How to Pick the Right Acquisition Channel
Introduction
This is probably the most important document in our course. At a high-level, it’s going to help you find the most effective way to find your potential customers.
“Acquisition channel” is a fancy way of saying “a way to make a lot of people aware of you”. This doc is going to cover every channel we have experience with. So you can pick the one that’s best for your business.
The rest of the course covers how to actually get customers using the channels you want to try, with step-by-step tactics and best practices.
Why is this important?
Once you understand all the major acquisition channels, you can quickly pattern-match the ones that are a fit for your product. You’ll save time and money because you won’t be looking in the wrong places for your customers.
With a giant internal library of channels to pull from, and data to back up what works, you become more than just a growth hacker.
You become strategic.
Criteria
There are three big things to look for when you pick a channel:
Volume
Targeting
Minimum achievable CAC
Volume
How many people are on the channel in the first place.
For example, there’s tons of volume on Google and Facebook. Pretty much everybody uses them (note that Instagram is part of Facebook).
In general, the more volume the better, because it means you can sell to more people.
Here’s a graph of the most popular websites in the United States as of February 2016, based on share of visits:
(Source)
As you can see above, Google and Facebook dwarf everything else. Mixed with their targeting options, they have the greatest chance of working if you want to run ads.
If a channel has low volume, it means you won’t be able to rely on it for as long before you have to look somewhere else for customers. Which makes growth a lot more time-consuming.
Targeting
How easy it is to get in front of the exact people who will buy from you.
Sometimes, you can’t get in front of the right people for your business. Which means you’ll waste time and spend money getting the wrong people to come to your site.
A dumb but clear example: if your company sells dog food, don’t advertise on LinkedIn; there’s no way to only show your ads to dog owners there, so you’d be wasting money showing your ads to everyone else.
Over time, we’ve picked up a lot of nuance around what channels work better for what types of businesses.
There are two main ways to get in front of potential customers.
Demographic (discovery-based) targeting
For example, being a dog owner, working as a plumber, or being a Golden State Warriors fan.
This is the targeting you use when you show ads to people on Facebook, Instagram, or LinkedIn. They discover you (because of an ad) instead of deliberately setting out to find you. And Facebook and LinkedIn have a lot of data on how to find the exact people you need.
When you use demographic targeting, it's easier to saturate your audience — and risk restricting your volume. Which means people will get bored of your ads.
For example, say you're targeting people in Florida who liked the "Incredibles 2" movie on Facebook. After the movie first comes out, there aren't many more people who will continue liking the page for it. You're eventually going to run out of people who haven't seen your ad. Because there aren't new people to show your ad to.
Instead, you want demographic audiences that are "living and breathing". These are where new people constantly join the audience and stale audience members leave. A good example would be an audience of "new parents" (a targeting option on Facebook); every year, tons of people become new parents. And, as their kids get older, they age out. So different people see your ads every year.
Behavioral (intent-based) targeting
When someone expresses intent to buy something through an action. For example, the moment someone wants to compare dog food, search for the nearest place to buy a wrench, or buy a Lebron James jersey, they’re going to search on Google.
Searching would be the “action” they take.
This is the targeting you use when you show ads through Google or Amazon searches. Customers have a specific thing they’re looking for, and they want you to deliver the answer. You show ads based on the words they search.
We’ll go into more detail on this throughout the course.
Minimum Achievable CAC
Minimum Achievable CAC is the absolute least amount of money you have to pay to get a new customer (who has never heard of you before). Again, that's a customer: someone who actually purchases from you.
Your MACAC illuminates the channels you can afford to test in the first place.
CAC stands for the “Cost of Acquiring a Customer”. It’s one of the most important numbers to track.
Pop open our glossary and read about CAC now. Then come back.
If you’re not charging for your product, or you can’t budget money to acquire customers, you’re not going to be able to pay for ads. (Unless you want a short-term burst of traffic to see how people interact with your site or product).
The higher your acceptable CAC, the more options you have.
We’ll give you rough estimates of the minimum CAC that we’ve found to work for the different channels, based on having tried them over and over with our clients.
If you can’t afford the minimum CAC, rule the channel out.
Channels
Here’s a massive list of acquisition channels.
It’s prioritized by roughly how successful the channel has been for clients, as well as the minimum CAC you’ll need to test the channel, based on our experience.
Pop open the glossary. Check it for jargon you don’t know as you read through.
Then, skim this list. There’s more detail below it.
In later modules, we'll dive deep into each of the following channels. For now, we're giving you an overview. You’ll want to read through all of these — some will apply to your business that you didn’t think of.
Let’s get started.
Referrals
Examples
There are many types of referral strategies — not just what you first think about.
Traditional Referral
Email Referral
Affiliate Link
Referral Cards
Minimum Achievable CAC (Based on our Experience)
$0 (works for any budget). Referrals can be free!
What types of products does it work for?
Most B2C products.
What’s B2C? When you sell to people, not businesses. Check the glossary for more detail.
B2B products that involve sharing and collaboration.
What’s B2B? When you sell to businesses. Yada yada glossary yada yada.
Referrals don’t work for one type of product: where the customer feels like they lose value by sharing it with others.
We’ll give you a couple examples of companies where referrals don’t work:
Celebrity shoutouts — referrals don't work
One of our clients was an app that let celebrities send personalized video shoutouts to your friends.
Part of the magic is that a celebrity sends your friend a message and that you somehow hooked it up. Implying that you know someone famous.
But as soon as you refer them to the app, the magic is lost. (“Oh, you just used an app and paid them for the shoutout.”)
So, many users wouldn’t want to refer friends to the app.
Riley — referrals don't work
Riley was a startup that automated a lot of work for real estate agents. It died. 😞
Real estate agents didn’t want to refer the app to other real estate agents — because those agents were their competition!
Making a referral was worse for their business. So they didn’t do it.
Google Ads (aka AdWords)
Example
Minimum Achievable CAC (Based on our Experience)
$10
What types of products does it work for?
Google Ads (formerly known as AdWords) is intent-based marketing. People are looking to answer a query or solve a problem.
Google Ads is one of the largest and most reliable sources of leads for most businesses, and unlike Facebook, which relies on relatively fixed demographic data, Google Ads is an ever-renewing source of new leads as people’s intents and interests change daily.
Therefore, it can work for most products. B2B, B2C, whatever. It’s almost always worth testing.
A better question here is “What kind of products doesn’t Google Ads work for?”
Answer: Products that are so new, people don’t know to Google them. Or products that rely on audience characteristics as part of the product. For example, this t-shirt:
A dog mom in North Carolina isn’t going to Google “shirts for north carolina dog owners”. At best, she might search “dog shirts."
Instead, she’ll have to discover the shirt in her Instagram feed. Where she’ll be perfectly targeted. (Instagram uses all of Facebook’s data about likes, gender, and location to target people.)
Google Shopping Ads
Example
Minimum Achievable CAC (Based on our Experience)
$10
What types of products does it work for?
Physical eCommerce companies and single purchase software. As of 2019, Google Shopping ads have generated the most revenue for eCommerce clients compared to any other ad channel.
Instagram ads
Examples
Minimum Achievable CAC (Based on our Experience)
$20
What types of products does it work for?
Mobile apps, particularly iPhone apps. eCommerce companies. B2B and B2C products.
Yes, you read that right, B2B products definitely work on Instagram. People click on ads related to their job, even when they’re on Instagram.
Instagram (IG) is the best demographic-based targeting channel. This mantle recently belonged to Facebook, but people are engaging less with Facebook ads.
IG users convert the best after clicking ads. And IG clicks are competitively priced.
It's an especially good fit for mobile apps and eCommerce goods. For many of our clients, Instagram is their only profitable channel.
Facebook ads
Examples
Minimum Achievable CAC (Based on our Experience)
$20
What types of products does it work for?
B2B and B2C products, particularly desktop apps and Chrome extensions.
On Facebook, you’re performing demographic-based targeting: Your audience size is limited by the number of Facebook users who happened to express prior interest that overlaps with your market. For example, you’re limited by the number of Facebook users who are dog owners or who liked the Boston Red Sox. And you're merely approximating that overlap.
Facebook is also a place where people discover ads: they’re skimming through their feed and clicking on things that tickle their fancy. People on Facebook aren’t necessarily trying to solve a specific problem in that moment. So if you're selling a product that really grabs people's attention when it's visually advertised, you might be able to leverage Facebook effectively.
Quora ads
Example
Minimum Achievable CAC (Based on our Experience)
$25
What types of products does it work for?
Surprisingly, a lot.
Relative to other channels, Quora tends to drive lower absolute volume. It has an order of magnitude less monthly traffic than the other channels. (Around 100 million people per month, as compared to, say, 1.4 billion per month for Google). You can bet people do more Google searches.
Not many people advertise on Quora right now, which makes it relatively cheap compared to other channels.
Cold Outreach
This is one of the cheapest and most effective ways to make people aware of you. People feel icky about reaching out to strangers, but most B2B companies are built on the backbone of effective cold outreach.
Think about how many salespeople there are in the world. This is what a lot of them do all day. There’s a reason: it’s a great acquisition channel.
Examples
Social Networking Outreach
Tweeting at people, responding to comments on Reddit, LinkedIn InMail, etc.
Door-to-door sales
People who sell Cutco knives, insurance, Jehovah’s witnesses, etc.
Minimum Achievable CAC (Based on our Experience)
$0. If you’re doing it yourself. Otherwise, if you’ve hired a salesperson, ~$50.
What types of products does it work for?
B2B products.
High LTV (>$150) B2C products.
Too many buzzwords? Cough… glossary.
Direct Sponsorship/Partnerships
Sponsor sites, businesses, content, and people to talk about you. (Or talk with you.)
Examples
Podcast Sponsorship
https://www.dropbox.com/s/h2j83vrs898vj3r/podcast_sponsorship.mp3?dl=0
Promoted Posts on Product Hunt
Conference Sponsorship
Minimum Achievable CAC (Based on our Experience)
$0.
If you can’t afford to pay, there are ways to partner for free. For example, you can send people free samples of your product to review. You can also offer them content (e.g. offer to be interviewed for a podcast or write a guest article for them) if their audience is hungry for more content.
What types of products does it work for?
Almost any product.
Direct sponsorship means sponsoring the places that your target audience visits: You design ads yourself then place them on specific sites, podcasts, conferences, and apps.
As long as you know where your audience goes online, you can often find a way to get in front of them. There just has to be enough volume to make it worth your time.
Direct sponsorship is different from most other ad channels. On those, you're forced into using standard sizes of ads. And you can't negotiate anything. Direct sponsorship gives you a lot more freedom. You negotiate whatever you want — what you know will convert at the lowest price. And you don't always have to pay for it.
Direct sponsorship is also different from brand marketing, which is when you only try to make people aware of your product. (It doesn't matter if they buy.) Growth is not about that. We care first and foremost about quickly increasing the number of purchases.
Therefore, we have to pick resources to sponsor that have high-quality, high-volume audiences. Resources our customers trust. And we have to make sure our direct sponsorship message is maximally compelling and visible to the audiences consuming these resources.
The main catch with direct sponsorship and partnerships is that they're time-consuming: you have to, e.g., brainstorm partnership ideas, negotiate, make custom ad creatives, and go back-and-forth on details.
Content/SEO
Examples
Blog posts
Free tools that show up in the Google search results
Video reviews on YouTube
Minimum Achievable CAC (Based on our Experience)
$0. If you’re doing it yourself and have a lot of time.
What types of products does it work for?
Products where people tend to Google for answers a lot. As a very, very rough rule of thumb, products that crush it on Google Ads do well in Content and SEO.
When it comes to content and SEO, you generally want to prioritize Google Ads first. (Unless you really can’t afford it.) You can start getting customers faster, and you may find out that it’s immediately profitable.
A content strategy generally takes at least 6 months to see results, and requires a lot more ongoing work. Many companies hire teams of writers and creators to make their content.
Ad Networks
Examples
Ads that pop up inside of mobile apps.
Ads you see in online magazines like The Huffington Post.
The ads you see around the internet on every major site you visit
Minimum Achievable CAC (Based on our Experience)
$10
What types of products does it work for?
All sorts. Mobile apps with broad audiences (e.g. men in the United States) can perform well on these. We’ve also seen success with eCommerce businesses and SaaS apps.
The quality of traffic on these tends to be worse, however. Meaning that, even if people click through an ad, they tend to purchase less. So we usually look at ad networks after our priority ad channels.
We’ve found the most success when we retarget people on an ad network. This means they first come to our site another way (like through Facebook ads or a news article), but they see us again in an ad when they’re browsing somewhere else on the web. Retargeting tends to work no matter where the retargeting ad is shown. So, a clever strategy is to take advantage of the cheap advertising available on these ad networks.
Conferences/Offline Meetups
Examples
Going to Dreamforce, SaaStr, the Green Sports Alliance Conference, the National Council of Teachers of Mathematics Conference. Meeting people. Et cetera.
Minimum Achievable CAC (Based on our Experience)
$10-$400 (roughly the cost of flying out to a conference).
What types of products does it work for?
Products targeting enterprise, B2B, and B2G. Service-based businesses. Products with a high LTV (over $500).
Pinterest ads
Examples
Minimum Achievable CAC (Based on our Experience)
$25
What types of products does it work for?
B2C eCommerce companies targeting women between the ages of 20 and 45. Because that's most of the audience on Pinterest.
You have the greatest chance at making ads work if you're selling fashion, food, design, arts/crafts, or furniture goods, and if your product lends itself to eye-catching imagery.
In other words, Pinterest can (modestly) work for some B2C eCommerce goods.
However, Pinterest is a much broader fit if you exclusively use it for retargeting, which is the tactic of showing ads to unconverted site visitors to get them to return and buy.
Snapchat ads
Examples
See this page.
Minimum Achievable CAC (Based on our Experience)
$25
What types of products does it work for?
Snapchat now has “install ads”, which means you only pay when someone installs your app. This lends itself well to B2C mobile apps, especially ones targeting younger users.
Retail stores also perform well: Snapchat lets you target users within 0.3 miles of any physical location.
Right now, Snapchat ad clicks are cheap, but the on-site conversion is terrible. Snapchat users do not take out their credit cards. They're coming for free stuff.
Expect 5-10x worse on-site conversion rates than what you'd get from a well-targeted FB/IG campaign.
This is a shame because the ad creation experience on Snapchat is wonderful, their support is top-notch, and their targeting criteria is sufficiently granular.
However, their ad platform is new, so we’re expecting improvements in the near future.
YouTube ads
Examples
Video ads that play before your video (either 6 second bumper ads, or longer videos you can skip after 5 seconds)
Minimum Achievable CAC (Based on our Experience)
$25
What types of products does it work for?
Products with audiences that live on YouTube: gamers, diet and fitness, people learning anything (an instrument, ux design, etc.), beauty products.
It’s good for visually appealing products that lend themselves to appearing in a high-quality video, particularly if they have good packaging or design.
Apple Search Ads
Example
Minimum Achievable CAC (Based on our Experience)
$10
What types of products does it work for?
iOS apps. Big surprise.
Unfortunately, there usually isn’t enough volume on Apple Search ads to make them worthwhile — unless you happen to have a super broad audience. People also don’t click on them much; when you search the App Store, you tend to have a specific app in mind already, so you won’t care if other ones show up above it in the search results.
It’s worth adding as a secondary channel if you’re a mobile app. That’s about it.
Bing ads
Example
Minimum Achievable CAC (Based on our Experience)
$10
What types of products does it work for?
Health products. Products targeting people over 35 (particularly less tech savvy).
Bing has a few problems when compared to Google Ads:
It has an order of magnitude less traffic
The demographics are older and less tech savvy (most use Internet Explorer)
People convert far less often
That being said, CPC’s are lower (due to less competition), it’s quick to set up, and you can directly import your Google Ads setup to it. Set up Google Ads first, though.
So if Google Ads works for you, it’s always worth setting up Bing as a supplementary channel to see if it works too. If Google Ads doesn't work, don't expect Bing to.
LinkedIn ads
Examples
Minimum Achievable CAC (Based on our Experience)
$750
What types of products does it work for?
Three types of businesses do well on LinkedIn:
White collar employment recruiting of almost any kind. For example: “We want to hire marketers like you. Submit your resumé.”
Why? Because that's largely why people visit LinkedIn in the first place.
B2B products or services with an LTV greater than $1,500.
Higher education. For example, an MBA school recruiting applicants.
That’s it.
Conversion rates are abysmal on LinkedIn and the on-site engagement is generally very poor. But, because LinkedIn is extremely good at targeting people by job title, you tend to have more confidence you're targeting the right audience that can get the most value out of your product. So it’s worth earnestly testing this channel despite how expensive its clicks are — so long as your audience exists on there.
Note: Don’t run ads directly to a signup page on LinkedIn. They won’t work. Instead, run ads for gated content (where you exchange content for the visitor's email address). Then, reach out to the email leads individually to see if they're a good fit ("qualify" them).
For example, you can ask people for their email before they access guides, free tools, whitepapers, eBooks, or webinars. Webinars work best for closing leads because you can sell better on a call — but are the most work.
One Exception - B2B Retargeting
LinkedIn's primary ad type only shows to desktop users. We've seen some success retargeting people for desktop products lower than that $1,500 LTV. This is worth testing if you're B2B.
Print ads
Examples
Ads in newspapers, trade journals, magazines, and books.
Minimum Achievable CAC (Based on our Experience)
Unclear.
When you run a print ad, attribution is near impossible. It’s very hard to track that someone bought from you because they saw your ad. It’s a lot easier to track clicks on a digital ad. So it’s hard to know how much to spend on these.
What types of products does it work for?
Niche businesses and products that target very technical audiences.
Print ads may be worth trying if you can stick in a free sample of your product. You see this with some sunscreen ads in newspapers: they’ll actually put a free packet on the page.
The advantage of print is that it can be cheaper to run ads. Since it’s hard to measure how ads do, a lot of companies are turned off and don’t compete with you for ad space.
(There are ways to measure performance, such as with coupon codes, but they’re not great.)
Direct mail (snail mail)
Examples
Coupon booklets, magazine subscription letters, credit card offers. And of course, scammy letters like these.
Minimum Achievable CAC (Based on our Experience)
$50
What types of products does it work for?
Products that target older audiences. Small impulse buys where a sample can be easily shipped. Food delivery.
Local businesses that can handcraft and hand-deliver letters to people in the area.
Out of home and traditional media ads
Examples
TV ads, billboard ads, subway car ads, etc. Anything people see outside of their home.
Minimum Achievable CAC (Based on our Experience)
Unclear. Very hard to measure the impact it has since people aren’t clicking a link. They will likely just google your business after.
What types of products does it work for?
When the product is physically located near the ad. For example, local museums, restaurants, u-hauls, and storage space.
This is why you’ll see medical malpractice billboards outside hospitals and personal injury lawyers on the back of buses.
Twitter ads
Examples
Minimum Achievable CAC (Based on our Experience)
$45
What types of products does it work for?
Not many. Don’t test Twitter until you’re desperate.
Sometimes, it works for products with specific audiences that hang out on Twitter (for example, venture capitalists). People say that it can work for products that target developers — we’ve never found that to be the case.
It can also work if you have access to an account with a lot of followers that can personally tweet to recommend your product.
That’s pretty much it.
Relative to Facebook, Twitter is:
Lower volume
Higher CPC
Lower conversion rates
When our agency started, we ran Twitter ads for most of our clients, but we’ve stopped doing it unless we have a great reason or the client insists we do. They’ve almost never been profitable. There also isn’t much volume on Twitter compared to the other major social ad channels.
GIF ads perform decently on Twitter. Video ads also perform OK on Twitter. So if you decide to try Twitter, invest some time into video production.
Most people use Twitter on mobile. Make sure your web experience is mobile optimized.
Reddit ads
Examples
Minimum Achievable CAC (Based on our Experience)
$200
What types of products does it work for?
Reddit ads are typically a waste of time. Their targeting granularity is too broad to be effective, or too niche to be scalable.
Skip reddit ads unless your product appeals very broadly (e.g. underwear, credit cards) or you can squeeze enough revenue out of the tiny niches that exist on reddit.
However, Reddit is undergoing a massive shift in both their product interface and ad platform: They're increasing the news feed's emphasis on videos and GIFs. And they're planning to show video ads alongside that multimedia.
If these upcoming video ads perform anything like video ads do on Facebook, they may be effective. So we’re waiting to see.
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