Paid Acquisition Is a Perfectly Viable Growth Channel

Truly effective audience development is one of the hardest parts of building a media business. And in the early days, it can feel as if you’re fighting for every visitor. And if you’re doing the things that don’t scale, you really are fighting for each visitor.

At some point, you start to see the effects of compounding. You begin ranking more competitively for keywords, and your social followings grow, so more people find your content daily. It takes time, but if you’re creating great content, it’s one of the sure bets in business.

This organic growth is vital to a successful media business. But I think too many media operators get so focused on this that they forget it’s perfectly viable to introduce new channels to your growth engine. Specifically, I am referring to paid acquisition.

Brian Morrissey (formally of Digiday) and I did an impromptu Twitter Spaces last week. The topic of paid growth came up because Morning Brew (disclosure: I am GM of B2B there) has historically been a big spender in acquiring newsletter subscribers. He wrote about it in his recent piece:

Many publishers, including Morning Brew, buy a lot of email subscribers, either through ads or contests. Indeed, buying subscribers through ads was a key part of the Morning Brew growth story that’s led to a subscriber base of 4 million email addresses and 6 million total subscriptions.

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Organic is more valuable than incentivized. But publishers from the beginning of time have been mixing in plenty of chaff with the wheat. Trying to grow slowly and focusing on a meaningful audience ends up being a competitive disadvantage if you’re selling sponsorships. The first question is still about overall subscriber numbers. Nobody asks how those numbers were gotten – and, surprise, there’s no way to check. 

By referring to it as “mixing in plenty of chaff with the wheat,” he suggests that publishers are doing something wrong by paying to acquire subscribers and then selling ads against those people. However, I don’t think it matters if publishers acquired users through paid channels, even if you could verify the numbers with a 3rd-party tool.

It’s ironic. Media companies encourage partners to advertise, and publishers tell them that it’s a good strategy to pay a lot of money to acquire customers. But when the script is flipped, and publishers start acquiring users through paid channels, it’s suddenly a questionable tactic.

And look, I understand why that attitude might exist. So many companies have used fake numbers in their reporting, often delivering far less value than they are promising to partners. But I would argue that this is less a problem with paid growth and more with how those operators run their businesses. On the contrary, I would argue that if you’re operating an engagement-first media company, organic and paid growth are both acceptable.

This type of company uses concrete activity with the content to indicate whether that audience is high quality. That doesn’t mean things like pageviews. Instead, we’re talking about people who might click to other articles, convert on calls-to-action, forward content, or share it another way. In other words, these are actual people interested in what you have. They sought the content out in some way.

This is why paid growth gets a bad reputation in media. These people might not have been looking for your content but clicked an advertisement and found it anyway. But it’s what happens when they do hit your content that matters.

Let’s use newsletter growth since that’s what Morrissey talked about in his piece. A publisher might use paid channels—Google ads, for example—to get a user to sign up. In my book, this is equal to paying for a pageview. It’s not indicative of any engagement. A user signing up for something is simply day one. It’s what comes after the sign-up that matters more than anything. An engagement-first media company promoting its newsletter in paid channels looks at various things.

For a long time, the open rate was a good indication of someone’s loyalty. Unfortunately, it’s now not so clear. In September, Apple introduced Mail Privacy Protection (MPP), which impacted the mail app on iOS 15, iPadOS 15, and macOS Monterey devices. In a nutshell, Apple will download the invisible tracking pixel all email clients use and show the email as opened even if the user deletes the email. This means that Apple subscribers look as if they’ve opened every email.

Omeda has fascinating data to show the impact of this. For example, before MPP rolled out, the unique open rate in its network was approximately 15.2% (damn, people, churn your email lists). In February, the unique open rate had increased to 29%. That’s nearly double. Did these email senders get better? No.

And so, open rate is not as valuable a metric. However, if you can isolate Android users from your Apple subscribers, you can still use open rate for those people since MPP does not impact them. Each publisher is different, and the breakdown of Android to Apple is not static.

So, if open rate doesn’t work, what else is there to help determine engagement?

We will see more of a push to clicks as an essential metric. Apple’s servers might download the tracking pixel, but it can’t click links. Therefore, if a user with a 100% open rate also clicks links, you have a good idea about their loyalty.

Other possible metrics include forwards, replies, and engagement with surveys. You need to find ways to get the users to do something more than just open because you can’t trust open rates as much as you used to.

The truth is, irrespective of how you acquired the users, you would have to do this. If you had never spent a dollar on growth and it was all from organic channels, you’d still have to get people more engaged with the newsletter than they might have historically been. The source of the user is not as relevant as what happens once you have that user.

It is here that Morrissey is right. An organically acquired user is likely to be more engaged because, as I said above, they sought out your content. But when we get down to the individual user level, a paid user that reads the site every day is equal to an organic user that reads the site every day. In both cases, they are reading the sites every day. And if you can acquire an engaged paid user and monetize them profitably (aka, your CACs are less than your LTVs with a healthy margin), you should always try to acquire that user.

That is why paid growth is such a valuable channel. Once you have a good grasp of your ability to monetize and cash flow is strong, paying to acquire users can be a smart strategy to grow even faster. But you have to do it with a clear eye on engagement.

The final part of this conversation is when a user is not engaged. What do you do then? Candidly, this is where I think many media companies get lazy or somewhat shady. If you have users that are not opening or if you can’t tell, are not clicking or doing some other engagement metric, you have to be willing to get rid of them. This is the most important thing you can do as an ad-based media company. If half your audience isn’t engaged, but you’re selling based on the total number, your ad partners won’t get the actual value they expect.

But again, this is channel-agnostic. If you have a database of 100% organically users and half of them are unengaged, that’s no different from 100% paid users with half unengaged.

So, why do we look down on paid growth versus organic?

I think a big part of it is that it can be unsustainable. Are you ever getting off that hamster wheel if you constantly pay for users and have to replace them with newly paid-for users? This is why organic compounding, as I described above, is so great. You invest in content once, and if it targets the right keywords, it drives users for a long-time.

But the same rule that we have for revenue diversification exists for growth. We need to diversify how we acquire users. Having a foundation with organic growth is excellent, but layering in paid acquisition can help a media business grow faster. You have to be honest with yourself and ensure you are churning unengaged users, but there’s nothing wrong with using paid growth. On the contrary, I’d argue you’re doing your business a disservice by not looking at it.

Thanks for reading this week’s AMO. If you have thoughts, join the Slack channel. I hope you have a great weekend!