. Within which channel can my target audience be found?
  2. Is my product or service discovery-based?

Let’s assume you own a marketplace startup, where people sell their luxury watches from brands like Rolex or Patek Philippe. The target audience for watch buyers can be found on Meta or Google, and this marketplace is not discovery-based.

An example of a discovery-based startup would be a new type of sock that contains pockets. It’s an extreme example, but it’s used to showcase the fact that someone will not be searching for this, and you must throw it to the front of their social media feed for them to “discover” it.

Now that you’ve got your channels selected, let’s walk through a mock example of spending your first $10,000.

How to allocate your mock $10K marketing budget

Allocating your first $10,000 in ad spend is not overly complicated, but there are a few variables you need to keep in mind to take this money further. It’s imperative to ensure the $10,000 includes the following:

  • Two channels.
  • Campaign types.
  • Messaging tests.
  • Creative tests.
How to spend your first $10K on paid ads. Image Credits: Jonathan Martinez

In the early days of your startup, it’s important to be as efficient as possible, not only with this $10,000 budget, but also with your time.

With the setup above, you will be testing two channels, two campaign types, and two flavors of messaging at the same time. Imagine the potential learnings! I’m not going to write a comprehensive guide on messaging or campaign types for each channel in this column; instead, I want your mindset to be about diversifying your spending across the three most important paid ad pillars: channels, campaign types, and assets.

You need to imitate when lean

When you’re running on such a lean budget, in contrast to those advertisers spending millions per year, you need to simply imitate. There are powerful resources to help with ideation and inspiration such as Meta’s Ad Library and TikTok’s Creative Center.

Both of these ad libraries allow you to search for competitors and industry leaders to draw inspiration from, in both their messaging and ad concepts. It is imperative to not reinvent the wheel when your budget is so lean. Instead, it is better to successfully imitate what other companies have spent many thousands of dollars on testing.

At every major startup I’ve worked at, including Postmates and Coinbase, we did a fair amount of imitation, even after we had secured far more significant budgets.

Selecting winners fast

Make sure you are tracking all your paid acquisition tests on a simple Google Sheet so that you can look back and know what’s been succeeding when you are months down the road. Too many times I see early paid acquisition spend be wildly inefficient with no set outcomes to learn which setup will work best.

As a growth lead at Coinbase, I was always working to create a brief that outlined the hypothesis for every test that I ran. Getting into this habit with your first $10,000 in spend and beyond will make your subsequent testing much more analytical.

When looking at all the metrics on the ad dashboards for your early tests, the ones that matter most are the CTR (click-through rate), CVR (conversion rate), and CPA (cost per acquisition). Whether you’re testing messaging or campaign types, your eyes should constantly be on these three metrics, even though you will ultimately pick only one to determine your victor.

Typically, the most down-funnel metric such as CPA should be used as the determining factor to pick your winners. Leveraging the insights from CTR and CVR should help guide your assets and messaging even if they’re not the ultimate decider.

There is no preset delta needed to call a winner during tests, but it is imperative to clearly define how you will determine future winners so there’s consistency. I highly recommend using a stat-sig calculator (there are many available for free online) and using a 10% to 20% significance level.

Your next $10K

After spending your first $10,000 in ads, you should be armed with an abundance of new data if you followed the mock budget plan above. Every test should bring you closer to a better ROAS (return on ad spend) and should compound over time.

Throughout the testing, iteration to the budget can be made if the goal is to create greater knowledge. For example, if one of the channels is performing terribly and you become more bullish on the other, then a cut in spending can be made.

As you think about the next $10,000 and beyond, the same principles stand, including constantly testing to outperform your evergreen campaigns. If there are two primary takeaways from this entire column, it’s that you should constantly launch new tests and that you must document everything when running paid acquisition.

More TechCrunch

Meta’s Oversight Board has now extended its scope to include the company’s newest platform, Instagram Threads. Designed as an independent appeals board that hears cases and then makes precedent-setting content…

Meta’s Oversight Board takes its first Threads case

The company says it’s refocusing and prioritizing fewer initiatives that will have the biggest impact on customers and add value to the business.

SeekOut, a recruiting startup last valued at $1.2 billion, lays off 30% of its workforce

The U.K.’s self-proclaimed “world-leading” regulations for self-driving cars are now official, after the Automated Vehicles (AV) Act received royal assent — the final rubber stamp any legislation must go through…

UK’s autonomous vehicle legislation becomes law, paving the way for first driverless cars by 2026

ChatGPT, OpenAI’s text-generating AI chatbot, has taken the world by storm. What started as a tool to hyper-charge productivity through writing essays and code with short text prompts has evolved…

ChatGPT: Everything you need to know about the AI-powered chatbot

SoLo Funds CEO Travis Holoway: “Regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”

Fintech lender SoLo Funds is being sued again by the government over its lending practices

Hard tech startups generate a lot of buzz, but there’s a growing cohort of companies building digital tools squarely focused on making hard tech development faster, more efficient and —…

Rollup wants to be the hardware engineer’s workhorse

TechCrunch Disrupt 2024 is not just about groundbreaking innovations, insightful panels, and visionary speakers — it’s also about listening to YOU, the audience, and what you feel is top of…

Disrupt Audience Choice vote closes Friday

Google says the new SDK would help Google expand on its core mission of connecting the right audience to the right content at the right time.

Google is launching a new Android feature to drive users back into their installed apps

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

OpenAI is removing one of the voices used by ChatGPT after users found that it sounded similar to Scarlett Johansson, the company announced on Monday. The voice, called Sky, is…

OpenAI to remove ChatGPT’s Scarlett Johansson-like voice

The ChatGPT mobile app’s net revenue first jumped 22% on the day of the GPT-4o launch and continued to grow in the following days.

ChatGPT’s mobile app revenue saw its biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

1 day ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine