Using Direct Response to Drive Growth 📈 in Early-Stage Companies

Happy Friday!

This week I’m introducing a little series on brand measurement (don’t worry: regular brand breakdowns are here to stay).

“How do I know if my brand is working?” is one of the most common questions I hear from readers.

One of the challenges of marketing is managing results over different time horizons. Pay too much attention to brand (long-term), and you miss the commercial reality of day-to-day growth. Pay too much attention to growth (short-term) and risk your reputation being adrift or left to chance. Zooming in and out between different metrics across different time horizons - is the modern marketer’s challenge. 

For some reason whenever marketers talk about direct response and brand, it turns into a debate. My goal with this series is to provide perspectives from marketers in businesses of varying stages of maturity and tease out some heuristics for how to think about growth and brand marketing (we need both!). 

Luckily, I chatted all about how to think about direct response, when to consider investing in brand and how to run brand marketing experiments without breaking the bank with been-there, done that growth marketer Paul Piggott. 

• Paul is an operator with 15 years of full stack marketing experience…including…

• Running his own digital publicity company, working with CeeLo Green, Blink-182, Metallica, Bastille…and he’s got the platinum records to prove it 🎧

• A roster of brands as diverse as Virgin Mobile, Logitech, Ultimate Ears, and PHI Direct 😽

Here’s what you’ll learn about:

1. The case for 100% direct response budget allocation in an early stage startups

2. The difference between direct response and brand marketing

3. Conversion events for brand marketing

4. The role of creative in efficient marketing

_{Our conversation has been edited for length and clarity.}

Amanda Gordon: Can you explain what direct response is?

Paul Piggott: Direct response is a few different things. It is a closing conversion event, and it's how you optimize your campaigns. So where the conversion event being optimized for is commercial in nature, then I think it's direct response. 

Generally for me, it’s an ad that contains some sort of numerical right and it might be 20% off, or it might be ‘we are $20.’  The art of direct response is directly communicating some numerical value that should be appealing to the consumer; that is a campaign being optimized for a commercial conversion. 

But within that, you can also say ‘we are awesome, and we're 20% off’ or ‘we're the one that you should be choosing because we're the platypus of the category, nobody's like us’. So it's not binary in terms of which one can be which and I thought your discussion on LinkedIn was really interesting.

Amanda Gordon: You said you’d very recently become a big believer in direct response. Can you explain why?

Paul Piggott: I am a growth marketer broadly, but I come from slightly atypical background from a growth marketer: I started way up the funnel in PR, and as my career has developed across the last 10 to 15 years, each step has sort of got me closer to the dollars.

At an early stage in a business I think you’ve just got to show that your dollars are really working for you. Brand building is slow and 'expensive' so early-stage consumer businesses where cash is king need to convert. I'd go ~100% on DR here.  A DR approach should also reveal much faster and more effectively is there's product market fit.

As we look at efficiency, we could talk about CAC in sort of broad terms, but there's a lot that goes into that. CAC is a function of CPM meets click through rate, meets post click performance really is what CAC is. So if you want to know how all of those things are working, it's much easier to do that in a direct response strategy. 

For an early stage business, your job is to get efficiency working really well. I view that as sort of function number one, function number two, might be at some point and at some scale, to develop a brand that provides really strong recall to the consumer on a sort of non ongoing basis.

Amanda Gordon: I see…so in your view is brand less important for early stage businesses? Why or why not?

Paul Piggott: Brand building is a different calculus to direct response. We could not have had the luxury of developing a brand [at PHI Direct] and it would have been expensive. The attribution window gets really long and the connective tissue within the attribution systems get really fuzzy. 

We weren't in the business of driving awareness with the consumer that may become something three, six, 12 months from now or 24 months from now - we're in the business of let's get bums on seats (and by bums on seats, we mean consumers).

Amanda Gordon: What I hear often from readers is that it feels like there’s a lack of heuristics and knowledge around when to start investing in brand. Walk me how you think about scale and when to introduce brand to a business?

Paul Piggott: I look at 500,000 to a million annual recurring revenue as a sort of finger in the air. It feels to me like you've gotten to a really meaningful business there. 

Then it would just depend on the product, the category, the founding team, all sorts of things really. But yeah, I think I think then there might be a point where you would begin to put some money into brand. 

I also think it's worth us talking about what that inflection looks like? 

Facebook is an auction model: if I am asking Facebook to optimize for conversion as opposed to lead, in effect I am asking Facebook to go and find me a category level intent or conversion event to go and bid for. 

So when we talk about brand, what we're actually doing, sometimes is saying to Facebook, for example, don't go and find me category intent and or commercial conversion events, go and find me some other metric, right? 

So a click and even a view, or form fill could be brand because I my CPM will come way, way down. If my CPM optimized for an acquisition is 10 bucks, for example, as soon as I say, go find me clicks, almost all of the time, my CPM will come down because the commercial value is less, it's less competitive. So I might get 50 clicks over here to get me 10 conversion events. And I might get 500 clicks over here to get me a lot of conversion events. But again, the attribution gets fuzzy. So brand might get me more business but the funnel looks completely different because I've got a sea of clicks here. 

There may or may not be actual customers at the bottom of that funnel. So when I think about what brand is, I guess is maybe my question is: what event are we optimizing for?

Amanda Gordon: Yes! Attribution can be real challenge. The other thing that I keep thinking as you’re talking is creative: I have this real bias from the brand and creative world that creative can be an effective targeting tool, and I've seen it work. But again, I think that's going to depend widely on category.

Paul Piggott: I'm completely aligned. Facebook is now telling everybody that creative is the most important part of performance because their systems are good enough to go and find the right people.

I've seen this with my own eyes: CPMs get higher or lower depending on how much Facebook likes your ads.I think what is coming into really clear focus is that CPM is a consequence of how good your ad is.

I had an experience at PHI Direct, which was the pet insurance company that I ran. We were saying: We're not expensive. We're for every cat and dog in Canada. And so what our ads would say is pet insurance for all Canadian cats and dogs, not just you, Lady Fluffy Pants. And then there was a picture of a super fancy looking Chihuahua wearing a diamond necklace and like a little crown that is supposed to be one of those really spoiled and pampered pets. That ad worked. And it was maybe our most efficient ad for six to nine months. We then spun up a load of different versions of that ad, which included exactly the same structure, same numerical, and we changed the name like Lady Fluffy Pants became Lord Snuggles Worth. Now we had some of those pets looking sort of austere and serious, sort of like a posh, straight laced yet and some of them are very charming.

The CPM on the happy pets was half of what it was on the one with the serious looking pets. And that was because my belief is that as people were scrolling, what they saw was happiness and joy from a pet. And in next ones, they saw something much more sort of emotionally stable. And that was the only difference. So there's the difference maker in terms of what it means a CPM.

Amanda Gordon: I love that. I think it's really helpful to talk in examples because I think people struggle when we talk about direct response and brand and, and that's the perfect example: the cost of of doing that is some creative strategy and a different stock photo. Out of curiosity do you recall the difference in your CPM?

Paul Piggott: Yeah, I mean, it was I think it about $5 CPM versus a blended $8 CPM. That's huge. 

Amanda Gordon: So good. At what point do you start thinking about brand tracking in the traditional sense?

Paul Piggott: Enterprise level tracking?

Amanda Gordon: I’m thinking about spider charts. 

Paul Piggott: Not a huge fan, honestly. The couple of things I'm not a big fan of and we can. I don't know how actionable they are really, you know, whether it's good news or bad news, I don't really know what you do with that.

I've always just used brand volume and Google Search Console as a really strong function of how your brand is doing.

A brand tracker reveals how your money is being spent in totality like are you doing.

Effectively, it's a traffic light system doing good, bad or okay. Because if I was StateFarm,  would I want to know what my brand tracking performance is? Yeah, absolutely. I'd want to know how it's working against progressive and Liberty Mutual, Geico, for example. Because if I'm down three points, and somebody else is up four points: I want to know about that. Absolutely. Because if I’m one of those guys, I'm spending 200 million a month maybe? I think at that point, you know, and again we're I'm spending on linear TV, connected TV, radio. Podcasts, search, social programmatic, like everything. The brand tracking performance becomes a function of the totality of that.

Amanda Gordon: I love that. Well, Paul, I'm thank you so much for taking the time I found this conversation just so illuminating. I think it just like demystifies a lot of things and the way you're thinking about the numbers and your experience is just like super helpful.

P.S. Want a hand building a brand that builds your business?

When you’re ready you can book a discovery call with me to figure out where your brand is (and how to take it to the next level).

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