Don't Trust Your Gut on Creative: Two Case Studies That Show Why Testing Beats Instinct
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Quick Answer
In Reg A+ ad creative testing, the ad that draws the most engagement isn't necessarily the one that drives investment. We have learned not to prejudge which message will work, because the message that looks best is often not the one that performs best. We test messages and creative formats against each other, then measure which clicks turn into investment. In one campaign, the most-shared message produced little investment. In another, a seven-second video ad dramatically lowered our advertising cost.
Why Engagement and Conversion Are Different Questions in Investor Marketing
An ad campaign for a raise produces two different kinds of results. The first is attention: clicks, shares, and enthusiasm. The second is investment: a person trusting a company enough to put money into it. An ad can do well on the first and poorly on the second.
We draw prospective investors in with advertising, and if we are lucky, they love what they see and invest right away. Many people show some level of interest and then hold back, waiting for us to convince them. They need to see more credibility, and it is up to us to demonstrate it. Seeing a company do something interesting and promising is one thing. Trusting it enough to commit money is another. People who invest online have to be optimists, but we try to be reasonable about how much optimism we ask of them.
That is why the key question in investor marketing A/B testing is not which ad gets the most clicks. It is which clicks convert into investment. Even with years of marketing experience, we have learned not to prejudge what will work. When we have several messages to choose from, the one that looks best is often not the one that works well, and buzz alone does not tell us which ad will convert.
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Case Study One: Planet-Saving Messaging vs. Market-Opportunity Messaging
Some years ago, we worked with a green company on its Reg A+ offering. Its advertising had two broad thrusts. One spoke to people interested in the company's green side: saving the planet, looking after the world as a whole, and increasing efficiency. The other made the investment return case, pointing to a giant market and the scale of the upside.
The planet-saving campaign took off. It generated a great deal of sharing and enthusiasm, but very little investment. The market-opportunity campaign drew fewer clicks, and the buzz was less. Even so, it converted clicks into investment very efficiently.
Measured by engagement alone, the planet-saving campaign looked stronger. Measured by how well clicks became investment, the market-opportunity campaign did better. That is a classic example of why we do not assume we know ahead of time which messaging is right.
Case Study Two: The Seven-Second Video Ad
On another Reg A+ raise, the marketing agency was happy with its results, and the campaign was cost-effective. We were spending about $9 in advertising for every $100 raised. That is not a bad result. We still wanted the agency to try video ads, but it didn't want to. So we got our client to insist that the agency create and run them.
The agency then began experimenting with both long-form and short-form video. One seven-second video ad stood out. It reduced the cost to about $3.30 in advertising for every $100 raised online. The difference was substantial.
What the Two Cases Have in Common
Neither result came from foresight. In the video example, we didn't know video would work, or what length would work best. We only knew we had not tried the format, and we wondered why not. What mattered was the willingness to experiment, not a prediction.
The same is true of the green company campaign. We did not assume which message was right. We ran both and let the results decide. We are willing to test, tweak, and adjust, and we applied what we learned in one place to the next, because otherwise efficiency is very elusive.
Our approach after testing is straightforward. We look for efficiency first, then scale up accordingly. We learn what works, do more of it, and turn off what does not. We try not to stay blindly attached to ads that may be working but are only drifting in the background.
In practice, that can mean testing three or four different landing pages tailored to three or four different advertising campaigns, each with different lead messaging, to find out which one works.
Frequently Asked Questions
Does the most-shared ad always win a Reg A+ campaign?
No. In one green company campaign, the planet-saving ads drew a great deal of sharing and enthusiasm but very little investment, while the market-opportunity ads drew fewer clicks and converted well. It is a classic example of why we do not assume which messaging is right.
What should a company compare when testing ad creative for a raise?
We might compare three or four different landing pages tailored to three or four different advertising campaigns, each with different lead messaging. We then look not at which one gets the clicks, but at which clicks convert into investment.
Did you know a seven-second video ad would work?
No. We hadn't tried the format, so we didn't know whether it would work or how long it should be. We thought it was worth trying to see what we would get.
How much did the seven-second ad change advertising costs?
In that campaign, advertising cost fell from about $9 to about $3.30 for every $100 raised online. That was one campaign's result, not a benchmark.
What should a company do once a test shows what works?
Our approach is to prioritize efficiency first, then scale accordingly. We learn what works, do more of it, and turn off what does not.
Questions?
Have questions about testing your ad creative for a raise? Email us at [email protected]. To hear more, watch the full podcast episode, in which Rod Turner joins Jason Fishman on Test. Optimize. Scale.
Have questions about testing your ad creative for a raise?
About the Author
Founder & CEO, Manhattan Street Capital
Rod Turner is the founder and CEO of Manhattan Street Capital, where he built the platform growth-stage companies use to run Regulation A+ raises online.
He previously helped build Symantec/Norton, Ashton Tate, MicroPort, and Knowledge Adventure, and built the venture capital firm Irvine Ventures, investing in companies including Bloom, Amyris, Ask Jeeves, and eASIC.
The commentary on this page reflects Rod's observations of what tends to work in online capital-raise marketing. It isn't legal, accounting, or investment advice.
Manhattan Street Capital is not a law firm, valuation service, underwriter, broker-dealer, or Title III crowdfunding portal, and does not engage in any activities requiring such registration. Manhattan Street Capital does not provide investment advice and does not structure transactions. Do not interpret any commentary from Manhattan Street Capital staff as a replacement for advice from qualified service providers in these professions. When Rod Turner provides commentary, it is based on his observations of what works and what does not from a marketing perspective in online offerings; he does not tell readers what to do, only what is most likely to be cost-effectively marketed online. All decisions about the terms of any offering are made by the companies making those offerings.
