The slow and costly process of scaling user acquisition

One of the most valuable and rewarding experiences that a performance marketer can have in their career is scaling a growth operation from nothing. In hiring for growth roles, it’s common to meet people who have worked at big, impressive companies, managed massive marketing budgets, and driven meaningful incremental value. But it’s actually quite rare to meet people who have built an operation from the ground up, growing spend from $0 to some number that represented foundational growth for their company.

The reason that this experience is uncommon is simply that most companies fail at this stage: they struggle to build a direct path to their core target audience, they flail aimlessly around various marketing channels and invest critical time into other non-strategic growth media (eg. ASO, affiliate programs, influencer campaigns, etc.), and they get discouraged by their lack of traction and declare their product non-viable. Certainly some products get built that have no potential and simply cannot be scaled into businesses, but it’s also true that promising companies die because they fail to build a capable marketing operation that takes them to product / market fit.

In this QuantMar answer, I provide a framework for ad creative iteration and measurement at scale that can help teams avoid seeing performance degrade after the “half life” of their ad creatives is reached. This kind of iterative approach to measurement and optimization is the very heart of performance marketing and pervades every aspect of it. But it can be difficult to recognize consistent and incremental improvements at the very earliest stage of a product’s life, when its audience is poorly understood, when little or no user data exists on which to build ad targeting logic, when messaging and creative hasn’t been tested and the team doesn’t understand how to best communicate their product’s value proposition, and when channels haven’t been optimized for delivery. When nothing about the marketing operation is known, it’s difficult to know that progress is being made.

Some companies try to take shortcuts past this formative point in their company’s history: they’ll hire a senior, brand-focused CMO to build the marketing organization who will neglect performance marketing, or they’ll completely outsource marketing to an agency, or they’ll buy bad traffic from non-core markets to highlight cheap CAC values. These things aren’t fatal to a company in and of themselves, but not investing into performance marketing is, especially on mobile. Even when a product is inherently viral, the only way to scale a product to maximum potential is to invest sufficiently into performance marketing infrastructure. The sooner that’s done — the earlier the medicine is taken — the less friction will ultimately be encountered over the company’s growth trajectory.

Investment is the right word to use in these early days of marketing exploration. Just as money needs to be invested into building a product before it can start generating revenue, money needs to be invested into marketing tests and infrastructure so that the team (and the broader company) can find the right combination of ad creatives / messaging with channel mixture with audience targeting. This is a slow, costly, and sometimes frustrating process, but it’s vital. It takes time and money to build audience data to use in custom audiences and lookalikes, to test creatives, to test in-product event signals (add to cart, tutorial complete, etc.) against algorithmic campaigns, etc. The exercise of establishing and honing an understanding of these marketing settings is really no different than A/B testing a product feature, but since it bears more of a direct cost (spending money on marketing campaigns), it’s sometimes seen by companies as fundamentally frivolous or wasteful.

But this data and insight is necessary. And as comforting and easy as it might be to disregard this stage of the company’s lifecycle and declare that brand will drive growth, or that agencies can handle direct response marketing, or that the product will grow by word of mouth, this attitude merely kicks the marketing can down the road. As painful as it can be to spend tens or hundreds of thousands of dollars on ad campaigns that don’t generate meaningful, immediate return, there’s ultimately no avoiding it.

Photo by carlos hevia on Unsplash