The first thing to understand about building a growth model is that every way a product or company grows has a ceiling, some lower and closer than others.
Reforge Alum Andrew Krebs-Smith, founder of Social Fulcrum, digs into audience saturation for paid acquisition, especially on social networks — and 8 ways you can beat it.
Paid acquisition in Facebook's news feed, on Instagram, or on Google is one of the fastest ways to grow — but it's also one of the fastest ways to hit audience saturation with your target audience because it's that much faster and easier to scale up than organic alternatives.
The good thing about user acquisition on advertising platforms, however, is that you can get a good idea of where your ceiling is simply by doing “burst” tests. In a burst test, you increase spend to your ad campaigns in a specific audience and channel for a single (or few days) to understand how the variables in your growth strategy perform at that spend level.
Makes sense, right? In the rest of this post, I'll go over two different ways to think about the audience saturation problem — and why burst testing may not always be the best way to go.
Two approaches to fighting audience saturation for ads: the Mongol Horde vs the European Explorer
When it comes to beating audience saturation, you have two basic approaches, each with a set of trade-offs. Let's call them the "Mongol Horde" approach and the "European Explorer" approach.
In the Mongol Horde approach you go from audience to audience squeezing as much return as possible as quickly as your budget will allow. Once you're done with an audience, you typically won't come back to it for a while, which isn't a bad thing.
In the European Explorer approach, you first "test" many different audiences to observe the saturation (aka efficiency or diminishing return) curves, and any potential audience overlap.
As part of the European Explorer approach, you can run the "burst" tests (works great for Facebook advertising) that we talked about earlier, in which you vary your daily budget to observe the relationship between spend and return. This allows you to gain data before investing further.
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So the trade-offs of the approaches are as follows:
Mongol Horde Pros and Cons
- Faster Returns
- Can be performed with less data infrastructure (less need for sophisticated tracking/naming if you are just looking at one cohort at a time)
- More volatile, thus requires very close attention
- Sometimes requires significant changes upon saturation
European Explorer Pros and Cons
- Total returns can be greater because you define your “profitably addressable market” up front
- Once basic exploration complete, changes can be smaller and less of a fire drill
- Returns typically slower (both in terms of elapsed time as well as budget spent)
- Requires more-sophisticated data infrastructure (doesn't need to be enterprise level - you can do it with some well-organized Excel work)
Predicting the loss of efficiency on advertising platforms
Who doesn't want to predict the loss of efficiency? But be careful here.
On the one hand, the less data you have, the more it can be susceptible to seasonality or other less obvious pricing influences.
But on the other hand, the longer period over which you gather data, the more opportunity the underlying audience has to change, whether by audience turnover or changes in competition.
Finally, you also want to take into consideration the time of year in which you're making your predictions. Are the holidays approaching (bear in mind that holiday spend starts in September)? This can make for more volatility in ad pricing, which can throw off your predictions in critical ways.
Spot testing is a popular approach in paid acquisition — and usually for good reason. But, the factors we just outlined can make the European Explorer approach more challenging.
If you're in a less-predictable time of year (like now), and facing urgency, then the Mongol Horde approach could be the way to go.
8 things you can do to combat audience saturation & win over your target audience
Just like other areas of growth, paid can get harder the more successful you are. We've all had days or weeks where poor performance sneaks up on us, so here are a few tactical steps you can take to address saturation.
1. Go for high-intent audiences.
We typically see paid search having much greater turnover than channels like social media, which means that we can spend more reliably at some equilibrium point on paid search (often correlated with impression share in paid search) with a lot less work.
The people searching with high intent by definition will only be in that audience for a short period time, whereas people in demographic or intent/behavior audiences categories will be in those categories for a long time — as long as a lifetime!
Going for high-intent audience is a principle that applies for expanding both your paid and your organic reach.
2. Keep your eye on geo segmentation.
What about geo segmentation and its effects on saturation of your potential audience?
Geographical constraints tend to make things more volatile and more susceptible to saturation since you're essentially adding an additional layer of segmentation to work around.
3. Use (and update!) your Lookalikes.
Lookalike and custom audiences for your Facebook Ads are less prone to saturation since they can be "updated" via email or "live updated" if they are based on pixel traffic.
4. Segment Lookalikes by breadth and funnel stage.
In your ads manager, you can segment lookalikes into a matrix of breadth and funnel step, which will make your overall saturation of any one audience slower.
This also helps you quickly identify a prioritized list of segments so it's not such a fire-drill to find another audience, creative, or channel whenever you hit a saturation point.
5. Refresh creatives and landing pages.
Big picture: creative and landing page optimization give you additional levers to improve efficiency on your existing overall ad budget. Before you create a brand new ad, consider a simpler refresh of your creatives and landing pages.
That’s because creative and landing pages act like multipliers on the audiences you show ads to. For example, if you improve your news feed / Facebook Ads click-through rate from 1% to 2%, you’ll cut your costs by 50% (assuming all other acquisition funnel metrics stay the same).
So although testing and changing creative won’t technically change your audience size, it will allow you to get more conversions from a given audience, and improve your "audience reached ratio."
Similarly, testing landing pages to increase conversion rate will improve the number of conversions you get from a baseline number of clicks.
Whether you’re experiencing audience saturation issues (the ceiling we talked about earlier), or maybe you just want to get more out of your existing audience, optimizations on creative and landing pages can enhance efficiency without changing spend.
6. Same channel, new audiences (interests, demos, international).
Simply put, the bigger your audience, the less saturation will be an issue. Think of it in terms of concentric circles - the core group will be small and high-intent. But, there are other broader groups that can help to diversify your spend away from a couple of audiences that you rely heavily on.
7. Find more channels where your current audience already also lives.
Different people spend time in different places (i.e. on different publishing or advertising platforms). There can be overlap, but each new platform will usually also reach a group of net-new people whom you haven’t targeted yet. Whichever strategy you choose to follow, your efficiency will be higher by adding these new people.
There are other advantages too. If you’ve done significant audience testing on one platform, you should be able to start further down the cost curve on new platforms since you already know what works conceptually. Your new platform and your existing platform might even share some targeting parameters that you can access via 3rd party data management platforms, further increasing your efficiencies.
Finally, allocating spend across more platforms means you’re diversifying your risk, which can significantly reduce volatility. Case in point -- when Facebook gets expensive for the holidays, you can shift some of your budget to paid native because you’ve already identified profitable audiences to target.
8. (Bigger bet!) Add to your offering to enable targeting more audiences (i.e. A female focused ecommerce site adding male focused items)
The reality is that there’s some market ceiling on every product or service. This is as true for a channel as specific as Facebook ads and social, as it is for broader targeting opportunities like TV ads that we tend not to discuss in digital growth communities.
This means that at some point you will have shown ads to all the people who could ever be a potential fit for purchasing your product or service. Of course, you’ll always want to try to add people to that audience, but sometimes the next biggest opportunity will be adding a whole new market.
Sometimes this means adding a mobile product to a primarily-desktop SaaS. Other times, it means moving up or down market with an augmented or pared-down offering. Still other times, it could mean rolling out a new product offering in order to go after a different segment or niche that your original product doesn’t serve.
At the end of the day, the wider and more diverse your audience, the stronger your buffer against audience saturation and the more robust your overall marketing strategy.
Paid marketing is just one (important!) part of an overall growth mix to grow your product without sacrificing an awesome user experience, and it doesn't end with your Facebook page. To learn about the other systematic ways to acquire and retain new users, apply to join us for the next Reforge Growth Series.