Resource:
Growth Channels

Which paid and organic channels should you pursue?

This lesson walks you through identifying the customer acquisition channels most likely to work for your startup.

I've collected years' worth of marketing data from running a community of 60,000+ marketers at Demand Curve. Based on my observations, here are the acquisition channels I loosely recommend each business pursues first.

B2C companies

If you sell a product to consumers, these are the channels I suggest prioritizing:

To learn how to execute these channels, I recommend using my startup Demand Curve.

B2B companies

If you sell to businesses:

Before we continue, let's define some terminology:

Predicting which channels will work

How well a channel fits your business typically depends on four factors:

In short, for ads to reach scale, you're at the mercy of whether your target audience exists on a channel, whether you can accurately target them, and whether you can make compelling ads that belong on that channel.

Prioritizing channels

When you’re ready to test channels, don’t test randomly. Have a process for prioritizing. You can use the ICE prioritization framework, popularized by Sean Ellis, to identify which channels have the highest expected ROI.

Using ICE, you rate each channel: score three variables on a scale of 1-10:

  1. How much positive Impact would the channel have if it's successful
  2. How much Confidence do you have that it'll succeed
  3. How Easy it would be to try—how much time and effort will it take?

Add the numbers together then divide by three to get the average score for each channel. Repeat this exercise for every channel then rank channels by their scores. Channels at the top of the list have the highest expected value and should be prioritized.

You can jumpstart ICE calculations by finding an expert via LinkedIn who’s already grown a company similar to yours—then exhaustively grill them to learn which channels worked and which didn’t.

Succeeding at paid acquisition

Most companies are unable to profitably acquire customers through ad networks such as Facebook Ads, Instagram Ads, and Google Ads. (These are the primary paid acquisition channels that companies get work if they get any to work.)

Two types of companies have the best chances of making paid work:

Here's how to calculate if a paid channel is affordable:

Here's the problem: Let's say our hypothetical paid channel is Facebook ads. If your Facebook click cost rises by just $1.50 to $4.50—with no increase in conversion rate—you're now paying $360 to acquire a customer. Suddenly, Facebook ads are unprofitable.

That's the volatility of ad channel revenue, and that's why ads are typically best for companies with expensive products whose sizable margins buffer against volatility.

This is why I encourage marketers to harden their funnel's conversion and referral rates before investing heavily into paid. It makes paid net cheaper.

If they do get one of these channels working at scale, it's a holy grail when paired with strong word-of-mouth or product-led acquisition, which acts as a force multiplier: every paid user attracts many more unpaid users.

Succeeding at unpaid acquisition

If you fail to make paid channels work, you'll rely on unpaid channels: content marketing, referrals, word-of-mouth, sales, PR, community, and so on.

This is an acceptable outcome. Succeeding at paid acquisition isn't a necessity—it's just convenient because it scales quickly. In contrast, unpaid channels benefit from not being at the mercy of ad channel volatility, ad audience risks, and CPM pressures. The tradeoff is that unpaid generally requires more skill to make work.

Here are the major unpaid channels:

Here's a framework for prioritizing these unpaid channels: pursue persistence channels before hit-or-miss channels.

Twitter, for example, is what I call a persistence channel: If you post good tweets consistently, compounding follower growth is guaranteed. It's just a matter of persistence and picking up many small wins.

In contrast, Product Hunt, reddit, or Hacker News are examples of hit-or-miss channels. There's no compounding growth; you're at the mercy of that day's front page competition. And you'll rarely hit. This isn't a great long-term investment.

Do big hits on hit-or-miss channels make up for all the misses? Not really. It's still better to prioritize persistence channels:

  1. Hit-or-miss growth doesn't compound — A hit-or-miss platform indexes content and de-emphasizes the content creators. This means that having a post go viral doesn't reliably increase the odds that your next post goes viral. Compare this to a persistence channel such as Twitter: If your tweet goes viral, you'll gain new followers who retweet your future tweets. That's a compounding flywheel.
  2. Hit-or-miss ROI trends toward zero — After you repeatedly hit the front page of a leaderboard channel like Reddit or Product Hunt, you tend to wear out your welcome.

This doesn't mean you shouldn't post on hit-or-miss channels. Instead, it means you should treat them as accelerators instead of originators: post content on persistence channels then cross-post breakout hits to hit-or-miss channels to get an extra boost.

In my opinion, strong marketers recognize the unbounded upside and compounding returns of persistence channels. Weak marketers overvalue hit-or-miss channels.

Recap

Here's criteria you can use to filter channels:

Then you can use ICE to prioritize the experiments:

Most companies prioritize Facebook ads, Instagram ads, Google Ads, SEO, sales, word-of-mouth, and product-led acquisition.

Facebook and Instagram are particularly useful because you can target people based on their profiles—their interests and past behaviors. Google, on the other hand, is useful because you can target people shopping right now for what you’re selling. Combining the two platforms gives you full coverage on people both currently in and out of market.

However, I recommend testing nearly everything over time. Leave no stone unturned.

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