How Online Startups can Build Audiences on the Cheap

Last week, prominent investors declared in blog posts that two marketing tactics favored by many startups — search engine optimization and viral promotion via Facebook — were no longer viable. The real truth is that both remain effective but neither is free, and never was. So let’s examine how a startup making consumer apps or online services can get that much-coveted first million or two users as cheaply as possible.

Investor and Hunch co-founder Chris Dixon said he hasn’t seen any startups build a business through SEO since 2008. He reasons that Google’s ranking algorithm favors older sites with lots of links links. That is fostering an arms race between Google and the “black-hat” optimizers that build link farms and the content farms that create highly optimized but lightweight content.

Building off Dixon’s argument, Bessemer Venture Partners’ Sarah Tavel said she thought Facebook could still act as a startup’s primary free marketing channel, but that its efficacy had been severely diminished. Facebook is over-crowded with apps, she thinks, and is exerting more control over the viral amplification social gaming companies like Zynga used so effectively.

SEO, Facebook Never Free, Still Effective

SEO never was free. Big companies spend thousands of dollars on optimization tools (e.g., BrightEdge, Covario, SEOmoz, Yield Software) and search specialist agencies like iCrossing and 360i. These tools and services help companies with tagging and linking, and making their content and apps more discoverable and indexable by search engines. But more importantly, SEO still works.

Search guru Danny Sullivan advises multiple marketing tactics, and says he sees SEO working for plenty of companies. His own relatively new content site gets 20 percent to 40 percent of its traffic from search. Q&A sites like Quora and Stack Overflow have grown primarily through search and word of mouth. In this interview, Stack CEO Joel Spolsky concedes his sites’ user interface is so bad he depends on Google as his front end. SEO should remain a major marketing tactic for any startup.

Likewise, while it’s true that Facebook has clamped down on free promotions — game status updates only appear in other gamers’ feeds — the biggest Facebook success story wasn’t built on free viral tactics. Social commerce giant Groupon’s president Rob Solomon told me in an interview that Groupon didn’t do much SEO. It bought some paid listings and display ads from Google, but most of its marketing budget went for Facebook advertising. Groupon only did TV ads after it got to 50 million users.

At the same time, Inside Facebook wonders if Facebook might relax some of its viral restrictions, now that its games-driven Credits virtual currency business is starting to mature. It has already opened up Credits promotions. Along with SEO, most consumer startups should continue to use Facebook, but expect to spend some marketing dollars there.

Other Tactics for Audience Building

Getting that first million users that advertisers demand isn’t going to come for free, but it doesn’t have to be that expensive. Build marketing programs around the following:

  • Multichannel campaigns: Most ad inventory is still cheap at sub-50-cent CPMs. Facebook is building out free analytics tools to help plan marketing across offers, ads, Likes and Comments.
  • Flexible SEO: Google’s “panda” algorithm (upgrade affected more sites than usual. Here is some advice on how to react to the changes.
  • Lead generation: It’s a little sketchy, but you can still buy Facebook friends and Likes from companies like GetMorePopular.com and uSocial.
  • Other social networks: MySpace inventory is even cheaper than Facebook’s, and it still has 40 million users. Connect.me signed up 40,000 followers via Twitter without a product.

Question of the week

How can a consumer startup build an audience?
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David Card

VP Research Gigaom Research

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