A Head of Growth, CMO, or Head of User Acquisition has many responsibilities. One key task involves planning and distributing the company’s marketing budget through different paid acquisition channels. There are plenty of paid acquisition channels to grow our business. If we had an unlimited budget, we would surely try to use all of them. However, marketing budgets are finite regardless of their size. So we should ask ourselves these questions: what’s the best way to distribute the budget? What are the best paid channels to use? In which moment should we choose one or another?
This article does not cover the steps for executing a user acquisition campaign neither does it describes all possible acquisition channels to use. This article aims to help the person in charge of the company’s growth choosing between all different paid acquisition channels based on criteria such as market share or potential market through a simple framework. This model builds on the framework described by Eric Seufert in his article “Brand marketing and performance marketing could co-exist on mobile” which explains the relationship between “performance” and “brand marketing” based on such a model. This article applies to the “mobile app” ecosystem However, you can extrapolate it to other sectors.
Define the potential market
The first thing we must do is clearly define our potential market size. To achieve this, a ring-shaped graphic works well for this purpose. Each ring represents a segment of the population to target. The deeper layers represent the customers most related to our product and/or service while the external layers represent the rest of the potential market. You should adapt this chart for each sector. In our case study of “mobile apps” we could represent layers with different customer segments. For example, some use apps frequently while others own a Smartphone but do not use apps. Others only use basic apps. We could also include those who plan to get a Smartphone soon.
Market Segmentation Layers
In our represented case we have:
- Direct competitors. Start from the deepest layer to grow your business. Focus first on customers who use similar products and apps. This segment should have the highest conversion rate, although it depends on many other factors. Suppose that we have a music app that offers specific music services. It is possible that there are other similar apps that offer the same or similar services.
- Same application subcategory. In the case that there is a subcategory for our case, this would be the next layer to consider. Using the same example above, the layer will be “all music apps” subcategory.
- Same application category. The same case as previous one but on a higher level of hierarchy. For our example will be “all entertainment apps” category.
- Application ecosystem. A layer that houses the entire app ecosystem of mobile applications from games, books, movies, services, etc.
- Specific audiences. In the outer layers, we could reach users who may or may not use applications. We can segment them based on interests through specific media channels such as theme magazines, article opinions or even specific TV channels or TV shows.
- Generic audiences. This would be the most external layer of our framework and could be known as “mass market”. The same conventional channels could be used to target this segment but more generic speaking. It’s when we talk about TV channels, radio, press, prime time, etc. It is common to define the segment such as “Men over 35 years old”.
Defining our audience with a “customer persona tool” helps us better identify the stages described above for our case.
Paid acquisition channels to be used for each segment
Before combining the paid acquisition channels with the segment of our potential market, we will describe, very roughly and at a very high level, the different existing paid acquisition channels. Obviously, there are many more of them and they could be subdivided into many other levels. However, this is not the purpose of this article.
- Owned inventory channels. These are applications or companies with their own traffic. They sell it through different systems. The most well-known are Facebook Ads, Google UAC, Linkedin, Twitter, Pinterest, Apple Search Ads, Snapchat, etc. The main advantages of these paid acquisition channels are hyper-segmentation for interests, tastes, uses, demographics, etc. These native ads integrate into the application itself. This greatly increases profitability and conversion of the advertiser.
Ad Networks and AdExchanges
Advertising networks (adnetworks) and AdExchanges. These are basically networks or technologies that connect advertisers who want to buy inventory and publishers who want to sell their inventory. The main advantages of the AdExchanges are that there are some specialized by sector, segment or geo, and that could cover the rest of the market that owned inventory channels could not reach. For example, there are users who read a specific online magazine but do not use Facebook or Twitter. The segmentation capacity of these solutions depends on their ability to mediate. technology, and quantity and quality of their publishers. This other article collects more information about its operation in case you want to go deeper and in more details.
Traditional and Unconventional Media
Conventional media. In addition, traditional media such as press, magazine, radio, television, cinema, exterior, etc. The main advantages of these channels over digital advertisement are the scope, scalability, brand awareness and creativity.
- Unconventional media. Lastly, we have the unconventional media that consists of those alternative sources that will depend on each case in question. Some examples are influencers, podcasts or reddit.
Once the main paid acquisition channels have been described at a very high level, we will introduce them into our model by crossing them with the market segments we’ve described for each case.
Recommended Channel Strategy by Layer
To attack the more inner layers of our framework, it would be the best to avoid the Adnetworks jungle by focusing our budget on owned inventory solutions such as Facebook Ads or Google UAC mainly because of its targeting capability. While there are channels that may not meet the needs for all advertisers as well as scalability, they are the best channels to start with, obtain insights and define our business metrics. At the end of the day, these are “All in one” solutions really easy to use.
Subsequently, once we see that those networks begin to be “insufficient ” we can
Expanding to Broader Channels
Expanding our scope to adnetworks and adExchanges, starting preferably by the specific ones of our sector or geo. Before attacking this layer or diversifying the channels, we need to professionalize our reporting tools and have clearly defined our positioning strategy. Many companies fall into the mistake to diversify their paid acquisition channels too early. Some indicators for moving to the next layer include the audience saturation and CPM increases.
At this level, we can also try some unconventional media such as influencers. These types of campaigns consume too much time and budget in creativity, negotiations, etc. They are an interesting step to explore before reaching the upper layers and to start generating brand recognition across our audiences.
Lastly, when we aim to generate brand awareness or
Reaching the External Layer
To attack the most external layer, of our model to drastically open the spectrum, we could use the traditional conventional media, preferably starting with those specific or most related to our product and/or service. This should be the last option of all, once our strategy, positioning and product are well defined and executed and we have achieved enough traction in the rest of the layers. Conventional media will put the “link to the wrapper” of our entire marketing strategy by closing the circle.
As we evolve and scale our paid acquisition channels, our strategy gradually goes from what is known as “performance marketing” to “brand marketing”. And if we have set ourselves, this evolution is precedent of our market share evolution. A higher market share, the more need to use conventional media to increase our scope, generate awareness, etc. without ever neglecting the performance marketing, which allows us to enhance the more internal layers of our market.
Finally, let’s take a clear example into the startup ecosystem that really explains this model: the “Media for Equity” (take a stake inthe company in exchange for advertisement budget usually in the form of conventional media). If we had unlimited budget or the possibility of doing a Media for Equity we would do it, but it may happens that it is not the right time for our business. In fact, the first filter that you will find when doing a Media for Equity is to see if you really have reached the market and product maturity to jump into the next level.
Related articles:
The three stages of the mobile marketing lifecycle
Mapping the Mobile User Acquisition Stack
Acquiring Better Users
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