It’s surprising how many CEO/Founders of startups tell me that they want to hire a VP Marketing to “build awareness.”
Consider this: according to Inc Magazine , the average US consumer sees about 3,000 advertisements per day. Can a startup really spend enough money to break through that clutter and build awareness?
For at least the first year or two, online consumer/prosumer/smb targeted startups should focus 100% of their non-PR media budget on acquiring customers. Rather than buying a microsecond of awareness, you can actually use your limited funds to engage users in a real brand experience. Even for users that don’t convert to paying customers, you create a deeper impact by engaging people on your website. And you can gain intelligence about such things as where and why potential customers are abandoning your acquisition funnel.
Focusing on customer acquisition over “awareness” takes discipline. There is always some amazing advertising opportunity that could lead to explosive growth. Your odds are probably better buying a lottery ticket.
Building a strong customer acquisition engine is the best chance you have of creating long-term awareness. At a certain scale, awareness/brand building makes sense. But for the first year or two it’s a total waste of money.
Andrew Chen
Brant Cooper
Dave McClure
Eric Ries
Jamie Siminoff
Steve Blank
I agree 100%. You are much better off focusing all of your energy on your first 1,000 customers, build a base and then things will explode. Another great post Sean.
I agree, adding to your customer list drives real word of mouth (vs. buzz about “what a cool app/technology/website”). Paying customers are the fastest way to positive cash flow.
Excellent post. There is still a fixation on brand and building brands awareness often at the expense of response and knowledge. Brand awareness sounds so old school or limiting. Learn first through carefully calibrated spending and research. Talk to customers. Listen. Refine. That doesn’t feel quite so macho or expensive as running a big ad campaign but at the end of the year you’ll have customers and know fairly well how they got there.
Totally agree with this post. Consumers have already been trained to tune out advertisements so paid advertising is very low ROI. I can’t name one ad I’ve seen online today. Instead, startups should focus on driving user engagement & quality experience. By doing this, you’re leveraging the word-of-mouth and viral nature of the web to drive adoption. Really enjoy reading your blog Sean.
Thanks Leo, glad you are enjoying the blog. Very good point that user acquisition is best way to leverage WOM and viral nature of web… I checked out your blog. Good luck with the new venture.
Sean,Im currently writing my b-plan for my niche web app ( with a total niche market of 2 million potential customers )..and the 1 item that has been eluding me is User Acquisition Cost. Although i agree with you 100% about the approach for the years 1-2 .. I still need to include a marketing budget for years 3 & 4 when we plan to really see growth.Do you think 15$/user ( paid users ) sounds right? perhaps you can glance at my bplan and spreadsheet for a sec to get a better idea of my offering?it would mean a lot to me..its my 1st startup. thanksartur
I came across this article by chance and I must say, I disagree with it. Awareness relates to how many people (usually a %) in your target market know you AND what they know about you, or associate you with. This is important for any kind of business, a start up or the Apple iPad. A level of relevant or desired awareness supports interest-generating activities, such as the kind of engagement tactics offered by websites, that then lead to positive disposition and sales. Awareness building is an important strategy that supports customer acquisition and should not be seen as an alternative. Many start-ups fail because they are simply focussed on selling X, and forget about selling works best as part of an integrated marketing effort, that ought to address all stakeholders in the market. And awareness-building can be done in different ways depending on your needs, market and budget. Just think of it this way, Google can probably sell you a new MS Office alternative, but would you buy one from say Asus or AT&T? Why?
Hey Sean, great post. I totally agree especially since I am currently going through it myself. We have an innovative product that is borderline revolutionary and people still won’t flock to it. If you have any tips on how to get the first 1000 customers, be sure to email me. We are doing our best over here literally giving 100% bonus to anyone who deposits.