In JC’s Newsletter, I share the articles, documentaries, and books I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those.
Where marketing should allocate its resources and how important conversion is
How to introduce innovation
Why it could be more effective to focus advertising on small podcasts than on one big podcast
A new way to promote your offer: creating celebrity-driven content
How to create desire for customers
👉 Thread by Jaleh Rezaei on marketing at Gusto (PingThread)
❓ Why am I sharing this article?
It is a good discussion about how to get to efficient growth and where marketing should allocate resources.
I’m glad we started investing more in conversion too.
At Gusto I learned that growing at all costs is fundamentally different than growing efficiently. Companies need to change 4 things:
1. Shift to program-level CAC
2. Invest in conversion, not just demand
3. Launch new programs iteratively
4. Design an operating cadence
1. Shift to program-level CAC
To drive profitability, you have to understand CAC at the program level, not overall. Build realtime infrastructure to see conversion and CAC for expensive programs like ads.
Calculate CAC quarterly for smaller programs. Cut/optimize constantly.
You can have a finite number of "influencer" programs that accelerate (but don't generate) revenue. e.g. content that nurtures deals.
Use a revenue attribution model for these programs since program-level CAC won't give the full picture. Fold the cost into overall CAC.
2. Invest in conversion, not just demand
There are 2 growth levers. Demand helps you get in front of the right buyers.
CPC = $$$ Conversion gets them to buy your product.
CPC = 0 At Gusto we built a growth engineering team to drive conversion.
The ROI justifies eng salaries.
When I first took over Gusto's marketing, ~100% of our spend went into generating demand (ads, content, PR). CAC >20 months.
We redirected ~50% of budget to conversion and analytics.
CAC <12 months & ARR grew way faster. Don't just cut. Reallocate budget to efficiency drivers.
👉 10 lessons about innovations from working with 126 founders (Fast Company)
❓ Why am I sharing this article?
“Finding the balance between something that people recognize and what is new.” is powerful in creating a new category. It is why metaphors work well.
How will Alan define culture & society?
Introduce the new with the familiar: “You can’t put new on top of new, because then things just feel scary, or weird.” It’s about finding the balance between something that people recognize and what is new.
The most successful founders are those that describe their innovations simply and clearly.
It would be a misstep to create a great innovation and then position it simply as a solution to an old-world problem—because a problem-solution model is an inherently limited business model. When, on the other hand, you intentionally consider how your product or technology will interact with culture, “you’re looking at an interactive model which is also infinite,” Butler says.
👉 An interview with Michael Mignano about podcasts, standards, and recommandation media (Stratechery)
❓ Why am I sharing this article?
Focusing on a lot of small podcasts might be more efficient than on one single big podcast if we were to think about ads for podcast.
I’m not sure Ads on podcast are something interesting for us per se though.
What we found actually over time was that first of all, the value of a longer tail show punches above its weight class because the audiences are so niche.
So whereas you have a really big show, the audience of that really big show probably overlaps with the audience of another big show, but with a small show, the audience doesn’t overlap with anything, it’s a completely unique audience.
So then if you take that value and you multiply it by millions and millions of podcasts and you aggregate all that up, well now you have something pretty interesting and pretty valuable and pretty unique.
It took us a little while to figure it out and Spotify, I think, made a really smart bet in placing simultaneous bets on the Gimlet style investment and the Anchor style investment at the same time. Really, really smart in hindsight.
People don’t wake thinking about health insurance.
Let’s think about how to keep creating the virtuous loop about Alan.
Nobody wakes up in the morning wishing they didn’t have to carry a USB drive, email themselves, etc. Similar things existed, but people weren’t actively looking for what we were making. Display ads, landing pages ineffective. Search is a way to harvest demand, not create it.
Typical Dropbox User: Hears about Dropbox from a friend, blog, etc. and tries it ➡️ ”I didn’t realize I needed this” ➡️ ”It actually works” ➡️ Unexpectedly happy, tells friends.
Should we be the first ones to spend time on creating SEO content around mental health and health on Tiktok?
TikTok just announced its expanding the length of video descriptions from 300 to 2,200 characters.
Here's a great primer on how this evolved in China from Connie Chen at a16z.
You've probably seen this by now, but Google estimates "almost 40% of young people don't use Google Maps or Search when looking for a place for lunch. They use TikTok or Instagram". Its tough to nail down exactly why, but younger people seem to prefer more visual formats, especially on mobile.
The stage is set for a similar opportunity in video search. And it won't be just on TikTok. There will likely be opportunities across every other short-form video product.
Should we go more to very large companies or new segments asking for advice?
Having great analogies, tap on the emotions of customers.
Rather than going and saying, "Would you buy our product we're coming out with," we said, "We're trying to build a product that's focused on helping your business spend less money, spend less time. Can we get your advice?"
And it shifted the relationship from being on opposite sides of the table, so to speak, of I'm trying to get something from you, would you buy it, to let's sit on the same side of the table together and problem solve and talk about what real issues you have in your business. We started to learn things.
Thinking less about marketing the product and the futures, and getting more into how do you create desire? What are people looking for? How do you tap into that?
Think of it less of about informing, showing what a product could look like, what are the features, where the ROI? But what are the things that meet people want to do things like gets stuck in their head, they can't stop thinking about it? These concepts that just stick with people.
I think it is an interesting idea to explore to build short & fun content.
Cameo for Business also provides an opportunity for business owners to create celebrity-driven content to promote their products and services.
The company also runs a B2B platform dubbed Cameo for Business where businesses register accounts on Cameo, and hire celebrities to do promotions for their products and services.
Cameo for business signed up 50.000 talents in 2021 and has registered a 500% YoY growth since its inception.
Competitive Position:
Many platforms with similar business models to Cameo have appeared since its inception.
These platforms include Starzly and Halahi in the United Arab Emirates, Nejmo and Mainly in Egypt, Oulu and Yela in Lebanon, and Memmo.me in Sweden.
Competition has grown, with major players in the social media space such as TikTok joining the celebrity shoutout business. TikTok piloted its shoutout feature allowing its users to request and pay for personalized videos from their favorite creators using an in-app currency. The feature is only available in a few countries at the moment, but presents a major risk to Cameo should it be rolled out further, given TikTok’s superior brand strength and recognition.
Andre, you make $25 million a year on the Pistons. If you take $25 million divided by 2,000 hours in work year, 50, 40 hour weeks and then divide that by 60, you actually make $208 per minute. If your time in the NBA as a max salary player is $208 per minute, you could certainly do $200 videos in a minute and make the same effective rate, while you're recording as you do playing on the platform. So it was that type of math that got people to make Cameos way cheaper in the early days than people would otherwise have thought.
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