Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Sasha Pasulka
Last weekend, I saw The Social Network with some of my favorite pals from the tech world. Overall, I liked the movie; I was a little bit disappointed with Aaron Sorkin’s script, in part because all the best lines had been spoiled in the previews, and in part because my expectations for Sorkin’s work are probably a little higher than is reasonable.
But this is not a movie review.
The veracity of the plot has been debated endlessly since well before the movie hit theaters, but there’s one point that nearly everyone agrees is factual: Mark Zuckerberg insisted early on that Facebook focus on user experience and growth rather than advertising, while Eduardo Saverin hit the pavement recruiting low-grade advertisers to monetize. Zuckerberg won out, and I think we can all see in retrospect why he made the right call.
I chatted earlier in the week with the CEO of a stealth tech startup that plans to launch later this fall. It’s a Web product with a mobile component, it’s inherently viral and, I think, has the potential to engage a huge user base of tastemakers in a space where brands throw around ad dollars like it’s going out of style.
She wanted to know where she should put her Google ads.
“Nowhere,” I told her.
“But I’m a startup,” she said. “I have my savings invested in this, and I need it to make money as soon as possible.”
It’s a conversation I’ve had with more than one startup CEO lately – your project is six or nine months old, you’ve poured a ton of your time and effort into it, and you just want it to make money right now. Enter AdSense, GumGum, Kontera, affiliate programs and the rest of the folks who are willing to help you trade your page views for a whopping $0.50 CPM. To translate: That is fifty cents for every one-thousand page views. (And that’s a hopeful number.)
Don’t do it.
It’s not that you can’t eventually trade your traffic and page views for ad dollars, but if you focus first on building a strong and dedicated user base in a desirable demographic, you can later bring on an advertising agency or in-house team to develop creative brand integration strategies. You can pitch directly to giant brands with substantial ad budgets, rather than settling for whatever Joe’s Bike Shop wants to shell out for clicks.
These big ad buys can be worth literally hundreds of times the CPMs you see from AdSense and its ilk, and when you’re working with a large brand with a budget to match – a brand that fits closely with your demographic — you can integrate their campaigns in a way that adds value for your users rather than tosses irrelevant ads in their faces while they’re trying to use your product.
If you don’t feel like doing all that, you can spam the hell out of your users once they’re addicted. This was Zynga’s approach for awhile after Farmville blew up, and it proved extremely profitable. But they had millions of devoted users who would stab Justin Bieber in the eye to keep their plum trees alive. I’m kidding. Justin Bieber totally wasn’t born yet.
You might have to be a little bit patient, but don’t risk the early growth of your user base to make some spare change. If Zuck had gone that route, we might all be posting our relationship statuses on HarvardConnect.com. And that would just be weird.
