In 1941, the first official paid TV commercial aired in the U.S. It was a grainy, crappy, shaky 10-second ad for a watch company with the voice-over, “America runs on Bulova time.”
By the 1960s, TV was the dominant advertising medium. By 1994, one-third, or $31 billion, of all advertising dollars in the U.S. were spent on TV commercials.
In 2016, digital surpassed TV advertising spend.
Today, TV represents only 20 to 25% of total ad spend. However, TV advertising spend is still more than 50% higher — $50 billion versus $31 billion — than when this medium was the dominant channel 32 years ago.
Procter & Gamble still spends billions of dollars every year to launch, build, and cement its market-leading brands such as Tide, Crest, Gillette, and Pampers.
New channels to acquire customers appear every few years. But the old, dominant ones don’t stop working; the game matures.
How to get customers for free (a sneak peek at my new book)
Early next year, I’m releasing my new book on how to grow a business faster by doing less.
In the first of three parts of the book, I share how to simplify a business to grow much faster. Today’s newsletter is based on the section, “The Best Platform to Get Customers for Free Today”.
The 4 phases of every customer acquisition platform
Phase 1 — Rapid user growth: The platform catches fire. Users love it. They tell more users. At this stage, the platform owner subsidizes the value users get by dumping millions or even hundreds of millions of dollars into features built by highly paid, very smart employees.
Phase 2 — Free traffic: Savvy entrepreneurs and marketers take notice. They start using the platform to promote their products. With a high demand for new stuff on the platform and few competing businesses, the game is easy. Making money is always easy when traffic is free.
Phase 3 — Easy paid traffic: The platform owner decides it’s time to generate profit. They stop sending businesses free traffic — it’s time to pay up. They launch a paid advertising system. Businesses trickle in. Though the cost is more than zero, traffic is still cheap. Some grow massively and rapidly on scalable, cheap paid traffic.
Phase 4 — Hard paid traffic: The game isn’t easy anymore. Lots of businesses advertise on the platform. The user base is huge, but isn’t growing like it used to. New advertisers struggle without the necessary skills. Big businesses, or those with highly skilled teams, still crush it. The game has evolved.
Let’s apply this four-phase model to Amazon.
Amazon:
- Phase 1 — Rapid user growth (1999 to 2009): Amazon grows from zero to $34 billion per year. Customers get a massive selection and free shipping. They love it.
- Phase 2 — Free traffic (2010-2014): Selling on Amazon back then was ridiculously easy. By adding a few keywords to your title and getting a few reviews, you could rank in the top 5 of the search results for Top 100 products. I take notice. I also start teaching people how this works. We launch Amazing Selling Machine (ASM).
- Phase 3 — Easy paid traffic (2015-2017): Amazon’s paid advertising takes over. Paying for ads to get traffic that used to be free is annoying, but Amazon is so lucrative that it’s worth it. Some sellers build 8-figure brands ONLY with paid ads because traffic is still cheap.
- Phase 4 — Hard paid traffic (2018+): The game isn’t easy anymore. Only the sophisticated sellers win. You need good ads, good listings, and differentiated products. There’s still no guarantee you’ll do well. But if you crack the code, you can still build a massive sales channel with Amazon.
Know the game you’re playing
A couple of years ago, getting sales on TikTok was easy. At one point, TikTok let you sell your product at a 50% discount, give that discount to its users, and still get paid full price. That’s crazy, and it couldn’t last forever.
Every five to ten years, there’s a new, hot platform to acquire customers. Users are plentiful. Traffic is cheap. Competition is scarce.
Then the platform enters the inevitable subsequent phases of evolution.
To win at acquiring customers, first understand the game you’re playing. You have two choices:
- Master the skills of a mature, hard platform (Meta ads; YouTube organic; Instagram organic)
- Find a new one (maybe TikTok, though it’s maturing; whatever platform comes next;)
The latter choice isn’t always better. There’s a risk you put a ton of effort into a platform, and it dies — like Clubhouse during the pandemic.
I personally hate chasing new platforms. At this stage, I have zero interest in setting up another social media account, figuring out a new platform, putting a bunch of work into it, and then watching it fizzle out. But exploring new platforms might be what you love to do.
Also, depending on your budget, it might be what you have to do. On a low budget, you’re better off finding any platform that gives you free traffic.
If you have money, but little time, you’re better off mastering, or hiring people who have mastered, the skills of a mature platform.
The best platform right now to get customers for free
I like Meta advertising (includes Facebook and Instagram). You can reach half the world’s population in one place. But the game is hard. You need to have a good product, be great at funnels, be great at ads, and be great at media buying. All of that is learnable or hireable, but without each of those four ingredients dialed in, you’re going to struggle.
If you’d prefer to roll up your sleeves and put in hours a day for 3 to 12 months without seeing a return, go with TikTok organic content and influencers. If I were starting a new brand today with a small budget and no skills, I’d go hard on mastering the organic TikTok game. I’d literally post my own videos related to my product every day. I’d do that for a few months, figure out what makes content get views, then start paying others to create content for my brand. Slowly, little by little, I’d build my organic content skills and an army of influencers.
Pick your game. Do whatever it takes to master it.
—Matt
P.S. Is there a platform other than Meta or TikTok where you’re getting customers for free or where others are? Shoot me a reply. I’d love to look into it.