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Paid channels and better monetization

Competition is abundant in the startup world. The once slow and cumbersome corporates are adopting agile practices and moving more of their funds into online advertising. Sites like Facebook, where businesses used to be able to reach new customers organically, now choose from thousands of potential posts to build a user’s news feed, therefore it’s no surprise that organic reach has decreased rapidly.

One result from this is a shift towards paid channels for driving awareness. These channels give startups the chance to consistently reach their audience in a relatively predictable way, cutting through the noise. However, the increasing shift of ad spend from TV to digital platforms means you should expect costs to continue to increase.

We’ve also seen referrals gain increased attention, such as Dropbox’s free space example. The best referral mechanisms are usually baked into products. For example, Dropbox’s share functionality is a great way to introduce new customers to the platform, while also being very valuable. Therefore, you should pay attention to referrals and viral mechanisms when you’re building your product, rather than adding them at the end.

To achieve growth that reaches the rapidly increasing expectations, you need to ensure that your monetization strategy can justify the high cost of acquisition. When you’re raising investment, you also need to be careful not to underestimate your reliance on paid acquisition and keep in mind the increasing costs of these channels.


So how do you grow?

Study your customers, and as Andrew Chen put it, “study the classics”: the marketing techniques that work today have existed for a very long time. Don’t dive head-first into executing tactics, take a methodological approach that values research and puts your customers at the centre of your decisions. Then you’ll be able to answer the hard questions, like “is Snapchat the right channel for me?” or “why do I have a ton of traffic, but very few purchases?”

And finally, be mindful of the way that you structure your startup. You’ve probably read a lot of similar advice out there about building personas, testing your ideas, telling stories… Each of these ideas can be applied to many different disciplines with great success. Encourage teams to take an integrated view and share their insights with the rest of your startup.

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