Why Venture-Backed Companies Struggle with Content Marketing

SaaS businesses that are venture-backed from the beginning typically struggle with content marketing. Content is a growth engine that takes years to mature. But venture-backed SaaS companies don’t have that kind of time—and this isn’t a problem that can be overcome by big budgets.

That is not because money can’t buy good content (it can), but because venture-backed companies either come into content at the Series C stage or later or need a return faster than can reasonably be delivered. As the channels that drove early growth peter out or get too expensive, they turn to content in hopes of lower customer acquisition costs (CAC). The problem is that an immature content program is expensive to run and won’t deliver reliable, inexpensive traffic until it gains a foothold in organic search.

Slack typifies the fast-growing startup that gets initial growth from a great product and word of mouth. Not many companies grow as quickly as Slack did, but they all run into the same problem: increasing CAC. This is when many turn to content—and realize that it could be several years before it starts driving CAC down.

Here’s a look at Slack’s growth on their content site, slackhq.com. They started creating content a few months after their Series C, meaning they raised north of $57 million before they started investing in content. We plotted the number of blog posts they’ve published per month against the total accumulated backlinks. For the first two years, they accumulated very few backlinks. For the next two years, the growth rate increased, but steadily. Backlink growth finally exploded in mid-2018—nearly four years since the first post.

slack content velocity

Backlinks aren’t a perfect corollary to traffic, but Brian Dean found that“a site’s overall link authority (as measured by Ahrefs Domain Rating) strongly correlates with higher rankings.” Backlinks and organic traffic follow a similar pattern (as outlined in The Content Growth Cycle). Growth is slow at first, then momentum drives steady growth, then several years of hard work is finally rewarded with much faster growth.

The takeaway? Slack has raised more than $1 billion dollars and it still took them 3.5 years at two blog posts per week for backlink growth to take off. (That’s in-line with other SaaS companies we’ve analyzed.) Content is a slow but powerful channel. Funding and a big marketing budget can shorten the time to maturity, but it will likely still take several years for content to be a viable mechanism for reducing CAC.

You Can't Buy Organic Growth, But You Can . . .

If you're a venture-backed company that's ready to invest in content marketing, there are a few challenges you should be prepared to navigate. Here are some suggestions based on our in-house and agency experience.

1. Ramp up spending slowly if you want to scale quality content.

If you don’t spend enough on content, you’ll never get the quality needed to stand out. If you spend too much, you’ll create overhead for your team, and quality will actually decline.

Money can buy good content. You can hire an agency, an in-house team, or great freelancers. But the more you spend, the more stakeholders will eagerly be looking for results. Large budgets also tend to come with the directive that there should be lots of content rather than a few really strong pieces.

Looking for short-term results and focusing on volume are surefire ways to derail a content marketing program before it's even started. Ramp up spending so that you can focus on building a team of top-notch content creators without worrying that you have to spend your full budget.

It's really easy to disregard this problem entirely, but any content marketer that's worked at a well-funded company or an enterprise company knows it's a very real issue. There are plenty of lean content teams—we're talking one or two people, with tiny budgets—that outperform unicorn companies with millions to spend. It's because lean teams don't waste any time on content that isn't worth creating, while teams with large budgets spend because they have to.

2. Put someone who has legitimate content expertise in charge.

Put one person who knows what they are doing in charge, then let them decide how to grow the team and allocate the budget.

In order for a content operation to scale, you want someone at the helm who can establish quality guidelines; create an efficient workflow; choose their own agency, employees and/or freelancers; and, most importantly, build a culture around content that spreads throughout the organization.

Look for someone who has experience managing an editorial operation, running a team of writers and/or scaling a content program. Intercom tapped John Collins, who spent many years writing and editing for The Irish Times before applying his editorial expertise to SaaS content marketing. WeWork's head of content, Kate Lee, worked as a literary agent and a magazine editor and built the content strategy for Medium. Camille Ricketts, famous in content circles for her work at First Round Capital, was a Wall Street Journal reporter before running communications for Tesla and working for the United States Digital Service.

The trend here is obvious: These people have deep experience—and that helped them scale sustainable operations.

3. Measure content in a way that incentivizes sustainable growth.

The behavior economist and Nobel Prize winner Richard Thaler has some excellent advice for investors: watch ESPN.

Thaler's work has shown over and over again that loss aversion drives poor decision-making in investing. Justin Wolfers elaborates in the New York Times:

Since the Standard & Poor’s 500 index’s creation in March 1957, it has fallen on 46.7 percent of all trading days. At the daily level, the stock market can seem like a roller coaster. Even though a purely financial calculation reveals that the gains more than make up for these losses, if you feel the losses twice as keenly as the gains, it’s the sort of ride you might decide to avoid.

“Watch ESPN” is great advice because it keeps the investor's mind off of the day-to-day fluctuations of the market. The same is true of content marketing.

Measuring performance in the short term will almost certainly show slow progress. It took AdEspresso several years to build a content marketing engine, but now it's a powerhouse. Had they abandoned their strategy in search of better short-term results, they would have missed the chance to build a massive blog that is powered by 79% organic search.

Content marketing is about great execution, not brilliant ideas. A good strategy can deliver great returns if you stick with it long enough. Find ways to measure your early work that incentivize long-term growth, not immediate results.

4. Get stakeholder buy-in and keep them engaged.

Don't let your nascent content marketing program get derailed by a higher-up whose only perspective is a spreadsheet full of pageview data. You absolutely need buy-in from any and all stakeholders, so we suggest two things to ensure that happens:

  1. Present a detailed plan to any new stakeholders. Outline the purpose of your content, and explain how you plan to measure it. Make it clear that you understand the business objective and that your plan aligns with the company's overall growth strategy.
  2. Keep stakeholders informed with regular reporting that includes both data and anecdotal feedback. If, for example, an influencer shares an article on Twitter, or a prominent website links to a post, capture a screenshot and present it with context. This helps you tell the whole story and keeps people excited about content.

Companies that invest in content very early on—think of founders blogging in the first few weeks of the business—tend to adopt content as part of their culture. When you start content later on, there is some politicking required to get people on board. It can be frustrating, but it's part of the job. Do it well so your content can flourish.

5. Invest in Content Early

As we've said before about content marketing, timing the market helps, but time in the market is still more important. The sooner you begin investing in content, the sooner it will pay dividends.

You may not have the budget or the staff or the time to build a massive content operation from scratch, but you can still create some content resources early on. Shoot for middle- and bottom-of-the-funnel content that helps interested buyers find your product. Product updates, ebooks, webinars, etc.—these are all good ways to get started with content. Focus on conversions rather than traffic, and build plenty of internal links to these resources. When the time comes for a larger investment in content, you'll have a head start.