Your Pre-Viral Marketing Plan
Add comment November 13th, 2007
Google’s acquisition of YouTube seems to have captured the imagination of a lot of entrepreneurs that we meet at various evetnts, in particular everyone wants to start a consumer Internet or media oriented businesses based on “viral marketing.”
Here are a couple of key questions to answer for your “pre-viral” marketing plan, or what you are going to do before the customer acquisition cost goes to zero (note: this doesn’t always happen–alas it’s more the exception than the rule–which can lead to a situation where you are “buying Google Adwords to sell Google AdSense“).
- What is the cost ($, your time, calendar time) to acquire a customer?
- Revenue from a new customer in first 30 days, 90 days, 180 days (how long to cover your acquisition cost and increase in marginal operating cost?)
- Expected lifetime (and therefore lifetime value of a customer)
I would answer this set of questions before I spent any money incorporating or buying any more domains. Your largest risks are usually market risks, not development risks. Also, for item 2, the revenue driver in a media business is the ability to deliver a well characterized audience to your advertisers. If your audience is composed of “folks at random” your advertising rates are much less than for an audience of CEO’s or private aircraft owners.