Startups Need to Diversify Away from Paying Facebook

Over the last five years ago, a disproportionate amount of venture capital funded paid acquisition on Facebook.  Some very large consumer facing businesses were built, but that gravy train won’t last forever—and signs are that it is seriously slowing down.  Companies are reporting that acquisition costs are trending up, and optimization is increasingly feeling like squeezing blood from a stone. 

Having 90% of your marketing dollars go not only to one channel, but to use just one company’s platform is always a risky strategy—but now, in particular, it feels like Facebook is at a serious crossroads.  Not since it’s pre-IPO days has the company looked so vulnerable. I’d even argue that the company’s continued attention dominance has more to do with the ineptitude of Google and Apple to build compelling consumer facing software than the quality of what Facebook is doing.  The core Facebook offering is declining in usage and engagement—and if it wasn’t for the acquisitions of Instagram and WhatsApp, more alarms would be ringing.

I’m not saying Facebook is going away—but the chance of a major shift in either the platform itself or the way consumers use it is increasing.  If you lived easy on a fancy waterfront property full time, and the chance of flooding went up for 0.1% to 5%, wouldn’t you give serious thought to buying a second home somewhere?   That’s what startup companies need to do with their marketing.

What I would argue is that companies should think more about building their own communities—and that, while easier, the mantra of meet the people where they are may have, to quote Batman Begins, “sacrificed sure footing for a killing stroke”.  Because companies never had to gather communities on their own, their ability to do so withered.  

It’s time to start the long and hard work of rebuilding that competency. 

Consider a thought experiment.  What if you got to keep the same marketing budget but couldn’t spend any of it on Facebook ads—or perhaps even Google for that matter.  You can post all the content you want to these platforms, but you just can’t goose it with ad spend.  Would you be able to, at some point, hit all your acquisition targets at the same cost?  How would you spend it?

Much of this spend would undoubtedly go to content creation, which will tie to SEO, experiential marketing, influencer strategies, referral and ambassador campaigns, events, etc.  You’d be forced to make sure that every bit of marketing you created would be worthy of engagement—attendance, sharing, etc. 

Shouldn’t it be anyway?  Did paying your way to a lot of shares and likes lower the quality of the marketing you produced? The content you create should all hit the bar of “If this is the only thing people saw of us, people would make time to consume it, they would understand what we were about, and they’d subscribe to more of it.” 

The only reason to rethink your marketing is that when you consider what it takes to get that next round of financing, investors are going to want to see you stand out in the ways that value in your business will be created. In the consumer category, the ability to stand out and acquire customers is paramount—and if you’re just mindlessly doing what everyone else is, you’re going to be harder and harder pressed to get a VC excited enough to fund future growth.