“My biggest surprise
was when we launched the Facebook app and it didn’t go viral”
-Startup CEO quote
“The month after we
decided to stop all marketing and put the product on auto-pilot was our biggest
month ever”
-Startup engineer quote
I believe this discussion has come up and has been sustained
by the fact that most startups are not thoughtful about their marketing, but
the successful ones are.
Most startups rush into too many ‘standard’ marketing
activities, and then only dabble in their consistent execution over time. This
is very natural human behavior that successful companies and marketers must
guard against. The psychology and results of this kind of unsuccessful
marketing is exactly analogous to the many ways in which retail investors lose
money in the stock market: short attention spans, emotional and irrational
decision-making, and always an insufficient edge on the market.
Startups, please consider the entire attention and resource
budget that you have allocated to marketing and distribution, audit all of your
marketing activities against the qualities in this six-point checklist, then
double-down on your most effective activities and prune the mediocre ones.
Marketing/Distribution/Growth-hacking
Checklist:
Is this leveraged?
Just like you hope to establish a profitable business model
for your company, you want to get more out of a marketing activity than you put
in.
Content marketing? If your name
isn’t
KissMetrics, your own marketing team cannot hope to generate the velocity
and volume of content and interaction that a community like
Onstartups
(Hubspot) or
YouMoz (SEOmoz) can.
Building on Facebook?
SocialCam saw
a short window open in the Open Graph API that let them passively inject video
links into your friends’ newsfeeds. A brace of competitors quickly copied this
distribution leverage, but SocialCam went one better by overlaying the platform
leverage of popular Youtube videos on top the existing Facebook platform
leverage to create the CDO-Squared of distribution. Competitors were left
pushing videos created by their own small user-base into the newsfeed until
Facebook turned down the volume on that Open Graph channel.
Is this sustainable?
When Facebook detuned its Open Graph channel, all of the
social video crowd were caught out and now require a re-think. Even SocialCam
selling for $60M is a far cry from being one of the fastest growing companies
of all time a few short months before.
Skype, on the other hand, shows
that a company can ride virality for ten years and counting all the way up past
700M users with wholly-owned user relationships through multiple acquisitions
and hairy legal wrangling. This is largely the result of network effects being
at the product’s intrinsic core, and not hitching the company’s fortunes on an
unreliable third-party social platform.
Like Skype,
Dropbox’s famous
referral scheme fits neatly in with its core product interaction: sharing
documents across devices. Is your company counting on a referral program to
drive a product that isn’t frequently referred?
Is this core to the
product, brand and business model?
A product doesn’t need to be a core communication utility or
social network to build a long-term sustainable leveraged growth machine.
Surveymonkey has done just that to
the tune of $1B valued on business fundamentals. Surveymonkey’s business model
aligns its own goals with those of its customers. While even passionate Dropbox
customers might prefer to pay less for the service, Surveymonkey customers
would like nothing better than to pay Surveymonkey more money, because it would
mean that they had a bigger email list to market to.
Zappo’s isn’t even a company that
helps one party send email to another, but their primary marketing tactic was a
counter-intuitive growth hack as good as any other. Free shipping and returns
let Zappo’s wage asymmetric warfare against incumbent shoe sellers. By taking
on this additional cost structure, Zappo’s did not have to outbid competitors
for scarce ad inventory and could grow by word-of-mouth instead. In other words, you need to have a clear and concrete
reason for people to retweet or like, not just the buttons to do so.
Is there a unique
insight or special edge that we have?
The harsh light of ad-buying and paid customer acquisition
illustrates this issue clearly.
Whaleshark Media is a roll-up of
many of the largest online coupon and affiliate sites on the web. By virtue of
scale, Whaleshark can negotiate the best affiliate payouts from affiliate
networks and merchants. In some cases this means that Whaleshark sites can
offer coupons with larger discounts than smaller competing deal sites. This
also means that Whaleshark can spend more on paid advertising than a smaller
site and still be right-side up. If you are competing with this kind of
structural advantage, you had better be sure that you have a different
advantage that outweighs this.
Similarly,
Instagram’s unique
insight and competitive advantage was pure craft and design. Other mobile photo
apps had the same features, but were obviously less well crafted so there was
no reason to use them. In effect, other photo apps brought knives to
Instagram’s gun fight. This is the simplest point, but also one of the most
important. As a hypothetical, if your web startup is launching a mobile app and
you don’t invest enough for the fit and finish to rival other successful apps,
the rising tide of mobile will not automatically lift your boat.
Is this measurable
and able to be optimized and evolved over time?
One-time arbitrage opportunities and market insights tend to
disappear quickly as competitors catch up and consumers get over-supplied. The
path forward from success is continued optimization.
One of
Zynga’s main competitive
advantages over other social game publisher is its ability to cross-promote a
new game to the audience of its older games. This advantage helps Zynga get new
titles to scale before older game titles start to lose the interest of their
players. Since games tend to go out of style relatively quickly and the
Facebook platform ecosystem is always changing, Zynga needs to keep measuring
and tweaking the promotion strategy and mechanics for each new game. Without
measurement and improvement, Zynga would not have been able to sustain its
string of hit social games.
Whitepages.com is a very large web
property that spends millions of dollars each month on paid search. Like many
companies, their initial SEM cost is not initially profitable based on first
transactions. Whitepages’s search spend only goes into the black if some new
customers acquired via search marketing return for a second monetization event
without a second paid click. Without
measuring and optimizing for retention, one of Whitepages primary customer
acquisition channels would be entirely closed off and the company would be much
less viable.
If this works, will
it lead to success?
One of my favorite thought exercises for growth-hacking and marketing
is to ask what future success looks like for the company, and then work
backwards to assess whether a particular marketing activity can credibly get
the company there. For example, if your company has raised high single digit
millions in venture money or more, you should be thinking about marketing
activities that, if everything goes right, could build a business worth $100M
or more. Small-bore marketing activities are the single biggest mistake that I
see startup marketers make. Ad buying provides an excellent example. For most
online businesses, it’s not credible to believe any amount of ad inventory will
get your company to $100M. If you are tacking on a basic social media strategy
of blogging, Tweeting, Facebook page updates and ‘share this’ buttons, it’s
highly unlikely that this effort will contribute to building a large and
special business.
In the day to day cut and thrust of startup operations,
please take a more than usually critical eye to all of your marketing and growth
strategies and spend your scarce time on activities that are leveraged,
sustainable, and core to your product promise and function.
