Companies are abandoning traditional advertising channels and switching to digital. Google and Facebook are dominating this new ad world. The two tech giants bring in a combined $106 billion — that’s one-fifth of global advertising.
Facebook reportedly has 4 million advertisers and 75% of all Business pages promote their own posts. Google Adwords Cost per Acquisition for Search and Display ads is on average over $60.
This could be bad news, and it clearly has some implications. Digital advertising is getting more expensive. Facebook even had a period where they didn’t have enough ad space for all their ad requests and had a shortage of digital inventory.
So basically, everyone is spending money on social media ads. How is your startup going to compete against Procter and Gamble’s ad spend?
How are you going to get your message across to your target audience in a world where ad blockers are on the rise and users are paying a premium to not see ads?
It’ll be hard. But there’s light on the horizon…
Return of the Growth Hacker
Expensive traction and distribution channels are going to make growth marketers get creative again.
The term growth hacking goes back to 2010 and is famously coined by Sean Ellis. He is famously know for growing big-name companies like Dropbox and LogMeIn. He basically became the go-to person for growing startups in the Valley.
His method was: set up evergreen systems, processes, and mindsets that could be maintained after he left. He was basically building a growth machine and handing off the keys.
Don’t get me wrong, that requires a lot of work. It’s an endless amount of experimentation, analysis, and understanding of why things are or are not working. It requires an in-depth understanding of what your customers want.
Alongside Sean’s rise in the growth marketing space, there are some other great examples of hacks that helped build the powerhouse startups that rule the world. Think: the famed Airbnb Craigslist listing.
It’s time to get off the hamster wheel:
Growth marketers! We are going to have to get creative again. We are going to have to get off the big, saturated platforms and jump to a new pond. We must find ways to traction those channels for less.
This current state will show who is for real… and who isn’t?
Facebook’s cost per acquisition (CAC) is significantly getting higher. Is there any creative way around that?
How do we get around that?
Justin Wu, most famously known for his handle @hackapreneur, recently did a tutorial on Instagram stories showing how he is reducing his CAC on his Kickstarter campaign to around $0.50 — $0.60, down $1.5-$3.0 from his previous one.
Without any prior experience, he decided to dive into chatbots and run a viral Facebook contest. Every time someone comments on the post, a chatbot would automatically send that person a message through Facebook Messenger, and collect their contact information.
Don’t tell anyone, but you can do that here in 7 minutes.
Here is the contest he ran for this Kickstarter campaign Lifetime Bulb:
What does this mean for Lifetime Bulb… and you?
Beyond the pride of getting 3.000 comments, this allows you to retarget all those people the chatbot messaged. You can reach this new audience directly through the Facebook Messenger app, where messages have higher interaction and open rates than email. Additionally, you’ll enjoy having better-qualified leads, by being able to speak with this audience, taking them to your platform, and also asking for more information.
Chatbots are not for everyone. These bots really depend on your audience and product, so you’re going to have to brainstorm how to effectively deploy this tactic. You’ll have to go back to the good old days of experimentation.
Don’t give your money to Facebook and Google:
Start relying on referral programs. In “Startups are cheaper to build, but more expensive to grow — here’s why”, Andrew Chen says:
“Think of referral programs as another form of paid spend. You have the same CAC, but instead of giving the money to Facebook or Google, you give value to your users and their friends.”
What are the benefits of referral systems? They:
- Lower cost per leads. Referral systems don’t have to cost money. When Sean Ellis started Dropbox’s referral system, he didn’t reward his referrals with money, but rather storage space, which is marginal cost for the company.
- Increase closing ratio. The closing ratio of a referral is near 80%.
- Make a larger sale. When someone is introduced to your company through a person he or she trusts, you are more likely to close a larger deal.
- Generate more referrals. When a sale comes in from a referral, he or she is prone to invite to others.
Keep bringing the magic:
The way a company keeps growing is by having customers relive the “AHA! Moment” they first experience. This is when they live the true value of your product or service. It’s the moment when they just get it.
You’ve spent money to get people to your page, they are visiting and you get them to convert.
People pass through your funnel and you make money. You’ve got their contact information, you know enough about them to be able to figure out how to keep them coming back for more. Analyze each step of your funnel, find the leaks and optimize them.
Find out who your all-star users are and learn from them, how can you take your average users to all-star level?
Try to pick up the inactive users that have left. Why did they leave? How can they relive that moment again and have them convert?
Maintaining happy loyal customers who get to relive the benefits you are providing them is how you will keep growing your business in a competitive space.
A new wave of growth!
A lot of agencies have come into the digital space, and unfortunately, some have tarnished our reputation. Selling impressions and views is very easy. But in today’s competitive landscape, it’s expensive too.
Only the real professionals will survive.
This is a call to all growth marketers to come together and get creative again. Start running more experiments & make sure you are learning from your data.
The rising cost of digital distribution is going to bring in a new wave of purported “growth hacks” and silver bullets. But let’s leave that for those cocky headlines to the public relations departments.
Remember that there is no such thing as a silver bullet. You’ll only get there through constant experimentation, iteration, and learning.
Growth lets us reach our goals through systems and processes that rely on data and analytics. Make good use of what you have, reach out to your clients, find new undervalued attention channels, and double down on what’s working.