The ultimate guide to paid growth | Timothy Davis (Shopify)

Is Performance Marketing Essential for Every Company?

The Importance of Paid Marketing

• Performance marketing is crucial for all companies; paid advertising is becoming increasingly necessary as organic listings are harder to find on platforms like Google and Meta.

• Companies often focus on ego-driven marketing, aiming for the top position rather than targeting the right audience effectively.

Insights from Timothy Davis

• Timothy Davis has extensive experience in performance marketing, having led efforts at Shopify and consulted for major companies like Pinterest and LinkedIn.

• Key topics include when to invest in performance marketing, signs of life tests on various platforms, and identifying suitable platforms for investment.

Understanding Performance Marketing

• Performance marketing refers to measurable marketing strategies that can be evaluated based on their effectiveness.

• The term "paid growth" can encompass both online and offline strategies, though it is typically associated with online methods.

Clarifying Terminology

• While "performance marketing" and "paid growth" can be used interchangeably, it's important to specify which type of paid strategy is being discussed to avoid confusion.

• Historically, discussions around paid growth have focused primarily on online channels but have expanded to include offline methods in recent years.

Measuring Success in Marketing

How to Improve Integration Reliability with OneSchema

Importance of Data Integrity

• The speaker expresses a desire to eliminate integration issues by using OneSchema, emphasizing its role in both building and maintaining data integrity.

• They highlight the common problem of multi-day outages caused by bad records, stressing the need for reliable integrations.

• OneSchema includes a validation layer that prevents incorrect data from entering systems and provides immediate notifications about any data discrepancies.

Performance Marketing: A Necessity for All?

• The discussion shifts to performance marketing, with the speaker asserting that paid advertising is essential for all companies, regardless of their business model.

• They note that platforms like Google and Meta are increasingly favoring paid content over organic listings, making it crucial for businesses to engage in paid search.

• The speaker explains that while some companies may rely primarily on one growth engine (e.g., SEO or word-of-mouth), integrating paid strategies can enhance overall growth.

Identifying Opportunities for Paid Marketing

• Signs indicating potential success in performance marketing include analyzing where users currently find your business through analytics tools.

• If a platform shows promising user engagement (like TikTok), businesses should consider investing more resources into those channels.

Case Study: Hairstory and IPSY

• The speaker shares an example involving Hairstory and IPSY, where they identified strong traffic from Google Shopping but also saw potential on emerging platforms like TikTok.

• Initial tests were conducted on Meta using customer testimonials; however, they learned that creative strategies must be tailored to each platform's unique user experience.

Testing and Scaling Marketing Efforts

• Emphasizing the importance of small-scale testing, the speaker suggests starting with minimal investment to gauge interest before scaling up campaigns based on positive results.

Campaign Effectiveness and User Engagement

Understanding Campaign Strategy

• The importance of having the right campaign and messaging tailored for users on specific platforms is emphasized, rather than rushing into execution without proper strategy.

• Many marketers run experiments on platforms like TikTok, Snap, Twitter, and LinkedIn but often fail to see results, leading to questions about their approach or the platform's effectiveness.

Key Experimentation Insights

• A critical recommendation is to utilize existing customer data to create lookalike audiences when experimenting with new platforms.

• When using Meta for advertising, it's suggested to build ad sets starting from a 1% match (highly correlated audience), then incrementally increasing up to 10%, noting that higher percentages may not yield effective results.

Budget Considerations in Testing

• For those with limited budgets, starting with a 1% lookalike audience can provide valuable insights into user engagement before scaling up.

• The percentage refers to how closely tied the audience is to existing user behavior; smaller percentages indicate closer correlations.

Evaluating Creative Performance

• Determining whether creative content fails or if the concept itself isn't resonating can be challenging; metrics like click-through rates are essential indicators of user engagement.

• Focus groups can provide qualitative feedback on why certain creatives resonate better than others, which is crucial for understanding user preferences.

Statistical Relevance in Testing Duration

• Tests should ideally run until statistical relevance is achieved; however, budget constraints often dictate testing duration.

• It's important to communicate expected outcomes based on test data when proposing larger budgets for future campaigns.

Tips for Early Platform Experimentation

• Start with highly targeted lookalikes (e.g., 1%) and gradually increase as more budget becomes available.

Understanding the Importance of Learning from Failure

Embracing a Learning Environment

• It's essential to create an environment where failure is acceptable, as it leads to either winning or learning.

• Each platform has unique functionalities and user behaviors; thus, it's important to give yourself grace when things don't work out.

• Acknowledging that not everything will be understood initially can help in adapting to new platforms.

Key Platforms for Digital Marketing

Recommended Platforms

• Google is highlighted as a crucial platform, encompassing services like YouTube and Google Display Network (GDN).

• Video content is emphasized as particularly effective; consistent creative refreshes are necessary for ongoing success.

• For beginners, starting with Google Search followed by Meta (Facebook and Instagram), and then exploring YouTube is advised.

Exploring LinkedIn for B2B Marketing

Cost Considerations

• LinkedIn advertising tends to be significantly more expensive—up to three times the cost of other channels.

Targeting Capabilities

• The ability to target specific job titles and industries on LinkedIn can be very powerful for B2B marketing strategies.

Case Study: SoftLayer's Strategy

• A case study involving SoftLayer illustrates how targeted ads on LinkedIn were used effectively to reach decision-makers at Coca-Cola regarding cloud solutions.

Effectiveness of Targeted Advertising

Overcoming Barriers

• By targeting ads based on security concerns, SoftLayer was able to influence decision-makers positively during sales discussions.

Multi-channel Approach

• The strategy included geo-fencing around decision-makers' locations, enhancing the effectiveness of their outreach efforts.

Strategic Recommendations for Using LinkedIn

When to Use LinkedIn

• It’s recommended that businesses test Google and Meta before investing in LinkedIn advertising unless they are enterprise-level companies.

Starting Point for Advertising

Marketing Strategies for Emerging Platforms

Importance of Platform Selection

• The choice of advertising platforms should align with the user base; if users are not on Facebook, alternative platforms like GDN or YouTube may be more effective.

• Video ads are currently performing well, and it's crucial to have a team or agency capable of producing these videos to maintain a consistent marketing "flywheel."

Emotional Connection in Advertising

• Starting with an emotional connection in video ads can significantly enhance their impact; emotions such as comedy and happiness resonate well with viewers.

• Ads that evoke feelings lead to better recall and favorable actions from users after viewing.

Exploring Emerging Advertising Channels

• Emerging channels include connected TV, podcasts, VR advertising, audio/voice search, and AI-driven strategies.

• Podcasts are particularly effective for sponsors who can measure their success accurately; connected TV also shows promising results.

Timing for Performance Marketing Investment

• Startups should consider immediate paid marketing when seeking quick results since SEO takes time to yield outcomes.

• Understanding market demand is essential; awareness campaigns should focus on display media rather than search if the product is new or niche.

Product Market Fit Considerations

• Companies must assess whether they have product-market fit before scaling efforts; misalignment can lead to ineffective marketing strategies.

Understanding Product Market Fit and Marketing Strategies

Importance of Product Market Fit

• Achieving a "stronghold" in the market requires ensuring product-market fit, which leads to improved performance once demand is met.

• Running ads without having a desirable product can annoy potential users, leading to negative perceptions that may hinder future engagement.

Advice for Startups on Marketing

• Startups lacking product-market fit should refrain from extensive marketing experiments until they confirm their offering resonates with the target audience.

• If there’s a significant budget for awareness, it might be acceptable to pursue marketing efforts, but low conversion rates are likely if the product isn't ready.

Common Mistakes in Performance Marketing

• Agencies often rely on generic playbooks rather than tailoring strategies to individual clients, which can lead to suboptimal results.

• A lack of deep analysis into data and metrics by agencies prevents them from identifying key areas for improvement in campaigns.

Deep Dive into Data Analysis

• Effective management involves regular reviews of various aspects such as finance, performance metrics, ad copy quality, and user experience.

• Agencies tend to overlook critical elements like conversion tracking and landing page testing due to being overwhelmed with multiple clients.

Managing Agency Relationships

• Successful agency management includes ensuring team members aren't overburdened and maintaining open communication about workload challenges.

Starting with Agency Consulting

Importance of Agency Consultants

• The speaker emphasizes the value of agency consultants, suggesting that business owners should not be burdened with managing every aspect of their marketing efforts.

• A recommendation is made to initiate a conversation about hiring an internal team member once a certain spending milestone (e.g., $50K/month) is reached.

Transitioning from Agency to Internal Team

• Discussion on how businesses can transition from using an agency to hiring someone internally for marketing management.

• It’s noted that sometimes the new hire may want to keep the agency involved for specific tasks they are not comfortable handling.

Hiring the Right Person

Characteristics of Ideal Candidates

• The speaker discusses what qualities to look for in the first internal hire, emphasizing data proficiency and performance marketing experience.

• Reference is made to Nate Silver's book "The Signal and the Noise," highlighting the importance of distinguishing valuable data insights from irrelevant information.

Data Analysis Skills

• The focus shifts towards hiring individuals who possess strong analytical skills, particularly in interpreting complex data sets without getting lost in noise.

• The speaker stresses that while technical skills in platforms like Google Ads can be taught, understanding data signals versus noise is crucial for effective decision-making.

The Role of Experimentation

Introduction to Eppo

• An introduction to Eppo as a next-generation A/B testing platform designed for modern growth teams, enhancing experimentation velocity and analysis capabilities.

Benefits of Using Eppo

• Eppo allows users to set up experiments easily and analyze results independently, which streamlines processes previously seen at companies like Airbnb.

Personal Insights on Data Management

Connection Between Baseball and Data Analysis

Understanding Data Optimization in Marketing

The Importance of Data in Lineup Optimization

• Discussion on the significance of placing players correctly in a batting order to optimize performance, highlighting the abundance of data available for decision-making.

• Emphasis on the need for efficiency and effectiveness when dealing with data, sharing personal experiences from early career stages where eagerness led to diverse skill acquisition.

Transitioning from SEO to Paid Advertising

• Personal anecdote about discovering paid advertising after working with SEO, noting the immediate access to actionable data such as keyword bidding and ad performance metrics.

• Insight into hiring practices focused on candidates' ability to prioritize relevant data signals over noise during interviews.

Focusing on Campaign Objectives

• Explanation of how campaign goals dictate which metrics should be prioritized; conversions are emphasized over impressions or reach.

• Introduction to key metrics like Customer Acquisition Cost (CAC), Return on Ad Spend (ROAS), and Lifetime Value (LTV), stressing that focus varies based on specific campaign objectives.

Collaborating with Financial Partners

• Acknowledgment of the importance of having strong financial partners for understanding investment returns and setting CAC guardrails.

• Description of hyper-focusing on specific account metrics, using Google Ads reports to identify areas needing improvement, particularly in ad relevance.

Analyzing Ad Performance Metrics

• Presentation of a visual report comparing brand versus non-brand ads regarding click-through rates and landing page experiences, indicating areas for optimization.

• Notable observation about quality scores and cost-per-click (CPC); higher CPC should correlate with better quality scores, prompting further investigation into discrepancies.

Improving Ad Strength through Data Insights

• Discussion about account-level quality scores versus individual ad performance; removing poorly performing ads can significantly enhance overall account performance.

Understanding Google Ads Performance Metrics

Importance of Keywords in Ad Sets

• Including more keywords in descriptions or headlines can enhance ad performance. Many users overlook this advice, missing opportunities for improvement.

Evaluating Google Ads Reports

• Actual reports from past clients were referenced to evaluate Google Ads performance. The discussion highlights the importance of understanding metrics like "poor" and "excellent" as defined by Google.

• Determining ad performance is often based on Google's benchmarks rather than subjective assessments. Improvement efforts may not always yield significant changes.

Room for Improvement in Ad Strength

• Users should utilize change history features available in platforms like Meta and Google to track improvements. Lack of testing indicates potential areas for growth.

Industry-Specific Benchmarks

• Cost per click (CPC), conversion rates, and customer acquisition costs (CAC) vary significantly across industries such as healthcare and B2B sectors.

• Engaging with platform partners can provide insights into how a business's metrics compare against competitors, helping to contextualize performance data.

Utilizing Partner Insights for Benchmarking

• Partners at platforms like Shopify, Google, and Meta can offer valuable information about industry benchmarks when provided with competitor names.

• While specific competitor metrics are confidential, general comparisons can help businesses understand their standing within the market.

Visualizing Data for Better Decision Making

Custom Reporting vs. Standard Exports

• The reports discussed are visualizations derived from standard exports available in every account, emphasizing the accessibility of data.

Focus on Impression Share vs. Click Share

• It's crucial to focus on showing ads to the right audience rather than just maximizing impressions; click share is a better indicator of effective targeting.

Analyzing Campaign Performance Over Time

Performance Metrics and Competitor Analysis

Identifying Winning Strategies

• The discussion revolves around identifying which strategies perform better by analyzing various metrics such as conversion rates and the number of conversions. A clear winner was determined based on these evaluations.

True Competition Metric

• Reference is made to a website called PPC Hero, noted for its valuable content despite its unappealing name. The writer Jacob Brown introduces the concept of the "true competition metric," which provides deeper insights into competitive positioning.

Auction Insights and Competitive Threats

• Jacob Brown's method involves creating four new metrics from Auction Insights, focusing on position above rate and instances where competitors rank higher. This approach helps identify genuine threats in the market.

• The importance of understanding competitor behavior is emphasized, especially with advancements in smart bidding. Historical manual bidding allowed for more direct comparisons, but now data-driven insights are available through Google’s Auction Insights.

Tools for Data Analysis

• The speaker expresses interest in discovering AI tools that could automate data analysis processes, highlighting that current methods can be time-consuming and manual.

Attribution Models: Understanding Credit Assignment

Importance of Attribution

• Attribution is defined as assigning credit to different channels or campaigns to understand growth sources effectively. Multi-touch attribution is favored over single-touch models due to its comprehensive nature.

Multi-Touch Attribution Approach

• The speaker advocates for a multi-touch attribution model that gives varying levels of credit based on user interaction timing, acknowledging that initial interactions may not lead directly to conversions.

Incrementality Studies

• Companies like Netflix and eBay have conducted studies (e.g., GeoX or Conversion Lift tests) to assess the effectiveness of paid advertising campaigns. eBay notably reduced brand spend after finding users would organically seek them out anyway.

Tooling Challenges in Attribution

Understanding Incrementality in Marketing

The Importance of Actionable Metrics

• Emphasizes the need to focus on actions that lead to business results rather than just increasing user engagement, which can create noise instead of valuable signals.

• Discusses incrementality, highlighting the importance of determining whether ad spending leads to growth that wouldn't have occurred otherwise.

Evaluating Growth Effectiveness

• Suggests various methods for assessing growth effectiveness, including brand metrics like awareness and recall, as well as leading indicators such as visits and clicks.

• Introduces GeoX or Geo experiments and Conversion Lift tests as essential tools for measuring true marketing impact.

Conducting Conversion Lift Tests

• Explains how Conversion Lift tests work by intentionally excluding certain users from seeing ads to establish a control group, allowing for accurate measurement of opportunity costs.

• Notes that platforms like Facebook and LinkedIn are often willing to assist with these tests but may require a minimum spend threshold (around $50K/month).

Building a Performance Marketing Team

• Transitioning into team structure discussions, emphasizes hiring someone skilled at finding signals amidst noise as the first step in building a performance marketing team.

Key Initial Hires for Scaling Marketing Efforts

• Recommends starting conversations around hiring when reaching a monthly budget of approximately $50K; this figure is flexible based on individual business circumstances.

• Identifies the first three hires:

• A data-driven marketer who understands platform analytics,

• A creative professional focused on branding,

• A dedicated data scientist for advanced analysis and reporting.

Role of Creative Professionals in Marketing

• Clarifies that the creative hire should ideally possess graphic design skills to effectively communicate brand value while also driving conversions through compelling visuals.

Understanding Ad Effectiveness

The Importance of Target Audience in Advertising

• The speaker reflects on their experience writing ads that they believed were exceptional, only to find that they flopped because they weren't targeted at the right audience.

• A case study with ADT illustrates how a simple ad with minimal information outperformed a more complex one, emphasizing the need for clarity and direct value propositions.

• The speaker advocates for collaboration in ad creation, suggesting that no idea should be discarded without testing its effectiveness.

Hiring for Growth Marketing Roles

• In startups, growth marketing specialists or managers are often hired to wear multiple hats due to the dynamic nature of roles required.

• As teams grow, individuals can specialize based on their interests and strengths, allowing for more focused roles within marketing.

Hands-On Management and Testing Strategies

• Emphasizing a "getting shit done" (GSD) mentality, the speaker insists that team members should actively engage in managing ads rather than being bogged down by meetings.

• Establishing a structured calendar for tests is crucial; it helps track progress and results while ensuring accountability within the team.

Evaluating Team Needs Before Hiring

• The speaker discusses waiting until team members express an overwhelming workload ("cry uncle") before hiring additional staff to avoid organizational bloat.

• A calculator created by their manager tracks time spent in meetings versus actual work commitments to assess when new hires are necessary.

Decision-Making Based on Workload Analysis

• If team members consistently report being overworked ("in the red"), it prompts discussions about hiring needs and responsibilities of potential new hires.

Opportunities Cadence in Performance Marketing

Overview of the Ops Cadence

• The speaker describes a structured approach to performance marketing using a spreadsheet that outlines various operational activities.

• Key components include "big rocks" (major tasks like keywords) and "pebbles" (sub-tasks such as keyword granularity), organized by frequency of execution (weekly, bi-weekly, monthly).

• This system helps maintain accountability within the team and allows for easy reference when questions arise about task frequency or responsibilities.

• The ops cadence serves both internal alignment and external communication with cross-functional teams regarding marketing activities.

Training New Hires Effectively

• The speaker emphasizes the importance of training new hires quickly, aiming for them to have an impact within 30 to 45 days instead of the typical 90 days.

• Understanding company culture and specific operational methods is crucial; new hires are given clear expectations early on to foster ownership and responsibility.

• An example is provided where a new hire was immediately tasked with significant responsibilities, promoting rapid learning through hands-on experience.

• Regular one-on-one sessions are used to demonstrate effective practices, ensuring new employees learn efficient methods rather than just theoretical knowledge.

Managing Expectations and Continuous Learning

• The speaker advises against expecting perfection from new hires right away; they should be guided with clear directions while also being encouraged to share their insights.

• Acknowledging that everyone can learn from each other fosters a collaborative environment where continuous improvement is valued.

Impact of ATT on Paid Ads

Changes in Attribution and Tracking

• Discussion shifts towards the implications of Apple's App Tracking Transparency (ATT), which raised concerns about tracking effectiveness in paid ads.

How Creative Impact Ads

The Importance of Creativity in Advertising

• The discussion emphasizes the significant role creativity plays in advertising, suggesting that many underestimate its power.

• A notable example is Dollar Shave Club's viral video, which effectively captured attention and showcased creative storytelling.

• Effective creative should evoke emotions—whether through humor or heartfelt narratives—to leave a lasting impression on users.

Addressing Competitor Traffic Theft

• When competitors steal traffic via Google search results, it's essential to recognize that this can often be unintentional due to Google's close variant bidding system.

• If a competitor uses trademarked terms incorrectly in ads, brands can file claims with Google for removal; however, mismanagement may occur without malicious intent.

• Analyzing data trends over time is crucial to differentiate between consistent competitive actions and accidental occurrences.

The Role of AI in Marketing

• AI tools are increasingly being integrated into workflows for data analysis and performance marketing strategies.

• Historical use of AI in platforms like Google Ads includes Smart Bidding and ad copy recommendations, indicating that AI has been part of marketing for years.

• While AI's impact on content creation is still developing, it holds potential for future applications if combined effectively with creative processes.

Potential Risks with AI Usage

• There are concerns about how quickly Google reviews ad content; sometimes ads may run before being fully vetted for compliance with copyright rules.

Hiring a Creative: When is the Right Time?

Signs for Hiring a Creative

• The discussion revolves around identifying the right moment to hire a creative person after bringing on a growth marketer. Key considerations include budget and effectiveness of current strategies.

• If an agency meets all creative needs satisfactorily, hiring in-house may not be necessary. However, in-house creatives often outperform agencies due to better alignment with brand tone and quicker idea generation.

• Having an in-house creative allows for rapid testing and iteration without the constraints of agency hours or budgets, fostering more agile marketing strategies.

The Role of AI in Creativity

• AI tools can enhance creativity by automating ad creation processes, allowing marketers to focus on strategy rather than being limited by resource constraints. Examples include Google's dynamic ad builder that generates display ads from minimal input.

Strategic Planning: Forward Thinking and Backwards Planning

Importance of Strategic Planning

• Emphasizes the need for forward thinking combined with backwards planning. Marketers should envision their ultimate goals and then outline actionable steps to achieve them.

• Identifying specific platforms (e.g., Pinterest, Google search) as targets helps create focused strategies. This involves determining what resources are needed at each stage of development.

Micro vs Macro Goals

• Discusses setting micro-goals within broader objectives, such as defining performance metrics for emerging channels before fully integrating them into business operations.

• Each platform offers various ad formats; understanding these options is crucial for developing effective campaigns tailored to specific milestones.

Lightning Round Insights

Recommended Books and Media

• "Daily Stoic" is highlighted as a daily read that provides insights into stoic philosophy. Other recommended books include "Great By Choice" and "Deep Work."

Recent Enjoyments

• Timothy shares his enjoyment of nostalgic shows like "X-Men '97" and recommends films such as "RRR," which exceeded his expectations despite its lengthy runtime.

Favorite Products

Understanding Happiness and Expectations

The Relationship Between Happiness and Expectations

• Happiness is often influenced by our expectations; it can be "dictated by expectations."

• A key insight shared is that one may not see reality clearly until they stop viewing it through the lens of their desires.

• An emotional equation presented: "Happiness is reality minus expectations," highlighting how unmet expectations can lead to dissatisfaction.

Influential Figures in Career Development

Impact of Kasey Winters

• Kasey Winters significantly influenced the speaker's career, particularly in digital marketing after introducing them to Google Analytics (originally Urchin).

• Their relationship is characterized by mutual growth, with ongoing discussions that last over an hour, indicating a deep professional bond.

Lesser-Known Facts About Kasey Winters