Your Offer Isn't Converting. Is It The Marketing Or The Offer

Is your capital raise struggling because of the marketing, the offer, or the positioning?

In this episode of Behind the Raise, Martin is joined by VirtualAd’s Brendan Manley to break down one of the biggest questions issuers face when conversions slow down: is the marketing not working, or is the offer itself not converting?

They discuss how to diagnose performance across the funnel, from ad engagement and landing page conversion to booked meetings, investor follow-up, and bottom-of-funnel sales conversations. Brendan shares how issuers can use data to understand where investor interest is dropping off, why the first few weeks of a raise are so important, and how marketing benchmarks can help separate creative issues from deeper offer or positioning problems.

From minimum investment strategy and pricing psychology to urgency, incentives, trust, testing, and the importance of validating positioning before scaling, this episode gives founders a practical framework for understanding what is really holding a raise back — and what can actually be fixed through marketing.

Transcript

SPEAKER_00 0:08

Welcome back, everybody, to episode 10 of Behind the Rays, and back by Popular Demand, we have Virtual Ad's very own. Brendan Manley rejoining us after a couple of guest episodes from other members of the Virtual Ad team. So today we want to cover a topic that comes up often and inevitably during every raise, which is sometimes there's a lack of conversions, and there's always a question is your offer isn't converting. Is it the marketing or is it the offer? And in our seats as marketers, we often have to diagnose this, and part of it is because there's a bit of a knee-jerk reaction when a raise will hit some sort of a roadblock, which is inevitable. It's almost a knee-jerk reaction to look at marketing as the source of the problem, mainly because marketing is driving is the main source of the traffic. So it's a natural flash point to look at, but it's not always the main problem. And so you need to have a framework to be able to diagnose whether it is actually the marketing or whether it is the offer that you have in the market. And there's basically kind of three uh main buckets we would say uh that are worth diagnosing when you look at this, which is bucket one is diagnosing is it the marketing problem, two, is it offer problem, or three, is it a positioning problem. And we do think that it makes sense to look at the marketing bucket first as you diagnose things, primarily because marketing is often a the place where you can make some of the quickest tweaks. And so if it's just a marketing tweak, you will have a big impact on the product of the raise. So why don't we get into looking at uh diagnosing uh marketing and the problem and the gap first? So you know, Brennan, when we're looking at uh, you know, even call it like the first two weeks of a raise, or you know, first three to four weeks is always like a very critical period and a lot of figuring out that's happening during that time frame because it might be the first time this offer is in the market, first time the issuer is raising. So a lot of uh different feedback that we're getting. How do you go about understanding whether there is a marketing issue or an offer issue? And what are some of the key metrics or work backs that you're looking at when you are diagnosing a potential marketing issue?

SPEAKER_01 2:29

Yeah, that's a good question. The beauty about digital marketing is that everything's trackable. And so, you know, we can assuming, you know, we have the correct, you know, tracking mechanisms in place, we can, you know, pinpoint, you know, exactly where we're losing investor interest. And that tells us a lot about uh where, you know, the leaks might be in the bucket per se. In the first few weeks, obviously there's some, you know, performance benchmarks that need to be evaluated against actual results. And so that early on, you're kind of looking at some higher level metrics in terms of you know your ad creative engagement and how effective your ads are at getting people to that next step and visiting the landing page to learn more about the investment opportunity. In addition to you know, your cost per lead and you know how efficient you are at getting people into the funnel, you know, that's kind of the starting point. And you know, there's lots of metrics to look at. You know, on the ad side, you can look at things like your quality ranking on Meta, uh, your ad engagement rate, uh, your your thumbs, you know, stopping rate, your click-through rate, which is, you know, the effectiveness of your ads getting people to actually click on them, you know, your landing page conversion, you know, how effective is your landing page at converting people, you know, to that next step of becoming a lead or booking a meeting or whatnot. And so during the first few weeks, um, to your point, Martin, it's really just a matter of dialing in some of those upper funnel metrics to, you know, make sure you're getting people into the funnel at a cost-efficient manner and uh understanding how you're doing at that task, rely on some benchmarking. So it's important to understand what the norm is that represents a successful campaign. And so you're pretty much just taking a look at your actual metrics and your actual campaign results against what uh the norm is or what you would expect. And those benchmarks are, you know, created based off of running, you know, tons of successful campaigns in the past. So that's really what you're benchmarking against. There's more to kind of mitigating risk that I can talk about, but I'm sure we'll get into that.

SPEAKER_00 4:44

Yeah, I think that those are some good points. And, you know, from a founder's perspective, you know, they're looking at where are the investors? You know, that's like their main question or their main concern always. And the sort of fork in the road for me on whether you start diagnosing it as a marketing problem or a offer problem kind of starts a little bit post-landing page, I would say. And so I guess as a founder, like to your point, when you're looking at this and you want to see if it's a marketing problem, it's about where does the action really stop? Where's the biggest drop-off? And if it's in your your ad metrics, it's that's generally a marketing problem. So you kind of want to work backwards and see how are people actually relating to the ads? Are they getting a good click-through rate? Are they clicking through to the landing page? Are they clicking through to the invest now page or book a call or whatever? And generally I would say, like my take would be it tends to be a marketing problem if you're not getting good response in your ads. And that to me is like that's primarily more of a marketing problem. I guess maybe like ads and landing page, that would probably be the stretch. And it's still like a bit of a gray zone because you can have a marketing problem after that. But to me, those are the key areas where it's more of a marketing problem. Like if you're not getting good click-through rates or ad engagement, there's something going on with your ads. And I would say it's usually more messaging than it is targeting because nowadays ad platforms are so good at doing their you know creative targeting. That tends to be more of a messaging issue. That's kind of my take on things. What are your thoughts on that?

SPEAKER_01 6:24

Yeah, definitely. It's kind of um the typical funnel stages, the like marketing funnel stages. So there's the top of funnel, middle of funnel, lower bottom of funnel. And so, you know, the top of funnel is really the, you know, the ad performance and the ad campaign performance. And so yeah, exactly. I think that includes the landing page. And really at the end of the day, the ads are being effective if they're getting like let's say you're booking meetings from the campaigns, if they're getting people into the calendar. Um, if they're having a really good click-through rate and then people are going to the landing page, but then they're not booking a meeting, you know, that's still a marketing problem, right? Um, you know, maybe the messaging's broken down on the landing page, or some there's uh an issue or a technical issue, or there's just some sort of um troubleshooting that needs to happen on the marketing side. Um, but if you're getting people to book meetings, then we're kind of now that graduating, I'd say, to the mid-funnel metrics. And so that, you know, that the goal there would be to get people to attend the meetings. I still think that's a marketing problem because that's uh, you know, CRM automations, the email sequences, the ringless voicemail, the SMS, the reminders, the collateral that you're sending to prospects before they actually attend the meeting. So there's a lot that can go into those mid-funnel metrics as well from a marketing standpoint. And then let's say, you know, those meetings are actually attended and a conversation's being had. If there's drop-off at that point, I'd say a little bit less influence by the marketing side, and maybe there's something that needs to be evaluated on the on how those conversations are approached or what that strategy or investment deck looks like, or, you know, kind of those bottom of funnel metrics. So yeah, there's a there's definitely um, you know, a point where marketing is either doing its job or not doing its job, and then um, you know, something else that might need to be looked at.

SPEAKER_00 8:23

Yeah, I I feel like the the offer side is almost like the most difficult to diagnose. And unfortunately also the hardest to change if there is an issue with it. But to your point around, you know, when you're looking at more of the sales-based funnels and tracking that down to whether it's an offer issue, it actually can take you quite a while to make that determination because even if like all of the marketing metrics are looking good, and then you're at the sales metrics, and then you have to work your way through all the sales metrics to see whether it's an issue with the sales team or the sales process, and then look at the offer as well. And, you know, I think at that point it tends to be things outside of the offer, especially it's when it's like one of these sales-based funnels, but it's it's not always the case. Like it can always be a bit of an offer issue. But on those larger deals and those those types of funnels, I find that it um it can be quite laborious to find out whether it's an offer problem in those stages. But uh it it can happen. And so we, you know, we do typically run these two types of funnels. I would say we have these self-directed funnels where you can get to the offer issue a lot quicker because if you're following that same logic of the metrics diagnosis on the marketing funnel, you actually can get there a lot quicker because you kind of get to the investment landing page. And those raises really l rise, uh, you know, rise and fall in the strength of the marketing. And so if you find that you're getting basically good click-through rates, landing page visitors, leads, investment interest, but then low investors, that tends to be a bit of a signal about offer or you know, offer appetite. But it can also signal things around like trust or conviction. And I think that there's an interesting stat that some founders can miss where the assumption would be that if people are not converting, it's because there needs to be more middle of funnel nurture, which is important. But we also see that a lot of these investors convert quite quickly within like 24, 48 hours, maybe even three days. So there's like that small window. And I would say if they're not converting in that, it's not really a middle of funnel issue. It is more of uh an issue around potentially the offer or trust, which could also be another factor. So maybe sometimes the offer looks good, but trust is a factor. I think we've seen that before too, a little bit.

SPEAKER_01 10:48

Yeah, definitely. I mean, with the campaigns that you're referring to, those ones that convert very quickly, like 24 to 48 hours for up to three days, you know, the offer plays a big role. I'd say like how the offer is structured, for instance. Like, you know, do you have like, you know, for a crowdfund, for instance, it's very transactional. And so, you know, the marketing is important to kind of have that flair and that wow factor to kind of bring people in or that hook per se. And, you know, but then when people are going to check out, you know, do you have like incentives to uh make that decision quickly? Like, do you have time-based promos, for instance? And and can you, you know, if you don't have like uh bonuses or promotions or incentives to get people to convert within that 24 to 72 hour window, you know, they're gonna kind of think about it and then they might drop off. And so that's somewhat of an offer thing because you know, you want to structure some of those incentives into the offering exemption at the get-go so that you can have those marketing levers that work so effectively, you know, to work with. And so, yeah, the offering structure is important and having those incentives in place is important for crowdfunds, especially. And then the trust point that you were making is important as well, right? Like people oftentimes come in because it looks exciting and it looks like a cool opportunity. And but then, you know, where they might hesitate is like, do they really understand, you know, the vision behind the company or do they understand the uh, you know, the the people behind the scenes and the leadership team? And you know, they might want more information, right? To have that um security to to invest, and that kind of comes down with trust and and credibility. And and that can also be delivered through marketing as well, like you know, with web webinars or collateral or ebooks or you know, opt-ins and things like that. So bit of a a bit of a mix, um, for sure. Yeah.

SPEAKER_00 12:48

Yeah, I find like trust comes down a lot to visibility and just being visible and being out there and having honest conversations about what's happening so people can hear your take on things. You brought up a couple of really good points on the offer side. It made me also realize that maybe we need to define what we are talking about when we talk about an offer for the non-marketers out there. It's relatively intuitive, but there's a couple of key components to it. So the offer itself is like, what are you offering investors? And um, that can be made up of like what's the framing and the positioning of the offer, and then what are like the nuts and bolts of it. So um, you know, how many shares are there getting how many shares are they getting at what price? Then if it's uh a uh, you know, maybe a real estate offer, um, there could be a targeted, uh, a targeted return rate. Uh for some, it could be a yield offer where there's an interest rate that is paid. Uh, that would be like more of a hard, uh, harder term offer, I would say. Um, in other instances, it could be more just like an equity offer, but with an undefined uh period or an undefined liquidity event, because you're basically buying equity into a startup that maybe can grow over 10 years and maybe they IPO, maybe they get bought out, or they just continue growing. And so that also makes a big difference. What is the sort of path to liquidity? Is somebody gonna be investing investing? And then that money is held for uh three to four years, five years, 10 years. So clarity on that is important. You brought up some really good points around urgency signals. So urgency, FOMO, and incentives are also part of the offer. They're a little bit of the softer side of what makes up an offer. And in certain types of raises, those can take different forms. So urgency on the, I guess like on the reg CF, reg A side, you could have urgency and incentives tied into one by having bonus share periods that expire at a certain period. So that's an incentive and both an urgency driver. Then I would say likely on the reg D sales funnel booking side, investor relations side, urgency is a little bit more in terms of how it's the offers communicated, but likely from the sales team because those raises can go on for a longer period of time. And uh, you know, one piece also that comes down to it is valuation. Valuation is uh, you know, you want to have a valuation that's defensible. So one that's shows that there's upside, but also that there's been some growth in the company. And if it's like too high, somebody looks at that and says, okay, they're already so big, this isn't my 10x opportunity. Because if they're like, you know, at a hundred million or like five hundred million or whatever, what how much is it gonna take for them to grow 10 times this size? So those could be some other pieces. And I actually also think like a really significant one is a part of the offer that impacts marketing a lot is minimum investment. So that I think can also really drive your marketing metrics a lot. So, what are your thoughts on minimum investment and how that impacts the uh the marketing funnel?

SPEAKER_01 15:55

Let's break it down into the two different types of investment funnels that we would typically run. So um on the crowdfund side, the minimum investment is oftentimes uh, you know, can be as low as $500. On the reg D side, you know, it can be, you know, it can go up to like $50,000, let's say. So for the the Reg CF, like I think it's okay to like have a low minimum investment, like as low as as possible. But if you don't have any like tiered incentives built into the offering, then what you're gonna see is a lot of people investing at $500 if that's your minimum. And it becomes very difficult to turn a profitable campaign such a low minimum investment. And so, you know, the adjustments you'd make to the offering to counter that would be to have you know tiered investments. So, you know, typically like you know, like you invest $500, okay, you're into the the crowdfund. Um, but let's say you invest between $500 and $2,500. Maybe you there's some sort of incentive built into that. If you invest $2,500 to $7,500, you know, that's added some more stackable incentives into that and and so and kind of layering it on. Because if you don't have those those tiers built in, you're just gonna get a ton of people investing $500, but it's gonna be pretty expensive to acquire those investors and your average investment amount is just gonna be pretty gonna be low. And so you need that tiered system to kind of uh bring that average investment amount from 500 or 750 to, you know, the goal would be to be above the 2500. That's why the the tiers between 500 and 2500 are closer uh compared to the next one, because you're kind of trying to drag people up to that second tier is really the goal. Um, and you can have a bigger incentive for that tier. So on the crowdfund side, I think it's good to have as low as possible with a minimum investment so that you remove the barriers to entry, but you it needs to be combined with the appropriate, you know, tiered incentives so that you don't uh run into a situation where everyone's investing at $500 and then it becomes very cost inefficient. On the Reg D side, I kind of think it's good to have a low enough minimum investment that, you know, let's just say 25, let's say your minimum investment's 25,000. Again, with the Reg D, you're going after accredited investors. So it's a more you know qualified audience from a from that standpoint. So I think it's good to have as low as a possible minimum investment, but I'd say you probably don't want to market that minimum investment. You actually want to, you know, create some qualifiers in your marketing message. Um, so let's say for Reg D, it's like you're booking meetings with potential investors, then you know, you probably wouldn't put minimum investment 25k front and center. Um, you'd probably have messaging related to meetings are only available to those with $50,000 or more of liquid capital to invest in a new um, you know, uh project or whatever. And so you're kind of like, yeah, you've got the lower minimum investment in the background, but you're not really promoting that. Like it's obviously going to be in the offering exemptions, and but sometimes people don't read it too deeply until they're in conversation with people with the IR team. But that way you can kind of um try to qualify people in advance. And then when you're on the phone with them, you're on the phone with more, you know, people that have higher intent and have more capital to invest in. That can just be, you know, better conversations, more worth your time. And then you have that fallback if they're kind of hesitant. You can be like, okay, well, you know, the minimum is 25. So, you know, why don't you get in at that range? So those are a few thoughts.

SPEAKER_00 19:48

Yeah, there's a nice little nugget in there as well. That was when you talked about the minimum investment uh interest for placing a meeting, or meetings are reserved for those with over 50k in liquid capital interested in investing. You framed it way better than I just did. But what's so interesting about that is that it also creates a little bit of scarcity. And the way that you described it made me want to have a meeting so bad because I was like, what? Like only those people can have a meeting? What are what are they talking about that I'm not hearing? So obviously sucks for people that don't have that much capital to be able to have the meeting, but I think for people that do, it's like, oh, I'm special. And it is it creates a little bit of scarcity in that already unique offer. So that's an interesting psychological uh trigger there. And I also just wanted to mention that I I do find there's always a bit of a satisfaction when playing with this uh pricing psychology when it actually works out, uh, because the metric that I find the hardest to move is that average investment value metric, but it has the biggest impact on your return on ad spend or cost of capital when you can actually move it. And so and price anchoring is so critical in that. And that's why what you mentioned in terms of people going in with a mindset of invest even just anchoring at like 50k or 25k to have a meeting, but then knowing that you can invest less after that, you're just like, you know, either people are are going in with that intent and they they might do that level or more, or if they're doing less, anything less than 50k seems like they're saving 25k if they're just investing 25. So they're like, oh, okay, well, I I thought I was gonna do 50, but now I'm only doing 25. So I got an extra 25 to do whatever I need with. So that's really interesting. And honestly, like I actually I think we could probably do an episode on minimum investments pressing it uh in and of itself. But my last comment was just gonna be that I'm not a huge fan of low minimum investments. I find that it it makes the raises really tough. But I have been speaking with somebody who has a very interesting idea, um, who actually has some potential like high, uh like very popular influencers behind uh the idea. that they're they're looking to to launch. And they're they're taking the approach of like having extremely low investment, like literally like 70 to 100 bucks, where it's so low friction. But because they have the support of these broader influencers, they have more credibility and support, I guess, behind the idea that could make it easier to convert. So I find that also interesting because we've kind of been at this most offers have been a thousand or five hundred. I kind of feel like going below 1500. 1000's good, 500's tough. But this is interesting because it's like the lowest of the low. So I'd be curious to see how like the lowest friction number actually works if you can just get enough volume. Like literally people don't even have to think about it. Like that would be an interesting experiment to see.

SPEAKER_01 22:44

Yeah we've never gone that low before or like had issuers that have had that low of a minimum investment, but it really removes the barrier that's for sure. You'll just need a lot of investors. And so you you know, because then you can still incentivize people to invest more, but there's no barrier if they want to invest less.

SPEAKER_00 23:07

Yeah, exactly. Nice. Well let's talk about the the final bucket which is positioning problems, the gray zone. This is the the area that is you know probably I would say the more more tougher to diagnose and like I guess like harder on the marketing side because this is where you're sort of seeing you're actually seeing some pretty decent traction but you need to be able to convert at a higher level. So this is kind of the idea of positioning of landing like really good positioning for the raise and um seeing what lands the best. And so this is I think it can be really nuanced and I really do think some some raises might even be unsuccessful simply because of a positioning issue. And that's why I find that it is important to have different types of creative out there that are are testing things. And I always think of that the raise that we did with the agricultural robotics company and how easy it could be to frame that raise incorrectly and talk about like this language was used in the raise but it wasn't the framing of it which was like autonomous autonomous like robotics forms of agricultural robots or something like that. Like that if you if it's too technical I find that that can miss the mark. But being more mission based is something that people can relate to because they tend to be looking at the impact that the company will have. So a little bit less about what you do but more about why you're doing it and the impact of it I find can be important. And so yeah when it comes down to positioning how do you fundamentally diagnose that and you know that I I believe comes down to to ad testing and finding out like what's working in the different leading ads. And I would say there's a couple of like key areas that positioning is really obvious which is your basically like your headlines and your main creative concept the landing page as well. So the landing page positioning is very important. And then I would say things like webinars uh are also very important that like initial one to two email sense of of what you're talking about. And if you know those those key areas then you can test that positioning to see what's landing a little bit better. Yeah what are your kind of thoughts on the positioning side of things?

SPEAKER_01 25:30

Yeah that's that's a good point. The positioning is super important. The nice thing is is we've got some data on how to structure the positioning maybe not necessarily like the positioning itself but at least the structure of the positioning so there's the the capital conviction framework and so on the landing page like there's there's certain things that investors care about, right? Like they want to know the numbers um so what does the financial opportunity look like? What is the total addressable market? What is the uh unique value prop that separates you from competitors and makes you better what's the social proof look like in terms of you know external parties validating you know what you're offering like are there other people talking positively about the company and and the opportunity and so there's you know a checklist of things that we we need to make sure are included in in the overall messaging and and the best place for that is really like the landing page or any sort of collateral or if it's being talked about in in a webinar. But then when it comes to like the positioning or you know um that that's sort of like the headlines that you mentioned or the hook um that's actually going to bring people in that's where testing is is super important right so you know at virtual ad we do the the VA spark test and it's literally a 10 day $1000 ad campaign. Pretty basic and not you don't have to you know spend too much to get the insight that you need in terms of what positioning is effective or what positioning is getting people to respond positively. And so you know that's important, right? Because you don't want to just launch with under assumption right like we might have assumptions from a creative standpoint, from an agency standpoint. The founder will definitely have assumptions because they're passionate about their company and they have an idea about what makes them unique and but it might not be the thing that resonates with you know a potential investor. So we can't just enter the market and spend out of the gate on an ad budget on assumed positioning that we think is going to work. We actually have to test it. So you know coming up with those concepts testing it in market and seeing how it resonates and where people are becoming leads and booking meetings from and then you can build off of that position you know then you get some actual hard data on what's working and then you can go deeper on your your positioning and your creative and and the different angles that you would take um to kind of double down on what's working. And yeah, so I think my take is that we can't assume what's going to work. We have to test it and validate it and be strategic about it. And the other thing too is and then also make sure we're doing the things that we know investors care about. Like we're we're communicating the financial opportunity we're communicating the growth opportunity et cetera and then my final point would just be just um you know being strategic with the scaling of the rays. So at Virtualab we have four phases right we have the onboarding sort of setup phase which is getting every everything built then then I mentioned we have the VA spark test but it's the testing phase it can last about 10 days. And so that allows us to get some understanding of what positioning actually works without spending too much money or breaking breaking the the budget. And then once we kind of understand what works then we want to optimize what works and create more ads that reflect that positioning that works maybe adjust the landing page a bit adjust the messaging adjust certain things. And so that's our optimization phase. And then you know the goal is to come out of that optimization phase with a positive free cash flow because at that point you know we can start to enter the scaling phase where we just kind of dump more budget into the the ads that are working and scale the rays from there.

SPEAKER_00 29:25

Nice. Yeah I think that that's a good framework. We have about three minutes before we gotta wrap up this episode but I did some surprise rapid fire questions for you that you probably didn't see in the episode outline but I'd love to get those off before we have to close things off. Cool. Question number one marketing problem or offer problem what is harder to fix?

SPEAKER_01 29:50

I have the offer problem I mean marketing like you know we can make adjustments right like we can chick we can come up with new ads we can go back to the drawing board with the content the copy the landing page you know we have so much data so we know exactly where the drop off is through you know on the marketing side. So that's I mean it's you know I think we can dial in the marketing and then if it's still not working it's an it's probably an offer like the offer is also a a component like part of that's like the company the product hard definitely harder to fix the offer.

SPEAKER_00 30:27

Have you ever told a client their offer was the problem?

SPEAKER_01 30:30

Sometimes it looks good when we launch and you know but if you're not a positive free cash flow by month three or the end of the third month um and we've done all the marketing optimizations we can do, then it's an offer problem. And we've run into that a a couple times um and it's important to address that sooner than later.

SPEAKER_00 30:52

Agreed agreed it's a tough conversation to have but necessary. And then last question for you is can marketing ever save a bad offer? No. Yeah yeah it can't yeah it can't all righty well I think this was a really great episode very insightful thanks for answering those rapid fire surprise questions at the end. And yeah I hope everybody enjoyed this uh episode that we brought you on offers versus marketing and that you learned something and stay tuned for next week's episode. Thanks Martin thanks everyone