Tag Archives: Online Marketing

Before you start with Growth Hacking

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Note: This post is extension to my recent tweet on Product Management.

Building a product startup is exciting. Most startups look to raise capital early and investors look no other measure but traction to take their bets. This need for traction puts immense pressure on the founding team to grow their startup. That leads to implementing multiple tips and tricks to improve the key product metrics – most importantly to show traction to investors. Founders get into the so called ‘growth hacking’ mode. 

Growth hacking is the new buzzword in the startup town. There is nothing wrong with ‘hacking growth’ – most of the tricks attempted in this phase end up being short-term techniques. They might work for a while, bring traction for a while (which might lead you to raise investments) but these techniques don’t help in long term and the growth is not sustainable and quickly falls off.

Startups tend to neglect the simplest rules of product management before starting with growth hacking. According to me, here are the 5 Basic Rules of Product Management:

  1. User Engagement > Growth Hacking
  2. Retention > Acquisition
  3. Context > Activity
  4. Own growth channels > External channels
  5. Being Valuable > Being Social
A. User Engagement > Growth Hacking
Remember startups like BranchOut, Glassdoor, Viddy, Socialcam – that famously hacked growth through Facebook Dialog Feeds? Though they showed amazing growth curve initially, it soon fell off. Most users dropped off the product as quickly as they signed up never to return again. Reason – zero engagement on the product. Ensure that there are enough engagement loops on the product before you do any sort of ‘growth hacking’.

B. Retention > Acquisition
Acquiring users is the simplest thing to do, retaining them is the key. Any user acquisition technique should retain a good percentage of acquired users. Not just that., over a period of time the users who dropped off should be reactivated – there should be enough methods to pull them back – emailers / network effects / and so on. If the product has strong engagement features, retention is a easy task.

C. Context > Activity
Most products undermine the importance of context. In today’s world – anything that is not context is considered spam. The finest examples of a context driven product is Quora that lets you follow topics of your interest and helps you discover relevant content. Also important are products like Twitter (that lets you follow users) and Pinterest (that lets you follow boards) to build a information stream in context thats relevant to you. Think of context when you build features.

D. Own Channels > External Channels
Many startups focus on external channels for growth. Branchout was focussed on Facebook Dialog Feeds, Zynga was focused on Facebook Activity Wall, Viddy was focussed on Facebook Open Graph. Perfectly fine – if there are enough engagement loops and good retention strategy. However depending on external channels might not be sustainable – many startups hacked the Facebook Open Graph to get significant users – this led to users complaining about to the noise on Facebook wall, Facebook in return built many approvals / controls to prevent applications from spamming the users and giving users ease to block spam applications.


Large startups like Facebook, Dropbox, WhatsApp were completely focussed on driving growth through channels owned by self and had very little or no external dependence for growth. Don’t depend too much on external platforms like Facebook, Twitter, Google (SEO) for growth – build our own channels. Facebook’s journey of growth hacking is well documented. Also Dropbox as mentioned in next point. 

E. Being Valuable > Being Social
There are also startups that focus on building ‘too-many’ social sharing features, expecting users to share almost everything and anything on to their social profiles (Facebook, Twitter, etc). Users are smart – they don’t fall in this trap and founders keep wondering why no social sharing happens. Instead of trying to be forceful on social, focus on being valuable. 

Example –  Dropbox, it was a very valuable product that had super methods to hack growth – by connecting FB or Twitter account with Dropbox and providing users additional storage space by asking them to spread a message to their social circle or invite email contacts.

Concluding Notes:
Can you hack growth first and implement these rules later? No. There are startups that hacked user acquisition and raised initial investment on traction., and later things did not go according to the plan. Not just startups, that leaves even investors wondering what went wrong after the initial impressive growth metrics. 

Startups are about growth, no doubt. Getting Techcrunche’d (PR release), top position on Hacker News or Video that goes viral might bring one-time traffic boost / user sign-ups. You can get good amount of traffic by integrating with Facebook Open Graph, optimizing site for Google (SEO) or even paid user acquisition – but make sure that the product has enough engagement, retention loops, value and context to sustain the users you are acquiring!

You may hack growth., but you can’t hack success. Building the next billion dollar company is a big deal!

API based Advertising. Maybe Google lost a Billion Dollar Opportunity…

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Google is undoubtedly the master in text based advertising with its Adwords platform (that continues to be the largest contributor to Google’s revenue). It relies on a two formats of text advertising – through Search (display relevant advertisements to users on search results page) and Content Sensing (display advertisements based on content on the page user is browsing).

With advent of Twitter / Facebook and similar such platforms, emerged another prominent format of text outside boundaries of Google’s prominence – ‘status messages’ or ‘short text content’ or even ‘short text messages’. This text format originates and is consumed as quickly as it is generated. Concise, one-to-all (FB / Twitter) or one-to-one (SMS or chat).

Twitter owes its success to its API. Back in 2008-09, while developers were building applications on top of its API, I read/heard many say – “APIs is the product distribution” or “APIs is product marketing”. However, no one said “API is the next Advertising” (in context of text based advertising).

Imagine this simple hack – post the ‘short text’ through API to Google. The service would intelligently interpret if the ‘short text’ has any intent-value and revert back with the most relevant advertisement which the developers can embed back in their application the way they want it as part of their core product experience. The API could have options for Geo / Context, etc.

Is the opportunity huge? Its massive! Facebook is already under-fire for not having enough on its monetization plate. FB is monetizing via demographic targeting, while millions of status messages with a intent-opportunity go without monetization everyday. Twitter faces similar challenges, wrote about this earlier. Instagram, for example – you see this amazing photograph of a Pizza, you immediately want to eat one – show a relevant advertisement. Or two people on a IM like Whatsapp – making plans of a vacation to Canary Islands. This list goes endless.

There has been a radical shift in Internet (read content) over last 10 years, but web-monetization still continues to be same old method – either search or display. Companies involved in mobile advertising copy-pasted the web model to mobile. Web/mobile monetization models are ripe for disruption. While such kind of API based advertising requires a long-tail of advertisers, like the one Google has. But it will be difficult to under estimate startups who would want to get a slice off such very large opportunity; which otherwise will be Google’s lost opportunity….

 

Search to Display ReMarketing – To lower Cost of new Customer Acquisition

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Search to Display Remarketing

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All eCommerce sales can be attributed to two types – Impulse and Intent driven.
  • Impulse buying is more of direct marketing – combination of offers and deals driven by on-site marketing or direct marketing to existing consumers.
  • Intent buying covers full AIDA cycle – Attention, Interest, Desire and Action; and can be categorized as a conscious purchase decision that spans over a period of time.
Usually Search Marketing Conversion Rate > Display Marketing Conversion Rate
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Why so:
– Search Traffic comes with user-intent, user searching for product
– Display Traffic – click enticed more towards impulse decision, less towards intent
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Usual Difference:
– Display Marketing Conversion Rate is 4X-6X of Search Marketing
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Conversion by clicks:
– Average eCommerce service requires 100 visitors to convert into a customer (successful transaction)
– Search typically takes 50-65 visitors for one successful transaction
– Display will require about 250-390 visitors for one successful transaction
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CTRs by Marketing Channels:
– Search Marketing – 1% to 2%
– Display Marketing – 0.1% to 0.2%
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Costs per Transaction of Marketing Channels:
– Search Marketing: 10-15 INR per click = 500 INR to 975 INR
– Display Marketing: 4-8 INR per click = 1000 INR to 3120 INR
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Now, introduction to Search ReMarketing: – Reaching out to highly-intent driven users who visited the eCommerce store via Search, but did not complete transaction.
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Scenario 2: Search to Display ReMarketing

Increase Search Marketing spends to expand to more high quality traffic by increasing span of keywords or by bidding higher on converting keywords.
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Search Marketing: 12 INR to 20 INR = 600 INR to 1300 INR
Direct Display Marketing: 0 spends
Display Re-Marketing: 10 – 15 INR per click
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Acquiring New Customers:
– Search Marketing = 600 INR to 1300 INR
– Out of 50 to 65 visitors – 1 successful transaction; 49 – 64 users drop-out.
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Display ReMarketing to the dropped-out users;
– 49 – 64 Clicks: 490 INR to 960 INR
– 2-3 usual conversions
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Total Conversion 3-4
Total Cost: 1090 INR to 2260 INR
Average Cost of Acquisition: 360 INR to 572 INR
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Closing Remarks:
  • Do not treat Search and Display as separate channels to acquire customers
  • Search remarketing through Display will reduce your cost of acquisitions by 25% to 65%
  • Always look for cross-channel marketing opportunities to enhance RoI on Online Marketing