Our brand is launching in the US for the first time this summer. What is your recommendation for our marketing mix?
This content was originally published in the No Best Practices newsletter on 5.15.2022.
This is the first entry in the No Best Practices “Ask Me Anything” series, where I answer real questions from readers like you.
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Reader Question:
Our brand first launched in an English-speaking market outside the US. We are rebranding and intend to launch in the US this summer. The rebranding was due to conflict with an existing copyright in the US. When we rebrand, the product will have a new name and visual identity. We’re also planning some iterative improvements to the core product.
The question: what is your recommendation for our marketing mix? Our goal is to hit the low seven figures in revenue in the first 12 months after we enter the US, and we have a paid media budget in the low six figures. To date our primary acquisition channel in our home market has been Facebook/Instagram ads, and we have also run some Google search ads.
Additional context: the brand provided me with revenue, CAC, MER, AOV and LTV metrics. I will reference these in the answer but I won’t share the specifics.
No Best Practices Answer:
At first glance this is a media strategy question. But peel back a few layers, and it’s actually a market entry question, and a brand launch question.
What makes this one especially interesting: most brands do the reverse of what our writer is attempting–they develop traction in the US and then launch paid media in smaller English-speaking international markets. The reason brands start with the US is because media costs are typically higher here. So if you can get the business model to work in the US, your marketing costs will typically be lower English-speaking markets–at least on Facebook and Google.
You want to develop a media strategy that will give you the best chance at succeeding in the US market given the budget provided. Before we dive into the specifics, I want to take a moment to share two different approaches to launching a brand in a new market: tops down and bottoms up.
In the tops down approach, you analyze the size of the market for your product and estimate how much share you think you can capture. For example: the market for women’s bras in the US is $2 billion per year, and we believe we can capture 0.5% of the market in our first year in business. Those numbers are completely made up, by the way.
That estimate would put your year one sales at $10 million. You could then plan your media budgets, inventory position, etc. based on that figure.
In the bottoms up approach, you analyze the unit economics of your business and determine what conditions would need to be true to sell profitably. For example: we can afford to pay $30 to acquire a new customer, and we assume these customers will spend an average of $90 in their first year post-purchase.
You would then test into different performance marketing channels to determine if it’s possible to achieve a $30 CAC sustainably. You would purchase minimal inventory until you were able to make it work in at least one channel. Then you would invest in resources to scale.
Our writer’s approach is closer to tops-down. The rebranding effort was driven by the decision to enter the US market and it is a major commitment of money and resources. We’re pot-committed to entering the US market successfully.
The first step in answering the media question: doing some back of the envelope math to determine how far the budget can go and how many customers will be required to hit the desired sales goal. This section is going to reference precise figures provided by the writer that will not be revealed here.
Based on the brand’s AOV, it would need to acquire 30-40,000 new customers in the first 12 months to hit their sales goal. This assumes that every new customer places a single order. If we base the calculation off of the brand’s current average LTV, the brand would need to acquire 20-25,000 new customers.
There is good news and bad news. The good news is that there are almost definitely 30-40k people in the US who would be willing to purchase the product at the price offered, based on the total market size for the category.
The bad news is that at the brand’s current CAC they would be able to acquire around 5-8,000 new customers with their budget. You would need to get CAC into the $4-7 range to achieve the revenue goal with the budget provided. If paid media is the only component of the go to market strategy, that’s going to be difficult.
So my “final answer” to the media mix question is as follows:
- Work to sharpen and define the narrative around “why we exist”. When I search some of the brand’s top-performing SEM keywords, it appears that the product has a unique value prop for those looking to balance sustainability and convenience. A strong founder story can also help here–why was the founder motivated to tackle this problem?
- Invest some of the launch budget into a targeted PR campaign. Aim for coverage in publications that speak to sustainability, as well as sustainability-adjacent lifestyle authorities like Goop. If this is done well it can improve paid media efficiency and make the brand feel more “real”, vs a random drop-shipping operation (which it is not).
- Develop a library of video and photo assets that can be remixed into different ad creatives to enable lots of testing. This should include a founder’s story and UGC-style assets.
- On the media side, focus on Facebook/IG and SEM. When faced with limited resources, go with what you know. Run a pilot budget for each channel that will enable some testing. Iterate through creative, ad hooks and landing pages until you’re able to beat your current CAC, then invest in the channel where you’re seeing the best results.
- Consider adding TikTok to the pilot as well if your budget allows for it. This platform has been polarizing–it works really well for some brands and doesn’t seem to work at all for others. But if you can develop creative assets that feel native to the platform, it’s worth a try.
Your budget breakdown will roughly be as follows:
- 20%: PR campaign
- 10%: producing photo/video assets–raw creative and cutting them into ads
- 20-30%: pilot campaigns on FB/IG, Google & TikTok
- 40-50%: scale most efficient channel
The brand is essentially seeking a 10x return on their ad spend if we assume that sales are coming entirely from new customers who make a single purchase. Increasing AOV and repeat purchase rate will give us some room to breathe. Here are some thoughts on how to achieve those goals:
Increase AOV
It looks like you’re currently offering the product in two colors. There are three total SKUs on the site: the product, a pack of replacement parts, and a travel case. Can you create a bundle offer where customers can buy two units of the product for a slight discount? Or bundle all three current SKUs together?
Increase customer LTV
Based on the AOV and LTV metrics you provided, it appears that the average customer buys a replacement part 1-2x after their initial purchase. You could reach out to lapsed customers to try to learn more about why they stopped reordering and use that information to attempt to improve the repurchase experience.
Overall, you have the components of a solid launch, but it will be difficult to hit your desired revenue target with paid marketing alone. I can’t say “put x% of your budget in this specific channel” because your prior performance doesn’t really apply to this new situation, and industry benchmarks are pretty useless in the post-iOS 14 world.
Hope this was helpful!
Alex