Hacker News Reader

Comment by forrestthewoods | Hacker News Reader

The moral of this story is don't let your business become overly reliant on one source of users. Particularly when that source (Facebook) has goals (generate revenue/profit) that do not align with yours (free marketing).

I've also come to accept and even appreciate that access to users is something worth paying for. Getting users is hard. Damn hard. Sometimes that access is a rev share and sometimes it's an advertising fee. That's fine. A mere 15 years ago you couldn't pay that fee to access a user pool that large if you wanted to.

View on HN

> The moral of this story is don't let your business become overly reliant on one source of users.

Having a higher-than-ideal concentration of referral channels is not in and of itself a bad thing if you truly understand those channels. For example, a business that derives the majority of its customer referrals from paid search doesn't necessarily have a valid reason to diversify if it has the ROI equation down and understands and manages the associated risks.

The real problem with social media channels like Facebook is that many folks have been treating them (and investing in them) as if they were "owned media" when they never have been and never will be. These people are just figuring out that these channels fall under the categories of "earned media" and "paid media" now that Facebook et. al. are turning the screws. The true tragedy of this is that many of these unsophisticated marketers will have little to nothing to show for their social investments when all is said and done. They've been spending gobs of time and money building up their social profiles and will now have to pay even more in perpetuity to use them going forward.

Well even the ROI calculated example is unstable ground. One change to one of several invisible algorithms can turn your boom to bust. And user acquisition costs tend to go up. You can find yourself priced out real quick. Particularly during the holiday season.

So true. Just like when Adwords changed its quality score algo.

I know businesses who had to adjust when the QS algo changed but I don't know any for whom the change was dramatic enough to class as "going from boom to bust"

What kind of sector/business are you thinking about?

Here's the thing though: the marketers who are serious about paid media, and spending a significant portion of their budgets on it, tend to know that those algorithms exist and are smart/experienced enough to monitor and manage their campaigns accordingly. If you have good margins and/or a solid customer LTV, "boom to bust" isn't likely. If you don't have good margins and/or a solid customer LTV, the eventual demise of your business is the result of the economics of your business, not your marketing channels.

From what I can tell, a sizable number of the folks who have been running around treating Facebook Pages as owned media probably don't even know what "owned media" is.

I agree. Platform risk is real. This business should have diversified its acquisition channels, incorporating both paid and earned media.

This can be said for _all_ businesses really! A good tip for anyone.

Reply on news.ycombinator.com