When should you invest in paid marketing?

A decision tree on when to do it

This post is co-written with wonderful Sarah Charlton who led Asana’s SMB and self-serve businesses, growing paid media to $100M+. Through her decade in tech, she helped scale both Dropbox and Asana from startup to IPO. She writes about hyper-scaling, PLG, and growth frameworks at Growth Systems.

---

Paid marketing is often used as a magic shortcut to growth, especially for startups eager to drive top of the funnel and new user acquisition. It seems like a dream from the outside – no matter what’s going on with your company, just give Google or Meta some money, and suddenly, you’re flush with “growth.” It’s the solution to all your problems, right?

Wrong.

In reality, a premature investment into paid marketing leads to burning a LOT of ca$h, lackluster acquisition results, and worst of all, long term consequences of unsustainable growth efforts. This is not to say you shouldn’t do paid marketing, but timing matters. Paid marketing is an accelerator of growth, but you need to sequence your marketing efforts the right way. Follow this decision tree to get the most out of your paid marketing budget.

Paid Marketing Decision Tree

Here are the questions you should ask yourself before burning ca$h.

1. Do you have Product-Market Fit?

Product-Market Fit (PMF) will always be the prerequisite for any successful acquisition strategy, but especially paid. After all, every impression and every click costs money with paid marketing, so you better *know* who you are acquiring! Remember, PMF is defined by your ability to retain customers: churn should be <25% or you’re not delivering on your promise. For B2B, great PMF will also have Net Dollar Retention (NDR) >100% (this will take 12+ months to measure).

2. Have you optimized your top landing pages?

Your paid marketing efforts will lead your customers to your top landing pages, so those better be ready to receive and convert. Apply all best practices, such as:

1. Clear and compelling value proposition: Ensure your headline clearly communicates the value of your offering (aka, your PMF). Use subheadings or supporting text to expand on the benefits.

2. Simple and focused design: Avoid clutter, highlight one primary goal (e.g., sign up, download, purchase) and use space effectively for readability.

This is a nice graphic showing the fundamentals of the most basic landing page.

3. Strong Call-to-Action (CTA): Make your CTA buttons stand out with contrasting colors, use actionable language like "Get Started Now,” and place CTAs above the fold and repeat them strategically on longer pages.

4. Fast page load speed: I cannot stress this one enough. It needs to load within milliseconds! Implement best practices from the beginning here: compress images, minimize scripts, and use caching to reduce loading time.

5. Mobile optimization: Many prospects browse on their phones before signing up for your product, so even if your product is not mobile-friendly, make sure your marketing site is mobile-friendly from the beginning.

6. Trust signals: Include social proof, display privacy policies, money back guarantees, and recognizable logos.

4. Do you have more than 10,000 visitors to your site?

The next priority is to secure “cheap” sources of traffic. There are a few reasons for this:

First, you never want to be wholly dependent on paid marketing as your sole source of traffic and users.

Second, you’ll need an initial batch of web visitors to help you test and iterate on your website – trying to do this while optimizing your paid marketing is extremely expensive and adds too many variables to an already tough task.

4.1 Have you scaled organic marketing traffic sources?

Organic marketing continues to be your best bet for building sustainable growth. And when I say organic marketing, you say… SEO.

SEO in the AI era

SEO has long been the pillar of organic growth, but AI is fundamentally changing how we consume content. That leaves SEO in a strange place – still valuable, but in decline.

One analogy I’ve heard and adopted captures this shift: If you think of content as a database, Google Search has been the traditional user interface for discovering content. However, AI tools like ChatGPT are introducing a new user interface for content consumption. Instead of searching and clicking through multiple sites, people now engage with an interface that allows them to ask questions and get direct answers pulled from multiple sources. Unfortunately, for now it often compiles information without proper attribution and credit, the interface and user experience are underdeveloped, and it lacks paid marketing capabilities.

And results can be scary. I mean just look at whats happening with Hubspot blog… Jeez Louise.

Does that mean you shouldn’t invest in SEO or other organic channels? Absolutely not. There’s still a latent majority that will take *years* to adopt AI tools, so SEO is still a good bet. For now.

4.2 Have you explored and/or built your “owned” channels?

It’s time to consider whether you can put the pressure of acquisition on your product instead of only relying on marketing to do it.

Product-led acquisition

With organic marketing, you may own the content and earn organic traffic, but you’re renting the distribution channels of Google, Meta, TikTok (if it’s not banned again, lol), X, etc. This means you’re not only in the grueling competition with others, but also at the mercy of their algorithm. And as I like to say… “algorithm can giveth, and algorithm can taketh away.”

However, if you build the distribution system with the product experience itself, then nobody else can compete within it! This is an owned channel that will give you truly predictable and sustainable growth.

Can you build virality into your product experience?

Whether it’s collaborating across teams, sharing a project with others, or inviting new users through referral programs, viral loops create exponential momentum to deepen user adoption and use existing customers to bring in new ones. It looks like this:

Here are some examples:

• Collaboration: Products like Miro, Slack, and Figma grow through collaborative features. A user invites others to work on a shared board, workspace, or design file. This creates a natural flow of new users joining the platform.

• Sharing: Tools like Dropbox or Canva encourage users to share files, designs, or templates with others. This expands reach and drives user signups.

There are loops that exist outside of the product experience, too.

• Word-of-Mouth: The most coveted loop of them all, however it doesn’t scale well beyond early adopters and is highly unpredictable.

• Referral programs: Companies like Brex and Gusto offer generous $100-$300 referral bonuses - more than typical Google lead costs - due to higher conversion rates and referrer intent. For products targeting freelancers, small agencies, or business owners, financial referral programs can drive significant growth.

Loops on loops: User-Generated Content (UGC) is the future of SEO

UGC contributes to organic marketing and growth by both building and feeding multiple growth loops including SEO, product-led acquisition, and community building. Along with creating their own templates, companies like Miro and Canva have users contribute templates to their library. Each template not only becomes an SEO-optimized landing page built for long-tail search visibility, but another opportunity to capture signups and for existing users to discover more of the product’s potential.

See my previous blogs on getting started with UGC and why it’s the future of SEO.

5. Is your data and tech in order?

While paid marketing seems like a pure marketing activity, it has deep technical and analytical requirements completely unlike traditional marketing.

Here’s what you need before you can get started:

1. Solid web tracking and tag management: Advertiser tracking pixels need to feed the right data to the ad platforms to show what’s working and what isn’t. Google Tag Manager (GTM) is a fine choice, but implementing it cleanly is harder than it seems.

2. Data systems and a dedicated analyst: Make sure your web and product data is reliable and can be integrated together for analysis. You likely need 50-100% of a dedicated business or product analyst ready to help analyze and hone results during the first few months of spending…and then you’ll need more.

6. Lastly, do you have enough money to get started?

The final hurdle is making sure you’re ready to put your chips on the table: Paid marketing has a significant learning curve and it’s costly. Most startups need to spend north of $75k over 6+ months to begin hitting both scaled growth and acceptable ROI. And that’s only for getting started with the more intro-friendly channels such as Google SEM or Facebook. Be sure you have the balance sheet (and the stomach) to make this move. Otherwise, you’ll end up like this:

You’ve made it. It’s time to invest in paid marketing!

Is paid marketing your actual growth engine?

Here’s one final thought to consider before going all in on paid marketing. Sometimes you simply need a catalyst to help jumpstart virality or get more users to create UGC. In this case, paid marketing can be the fuel for your growth engine instead of being the actual growth engine itself.

If it’s the fuel, then you can be less strict on ROI simply because your initial focus is gaining more users to power your real growth engine.

But if paid marketing needs to drive sustained growth, it must be evaluated as a self-sustaining loop where there is a fast payback period (read this article from Lenny on what makes a good payback period) with compounding results that allow you to reinvest marketing dollars within the same year.

PSA: Common rookie errors to avoid

1. You’ll need marketing or Growth PM dedicated to paid marketing. Make sure someone is monitoring every dollar you spend and applying their intelligence/effort to getting better yields and improving your programs. (No, an agency is not a substitute and cannot oversee themselves – no matter how much you’re paying them.)

2. Find a good advertising agency. To get started operationally (getting your adwords account set up, finding keywords to bid on, etc.), you’ll need fractional help for SEM, Facebook, and creative teams – and you don’t want them all in-house at first (too expensive!). Be mindful that agency quality varies significantly, even over time within a single agency. Work as close colleagues and hold them to high standards.

3. Avoid bidding on your own brand keywords. This looks great in your SEM campaign metrics but unless your competitors are already appearing on your brand name searches, doing this just converts your free organic traffic to paid traffic.

4. Don’t send all your traffic to your homepage. It’s your most generic surface, but someone searching or clicking on a Facebook ad has a specific need in mind. Instead, they should go to high-converting pages that match their intent: Product/Pricing pages or better yet landing pages customized to their segment and needs.

5. Don’t set and forget daily budgets. Most B2B products should cut weekend spend and maybe even focus on local timezone 9 to 5 working hours. Focus on the likeliest hours for real buyers.

6. Don’t start way too broad. You can get a lot of useless volume from targeting broad SEM keywords or enormous Facebook audiences. Know your target segments and go after them.

7. Don’t ignore your creative. In SEM, written copy makes a big difference. Facebook audiences are even pickier and you need good creative that’s refreshed every 6-8 weeks. You don’t need to win Cannes Lions here, but you do need to be thoughtful and fresh.

The end goal is to build a robust growth ecosystem that layers both marketing-led and product-led strategies across all the channels and possibilities. Bottom line: All companies will need to invest in paid marketing. It’s always the question of when is the right time to invest in specific channels and how you should get started.

The time has come. The time is now. Let’s spend some money!

---

Edited with the help of Melissa Halim, my wonderful new editor and longtime friend from my Miro days.

---