A cheaper path to customer acquisition?

One of the hallmarks of the last bubble was the land grab.  Stake out a new territory and do what it took to grab as much mind share as you could - bandwidth consumed and eyeballs (unique users) were the key metrics.  Plans to generate revenue from the user base were at best vague - many plans didn't address the issue beyond unproven ideas and hand waving.

As the bubble grew, competition for users and mind share escalated - "distribution deals" became a feature of the business plan - deals with portal giants of the days to help attract eyeballs and generate downloads.  Some of these deals had price tags in the $10s of millions.  As I've written in the past, life time value (revenue) of a user has to be significantly higher than the cost of acquiring that user.  Most bubble era companies didn't pass that test and disappeared. 

Lately its interesting to see some new ways that companies are trying to acquire users with a much lower cost.  Silicon Beat has an article about Gizmo, a free PC to PC client for making voice calls over the Internet.  They also offer add-on features that let you make outgoing calls to regular phone numbers or get your own phone number for incoming calls.  The prices are very low - as Matt Marshall wrote in his Silicon Beat article, its a race to the bottom!

Looking at the log of hits on my RSS feed I found what may be another effort underway to acquire users - there's a mysterious site called Linkie Winkie who has an RSS feed crawler that is hitting my feed.  My curiosity knows few bounds so I visited the site to see what it was about.  There's little on the site that gives a clue to what they are up to or even whether this is a commercial effort but it looks like a way to find even cheaper (free!)  ways of driving users to particular Internet locations - the precursor to signing someone up as a user.

While many Internet startups claim that they will use "viral marketing" as a way of inexpensively generating a user base, most have to fall back on active marketing programs making the cost of customer acquisition the lynch pin of their business.

It will be interesting to see what other low cost methods emerge to acquire the customer.

Comments

[John Rodkin]

The Meebome widget rejection by Ebay falls right into your thesis - that most companies have to fall back on real marketing.