Feeding the Machine
When businesses believe in “feeding the machine” as a primary strategy gunning for ToFu conversions here's some MATH to help you steer clear & not fall prey to it at all:
Definition:
“Feeding the machine” is symbolic to stuffing money into what could be some sort of a variant of a vending machine and watch it get ripped apart intern leading to rip-off
To understand its application to products in general and product management in particular let’s start off with a graph (feeding my love affair for graphs):
Look at the advertising spend tilted entirely towards the internet, that’s almost 2/3rd of the spend of the entire world going into this channel.
And, what does internet advertising spend really signify given today’s timeline? Perhaps over a broad level, any / all of:
Social media marketing
Content marketing
Email marketing
Affiliate marketing
Influencer marketing
Display adverts (banners et. al.)
Video advertising
PPC (Pay Per Click)
There’s another term that seems to have come by predominantly with the advent of the startup culture which is “growth hacking”.
By definition a growth hacker is someone who optimizes costs and fosters acquisitions as usually applied exclusively to ToFu conversions alone, but could also go stretching on to represent the entire funnel at times
But beware, it could be a total red flag 🚩when someone is looking to just acquire users at the top of the funnel by helping them sign-up by what may even be some false incentivization at times and leave it at just that. That’s when it would qualify as feeding the machine which won’t be long before it wears down leading to fall-outs of sorts.
Some more stats here – Courtesy: Statista
So, according to the data on hand, a whopping US $491 billion was splurged on advertising for what might have been a meagre conversion rate of 2.4% across B2B, 2.8% across B2C.
Given the population of the world, when an average conversion rate of 2.6 % could still prove to be all worthwhile, there may be no denying how some orgs. might have employed “feeding the machine” aka “burning money” as a strategy somewhere over the growth phase, the percentage of which could be debatable.
Is that worth it?
Comparison: Repetition & Feeding the machine
Put some thought into this and you’d know that nobody, no team member, no internal stakeholder would want to keep feeding the machine, burning up all that money allotted. In fact, nobody could ill-afford to list this as their top strategy because if they did, it could be simple enough to signify one thing predominantly and that is “total lack of ideas” both in terms of the approach and in the strategy or strategic initiatives in achieving the outcomes.
But, it is also a well-known fact that marketing teams do rely heavily on repetition which in simple terms means to repeat the same content time and again until it sticks & settles in well with the users so to speak leading to the expected outcomes which could be conversions, although up to what level in the funnel ought to be the talking point and surprisingly isn’t.
Let’s consider this snippet of data & attempt to answer a few common questions.
Does pinning on a vanity metric like view-count make any sense at all?
Take a look at the first tuple. It has 100,000 impressions which is nothing but the view-count which is great, but is certainly not enough to unambiguously declare it a success, is it?
Is ToFu conversion good enough to be termed a success factor?
Thereof it is evident how 250 people have visited the landing page, which could be commendable an effort given the timespan of a work-week but that’s definitely not enough to term it successful. Absolutely NOT!
What’s a good conversion rate?
If you calculate the percentage of no. of sign-ups for trial against the landing page visits it is ~5% but is that really going to matter at all when one is talking of conversion rate? Never!
How long do we choose to show the adverts or run the campaigns?
Although the period of time is considered as a huge parameter in declaring the fate of such campaigns and it does make sense to give them a fair run owing to how repetition may take time to bear fruit, the composite value of the no. of days and the total cost ought to take precedence over any of these calculations and plain math
Do we have to resort to paid campaigns from the word “go”?
That’s largely a subjective decision depending on which stage of the PLC the campaign gets launched, the budgets allocated, the outcomes that matter to the teams & the org. at that point in time., the traction one is able to garner over a normal unpaid campaign, clarity in defining the target markets, customer segments
NOTE: The clear-cut advantage of starting small when it comes to these campaigns and then advancing based on the response rate from the markets, the relevant segments & targeted users should never be discounted.
Defining & Measuring Success Ratio
So, here’s a generic formula to determine if you are on the right track to running such campaigns helping you analyze whether or not you are getting that bang for the buck and to stop “feeding the machine” for good.
And using this legend for inferring & defining a gradation:
And now to the all important THUMB RULE:
If Success Ratio < 50%, just put the breaks on
If Success Ratio < 26%, pull the plug on it