Here is an excellent blog post from OnStartups that compares a Darwinian evolutionary marketing approach to a Big Bang approach. It’s from way back in July, but I found both the article and comments to be insightful:
I agree with the article that a Darwinian evolutionary approach is right way to get a startup out of the gate. However, the article fails to mention the importance of eventually stepping on the gas by investing in high growth drivers. Billion dollar companies aren’t created by only focusing on the downside.
If you’ve done your job right during the iterative evolutionary stage, you’ll have a very efficient acquisition funnel, strong value proposition and a product/service that delivers on the promise of your value proposition. This makes it much easier to fund profitable outbound marketing campaigns. With the right tracking system in place, you will be able to identify strong ROI campaigns and cut the losers. Nothing with a positive ROI is expensive if your pockets are deep enough. If you have scalable positive ROI marketing opportunities that can’t be funded, it’s probably time for another round of financing. In this situation, it will be much easier than earlier rounds of funding.
My marketing budget at successful startups grew to millions of dollars per month, the majority of which generated a tracked positive return (the exception being for a small testing budget that was necessary for pushing the envelope into new growth drivers). Contrary to one of the comments, PR was a great investment when we transitioned into high growth mode. Trend analysis and surveys indicated that the $20,000+/month spent on PR generated by far our best ROI.
In my latest startup I will conserve funds as much as possible while we iterate through the evolutionary launch process. But eventually we will need to shift into a much more aggressive spending mode to reach our full potential.
Glad you enjoyed the article. You make a really good point with regards to “nothing is too expensive, if the ROI is positive”. This made my day. Regards,Dharmesh