There seems to be this concept in Silicon Valley that paid media or advertising doesn’t scale. It’s usually expressed by an ex founder or VC who (hopefully) made a successful product 7-10 years ago, and believes that the way to build a good startup is to do what they did.
It is generally solid advice to follow in the footsteps of successful founders. When it comes to paid advertising in 2020 however, this advice is horribly wrong.
Let me start this post by saying two things. First, I have personally been executing adspends for 7 years working on campaigns that spend up to $5M per month. Second, I hate hate hate paid media.
I love organic traffic. You know what the best thing in the world was?
Facebook, 2011, a page with 1,200 followers could organically reach over 1,000,000 people a month. I mean just look at this relic.
I’ll say it again, I love organic traffic. I am organic traffic’s #1 fan boy.
Organic traffic died in a ditch in ~2013, and it has been laying there rotting and getting worse for the last 7 years. This has happened across almost all platforms Facebook, Instagram, Google Search, Amazon, Etsy, Apple Search, everything.
Platforms Like To Make Money
I know. It sucks.
I don’t like to give Google money. I really don’t like to give Facebook money. But for some damn reason they seem to always want to charge me to reach people on their platforms.
It’s just a fact of life. Slowly but steadily over time, almost all platforms have been optimizing to charge you money. Just look at Facebook’s growth since 2013.
Long gone are the days where Facebook even encourages you to “just build your audience”.
This concept that you’re going to build an amazing product or create amazing content, and then it’s just going to go viral organically because you’re so great is just grossly incorrect.
Paid Advertising Is King
There is a single redeeming quality that paid advertising offers and it is that you no longer need to grow organically. There is a basic formula that governs your success.
The better your product is, the more money it makes per impression, the more volume you can buy.
The goal of paid advertising is to buy all of the profitable traffic. The better your product is, the more traffic you can buy. This means that improvements to your product no longer result in more organic traffic, but a greater ability to buy more profitable volume.
So here is the key idea that so many founders and investors are missing.
“We are growing without spending money on paid media” translates into “our product isn’t good enough, we can’t spend money profitably.”
In a world in which every day is increasingly dominated by paid advertising, an inability to profitably spend money means you can only grow by the scraps left on organic channels that take years to develop.
While I hate the fact that I can no longer get a ton of free traffic from Facebook and Google, in 2020 if I have a product that can bid with a profitable ROI and there’s $1B of volume, well then that means I can scale it much, much faster than in 2013.
Test your paid channels. Optimize your product for paid channels. Don’t listen to the people who say you can’t scale your paid channels. Product improvements lead directly to increased profits and the ability to purchase more volume profitably.
There is trillions of dollars of paid spend waiting for a product that can profitably convert it. In the new world, paid advertising is the king of growth.