Is it Okay to Pay for Traffic?
“Why is web traffic like sex?” goes an old Growth Hacker joke... “Because only losers pay for it." 😏
Truth is, I’ve been a bit of a snob on this point, because I see so many companies “buying growth” mainly via paid traffic, with questionable payback periods and weak fundamentals. But that’s not fair…
I work with one B2C client, and they’re able to buy signups on FB for <$3, with a value of $20, and recoup their investment within a month. But the stars are really aligned for this company:
The message in the winning ads came from 15 customer interviews (and sounds nothing like any of their competitors)
They already have product-market fit, and have been optimising retention and pricing for 2 years
B2C app with an impulse buy price point
Strong conversion through their funnel
Large enough customer base that they can build a good lookalike audience
Enough organic inbound traffic they have a good prospect base to retarget
Enormous market, so they won’t saturate their audience
Altogether, it’s not (yet) 20% of their acquisition, so if it gets expensive or stops working, it won’t kill their business
Always remember, Google and Facebook are auction-based systems, so you need to have structural advantages that enable you to out-bid other companies and keep good unit economics yourself. Also, like any auction or exchange, prices often rise unexpectedly, so you should not depend on it entirely.
The huge danger appears when people throw more money at the paid channel to try to hit growth targets, instead of looking for the root cause of the problems, lower down in the stack - in the ‘core’. Therefore, the big lesson of the day is…
Start with a Strong Core
The good news is that all the stuff that gives you a “structural advantage” on CPA is exactly the Startup Core Strengths work I keep harping on about! (Understand your customer, deliver value, optimise conversion, choose the right metrics, etc.) So having a “strong core” is not opposed to paid traffic. It’s the foundation that ensures your paid traffic is hugely profitable!