It’s Not The Market Size That Counts
24–35 year old who is a college graduate who lives in California who uses Chrome on a Windows Desktop to make a purchase on Wednesday between 9AM and 2PM.
Alot of VCs and people and competitions and grants and most everyone get caught up in the whole Market Size dogma. I feel it is one of the most misleading ideas in Start-Up culture. I mean, if I am selling Tesla car wax my market size is less than 100,000 but that’s probably more due to bad marketing than a bad company idea or product. What people miss is that the better question is, “Who is your market?” If I see instead that I am selling a car wax to high-end car owners I can begin marketing to those people also(don’t ask me why I chose car wax as an example).
“Who is your market?” is actually not very difficult to figure out and can help you target audiences you want to grow or those that you are not reaching.
If you have a company and you haven’t tried to use Facebook ads yet, I am disheartened, because one of your main jobs is to spread the word of your company and that means experimenting with all the ways to spread the word.
Facebook ads are interesting because they most likely suck for what you actually want, product purchases, but are good for stuff you didn’t know you needed them for, Page Likes, Post Engagements and figuring out who your market is or who your current pitch targets.
Using Facebook ads is the best way to grow and understand your audience and market. In my opinion there is no other better tool for a Start-Up to understand who is interested in their product. Where else are you going to get detailed information on the thousands or hundreds of thousands of people and what they think of your company? From likes to comments to shares the data can all be broken down.
So you need to get started by first building an audience.
It is a not too closely guarded secret that Page Likes can be bought. You didn’t really think that Coca Cola has over 100,000,000 organic Facebook likes did you? The question is less “Should you purchase likes?” and more “How should you purchase them and who are you targeting?”. Don’t fool yourself into thinking that a post that “goes viral” did it without anyone investing money into it. With so much content on the internet these days virality is just as much pocket book as it is actually having something cool or interesting.
The so called “legit way” and honestly, the best practice is to build an audience using Facebook ads and pay per like or engagement with your Facebook page. This will grow your audience. You can even target the likes to your country or state or a demographic though it gets more expensive the more specific you go. This can give you an idea of who your audience is but can be biased if you are targeting certain demographics. Generally, if you have a good ad and your targeting is not very specific you will be charged $10 or less per 1000 likes or $0.01 per like.
After you have run a few ads and figured out what ads work best you should create an ad or posts on your page that are targeted to your country or the country you are targeting and leave out all other specifics and optimize for engagements. What this does is place the ad in the Facebook feed of a general audience to see who interacts with it. It is like a survey about your company without asking anyone any questions i.e. the people who interact with it are generally people who would be interested in your product. You can literally get people to comment exactly what they think of your company and product. They do it without you even asking! You can then use the Facebook ads dashboard to understand what exact demographic is interacting with your company. You can break it down to extreme detail, Age, Gender, Location, what device they used, what time of day they engaged! How awesome is that?
For The ODIN, we went so far as to run ads and connect it to our website and figure out who was purchasing from us and when. We saw who the people were that purchased from us and how to optimize that and expand our audience beyond just the median individual.
So now when people ask me “What is your market size?” I shake my head. I think this question is silly and near impossible to answer, especially for new products on the market. Our theoretical market size is everyone who can purchase our product but that is not who is purchasing our product or how to target the people who aren’t. Market Size gives someone little to no insight into a company.
Imagine when Facebook first started, if someone were to ask them their market size they would have said, “The Harvard student population.” that was their market size not their market. Then if stories are to be believed they might have said “Our market size is all Ivy League schools.” or “All schools”. I remember when I first joined Facebook it was for college kids only. Eventually they understood that their market was people, consumers, anyone who had a device that could connect to the internet and so began targeting everyone. If you are a company you can use Facebook to promote, if you are a Mother you can share baby pictures with your family, if you are a college student you can connect with friends, &c., &c.
At The ODIN, we think more about who our market is rather than what our market size is. We then understand who we are appealing to and can increase our marketing efforts to support that or to target new markets. Initially, our company was targeted to Biohackers, people who are trying to do Science independently outside of a normal lab. Then we began to see that educational institutions were purchasing from us so we targeted teachers. Now we see that our real market is people interested in Science or people who use technology or anyone who can afford our product because we imagine it will make their lives better.
As per the Tesla car wax example, if you understand at the end that the people you are targeting are consumers, people who want to take care of their things, you could easily start marketing your car wax for non-high-end cars or even motorcycles or stoves.
How do you expand your market size by understanding who your market truly is?
It is always good to have an initial market in mind when starting a company but don’t limit yourself to the idea of market size. Instead think about who your market is and use that to your advantage so you can reach as many people as possible.