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What we’ll dive into today
After measuring a billion dollars in ad spend and advising startups and scale-ups on Growth strategy, I am convinced that startups shouldn't spend a $ on paid ads for a very long time (I’m talking like maybe even until Series B or really strong PMF if you’re not raising VC money). Below I'll share the quantitative research and qualitative anecdotes for my POV on what the new modern marketing stack looks like.
Most people aren’t ready to buy → Only 5% of your target audience is ready to buy in the moment which means 95% aren’t
Buyers know what they want → 80% of buyers have already made up their mind on who they’re going with before starting the buying process (I think this is a B2B stat but I feel strongly it carries over to consumer tech)
CPMs keep going up) → The Average CPM varies by channel but the one thing we know is it goes up every year.
Social Media managers are steals → The average salary for a social media manager in the US is $60K. That feels quite low so let’s assume for a really strong one it’s closer to at least $100K. Sorry to say but I’d argue this person has so much more impact than the average engineer. Fight me if you want.
Creative is priority 1 → Creative represents 50%+ of an ad’s impact. Which means creative testing is extremely important.
Let’s also look at some qualitative anecdotes and learnings:
Founders' main job is to:
Build product the customers love
Sell the shit out of their product
Make sure the business doesn't run out of money
Attribution is a nightmare, and thinking through attribution across multiple paid channels and comparing against in-platform is the biggest nightmare.
Ads do not scale linearly.
Last, let’s segment the world into 4 categories through a 2x2 matrix (my favorite):
Those that know / don’t know your brand.
Those that are ready / not ready to buy.
It only makes sense to advertise for 1 of the 4 groups. At any point, only 5% are ready to buy. Of those, 80% have made up their mind so you’re trying to convince 20% of the 5%. You’re competing over 1% of your target audience. And so is every one else. So, what should founders and their companies do?
They should go ALL IN on social media and owned channels:
LinkedIn
X
Reddit
TikTok
Instagram
Youtube
Referrals
CRM
The benefits of organic social channels
Quoting Paul Graham, startups are told “To do things that don’t scale”. That quote is often shared because it implies things that can’t be replicated but are essential to the startup. Organic channels is actually one of those things that you should do and does scale but can’t be replicated. I can’t post about your experience on LinkedIn or make a video of you. I just can’t state enough how big I think founder led marketing is.
To not be repetitive, let’s start at a high level why I’m advocating for these channels.
Better customer feedback
Nobody comments on a paid ad other than “this is crap”. However, so many people interact with organic posts. It’s such a great way to understand the pulse of the message
Free creative testing
An extension of the above is using organic social for creative testing. Nowhere else can you gauge how a message might resonate or even use it to test potential features . It doesn’t mean you have to listen to everything your customers say but it’s a gift to have it and then decide what to do with it.
Creates community
If you’ve ever looked at a post by Duolingo (on any platform), you’ll see the community spring to action. That sense of belonging and connection with your customers is something paid ads will never deliver
“Infinite” scaling
The examples I’ve been sharing are for a team of 5. Imagine what this does at scale with 100 people.. 200…10,000. Now what if you post 5-7 times a week? And, every time time you post you get better and you attract more followers and your content has more impressions… the impacts are compounding!
“Free”
While yes you do have to pay for time, the reality is these channels are essentially free. As I’ll share later , there are ways to create systems that bring the cost of creating these content pieces to virtually zero.
Now, let’s talk about the economic benefits. These can be summarized in a quick table by showing MAU and CPMs to advertise on these platforms. Now, it’s hard to showcase exactly how many impressions you’ll get per platform if you posted organically as it’s usually a % of your followers, but instead I’ll show that the ceiling when you post organically is much higher.
Channel | MAUs | CPMs |
|---|---|---|
310 Million | $15 - $180 | |
X | 600 Million | Unclear |
1.2 Billion | $7 | |
TikTok | 1.6 Billion | $5 |
2 Billion | $7 | |
Youtube | 2.7 Billion | $4 |
LinkedIn + X
There are 1.20 billion on LinkedIn. Less than 1% post regularly. Let’s reread that. There are 1.20 billion on LinkedIn. Less than 1% post regularly. It’s a channel for the taking!
“But, Sundar, LinkedIn is a professional site” Bullshit. It’s a social media site first and foremost. When I worked at Bounce, which was a consumer tech marketplace for luggage storage, I would post frequently about my experience.
Here’s just one DM that came from it (I have at least 2-3 others + all those who didn’t DM me but may have tried Bounce because of me)
Now, let’s do the math for a startup. Let’s assume it has 10 people and each post generates 1000 impressions once you get going.
10 people x 3 posts a week x 40 weeks x 1000 impressions = 1,200,000 impressions.
Now, assuming a CPM of $15, you’d get $18K worth of paid ads a year just from posting. Now, here’s where it gets interesting. With paid ads, you have a linear funnel. With posting you don’t. For example, $18K on paid ads will 100% only get you 1,200,000 impressions. Changing nothing else, posting on LinkedIn could get you 6,000,000 impressions. 5x that for the same cost!
Let’s use me as an example:
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