(Ed's note: I originally posted this on my personal blog 2 years ago. I tweeted it out yesterday and it got a positive response, so I'm posting again here).
Before I start this article, some fair disclosure - I'm an acquisition marketer by trade, so there might be a little bias in this post. That fact hopefully doesn't dissuade from the argument below.
Yesterday, esteemed Venture Capitalist, Fred Wilson, wrote an epic post outlining his thoughts on how he believes most start-ups should market their product. Fred made several good points and everybody should take the time to read the blog post in its entirety.
Likewise, my buddy Bryce tweeted an interesting comment from Geek Squad Founder, Robert Stephens:
“Advertising is the tax you pay for being unremarkable”
Both Fred and Bryce make their points explicitly clear - start-ups need to scrimp and save when it comes the cost of acquiring customers. I absolutely agree with this. The goal of every start-up should be to minimize the cost per acquisition of each new customer. Likewise, as Fred points out that start-ups need to at first focus on the product, that product decisions should at first be hunch driven, and later data driven. I agreed with this point in my post about building the better mousetrap.
Fred then goes on to make a number of points about 'free' customer acquisition methods and lists a number of examples of companies who have become hugely successful by 'going viral' and spending relatively little on paid marketing.
I think what both Fred and Bryce miss in their thoughts is there is often a third way of getting to critical mass without relying solely on paid traffic, nor having the employees of your start-up sitting around the office all day dreaming up the next big 'stunt' to get 100,000 users at the cost of $1 a user.
There are plenty of examples of companies who have become wildly successful who spent plenty of money in customer acquisition, here are a few examples:
(I know for a fact Groupon and LivingSocial are spending nearly $3 to $4 to acquire AN EMAIL ADDRESS OF A PERSON!)
While I absolutely agree with both Fred and Bryce that it's important to minimize customer acquisition costs, part of the goal of every start-up is to gain traction and gain it quickly in order for VC's to ultimately get their money back. How do you gain this traction? You turn to successful online (and offline) marketing professionals to get traffic to your site.