Advertising Hacks for Startups

ADVERTISING HACKSPAID TRAFFIC FOR LEAN STARTUPS Ilya Lichtenstein 500 Startups May 8, 2012

ABOUT ILYA• Started buying traffic in 2007• Grew my internet marketing business from $300 to six figure profits in a year• Founder of MixRank.com (Y Combinator, 500Startups)

AD CAMPAIGNS==STARTUPS?• 80/20 rule baseline• Returns governed by power law• Disproportionate returns from winners “make the fund”• Failure is the default state: All lose money in the beginning

THE GOAL

DATA FROM A REAL CAMPAIGN SPEND: ~$35,000/MONTH Month 1 Month 2 Month 3 Ad Groups 634 225 45% Ad Groups w/ Traffic 28% 89% 100%% Profitable Ad Groups 4% 12% 80% Net Profit/Loss -$26,300 -$17,201 $7,829

HOW DO YOU SCALE 100X FROM $50/DAY TO $5,000/DAY?

EASY.BUILD 100X MORE CAMPAIGNS.

PAID TRAFFIC IN 2012• Highly fragmented (resistance to consolidation)• Very inefﬁcient (misaligned incentives)• Not a free market (price manipulation by everyone)

THE KEY TO HACKING THE MARKET• Arbitrage low value trafﬁc into high value trafﬁc• Get it cheaper OR monetize better• New business models help (ex. Zynga, Zoosk, ZocDoc)

ASSUMPTIONS• Some traffic is underpriced (inefficiency)• Diverse traffic sources bring diverse results (fragmentation)• Big wins will pay for failures (power law)

ACTIONS• Find cheap, scalable trafﬁc sources(but not too cheap!)• Test faster than the competition• Many small experiments rather than few big ones• Track everything!

GOOD TRAFFIC SOURCES FOR STARTUPS• Self-serve platforms (Google, AdCenter, Facebook)• Transparent ad networks and exchanges• Direct media buys on smaller sites• Low cost/no cost partnerships• Fast build->track->iterate loop• Jump start organic channels(ex. StumbleUpon,TapJoy)

BAD TRAFFIC SOURCES FOR STARTUPS• Competing with brand advertisers• Any site with a media kit• Any site with a sales team• Anyone who will “optimize for you”• Big commitments

HOW TO SCALE FAST1.Test many diverse audiences and trafﬁc sources quickly2.Focus on the ones that show promise3.Track everything and never stop optimizing

THANK YOU! WWW.MIXRANK.COM BLOG.MIXRANK.COM @MIXRANKILYA@MIXRANK.COM

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Advertising Hacks for Startups

by Ilya Lichtenstein on May 09, 2012

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