How Blinkist found product-channel fit with paid marketing (a case study)
In our latest case study, Blinkist’s co-founder and CEO Holger Seim talks us through Blinkist’s journey to find product-channel fit. Blinkist provides Blinks: the key insights from over 5,000 of the world’s best non-fiction books in 15 mins. It is used by over 20 million people and has raised over $35m in VC funding.
By the end of this article you will:
- Understand the importance of finding channel-market fit
- See an example of where a viral, product-led approach can be challenging in EdTech
- Gain insights to help you reflect on if your product suits pull or push marketing
- Know why focusing your growth strategy is important
- Understand that different growth strategies might be needed at different stages
“At the end of that year we were in a bad space. We didn’t have anything to show for it,” says Holger, shaking his head. “We were running out of money. We had this product, we had a few paying customers. But we had no proof that we could scale this with positive unit economics.” He is remembering back to one of Blinkist’s toughest moments that came one year in.
Blinkist started in the summer of 2012 when the founding team built an MVP iPhone app in 6-months. Their new product that condensed powerful ideas into 15 minute ‘blinks’. “That’s why we call our service Blinkist. It helps you to read or listen to key insights in the blink of an eye.” The MVP featured 50 titles in German and they were adding 10 titles per month.
At the time, there was scepticism amongst investors about whether people would pay for digital content and whether Blinkist could produce a big enough volume of content. “So with these headwinds from investors, we only had 12 months of money in the bank,” says Holger. “We needed to reach product-market fit and get some sort of serious traction to make it to the next funding round.”
The team had many questions, but chief among them was how to prove that the product had the potential to scale. They started exploring the right growth strategy. There are broadly three channels you can base your growth strategy on: viral, SEO and paid. Each has distinctive characteristics.
“We thought SEO could make sense in the long term… but it’s a slow burn,” says Holger “We only had 12 months to prove Blinkist was scalable. To get into the top ranks of Google, you need to have reach. If you’re a seed stage startup and you don’t have domain authority, it’s really, really tough to start getting into high ranks. So we quickly disregarded SEO.”
They also decided paid marketing would be too expensive and too big a risk. “We thought we’d need to invest a significant amount to really make it work. And if we got it wrong, then all of our money would be gone and our run rate would go from 12 months to six months.”
So instead they decided to try and create a viral loop.
The challenge with viral
“We had a content product. We thought viral was a good product-channel fit because when people read content and they like it, they may share it with others. Either to recommend it or just to show off what they’ve read,” remembers Holger. “And obviously a viral approach is cheap. If it works, you don’t need to pay for it.”
The problem they found was that for their product, there were no real network effects. “It doesn’t matter how many people use Blinkist, you still get the same value out of it,” says Holger. “It doesn’t matter if 10 or 1000 others are using it, it’s the same experience.”
They also learnt that Blinkist, like many educational products, is ‘lean forward’. “You have to invest a lot to get to the ‘aha’ moment. And that’s the moment where you share,” says Holger. “Blinkist is not like social media where it’s a lot less effort to consume and share the content.”
They also flirted with PR but quickly realised it wasn’t repeatable. “PR is not a scalable channel. There’s only so many times you can convince a tech magazine to talk about your next feature.”
After pouring lots of resources into a viral approach they still couldn’t make it work. They were out of time.
Things to apply
- Consider if your product has natural network effects — does the product improve if more people use it?
- Think about how quickly your users get to an ‘aha’ moment — is it fast enough to encourage sharing?
- If neither of these things are true, viral may not be an appropriate channel
Finding channel-market fit
Fortunately they convinced another investor to invest. They had another 12-months.
So in early 2014, they decided to pivot and try paid marketing. They started with Facebook. “Facebook is very easy to set up,” says Holger. “You create an account, upload an image, write a text, define the targeting, and ‘boom!’ you have your first ad.”
And as well as being simple, it is powerful. “One of Facebook’s killer features is Look Alike audiences. If you have 100 or 500 paying customers already Facebook can give you an audience that is similar. It worked for us.”
Perhaps more crucially, social paid marketing also had channel-market fit.
“Most people use Facebook whilst on the move, on their mobile phone when they have time to kill,” explains Holger. “So when you’re on the go and have time to kill, that’s when you could also do something more meaningful… Like Blinkist.”
He contrasts this with paid search marketing: “If you interrupt someone while they are on a mission to search for something, or they want to answer a question, your ad would be very disruptive unless it’s meeting the user’s search intent. They’re not in the mind space for exploring something new. But when people are on Facebook or Instagram, they have time to kill. If you give them something more interesting than that next Facebook post or Instagram picture, then they’re willing to click and explore it.”
Things to apply:
- Are people searching for what you’re offering? If not, then search might not be the right channel
- Are they looking for something distracting to fill time? Then paid social might be a good fit
The opportunity of new platforms
At the time, Facebook marketing was relatively new and there were not many people advertising on the platform. Being opportunistic and trying new platforms is something he would still recommend.
“There are new services that have a lot of eyeballs but don’t have a sophisticated advertising product yet. Right now, TikTok is very exciting because we’re still in a phase where not everyone advertises on TikTok and the bigger players still haven’t jumped onto the train,” advises Holger. “Look out for these new emerging products that want to monetize by ads. You may be able to find some really cheap leads if you’re an early adopter.”
Things to apply:
- Consider being an early adopter of new platforms with an advertising model
Focus. And then Focus again.
Holger recommends picking one channel and focusing. “Like us, you probably have only one or two marketers and only so many product people and engineers who can help you with building the funnel. If you’re spreading yourself too thin you may not break through in a new channel.”
He reckons that a channel should last a couple of years. Then it’s likely you’ll need to look for the next one and focus again.
For Blinkist, by 2016 they were seeing diminishing returns from Facebook and had hit a ceiling. They had just raised their series A and needed to establish a new channel. Again, they decided to focus. This time on an emerging channel: paid content.
There were two new platforms Outbrain and Taboola that placed advertorial content at the end of articles.
“We thought we would probably have a very good product-channel fit because it targets digital readers who read the news online or articles on Lifehacker, TechCrunch, etc. People who are interested in reading are likely to be interested in Blinkist,” says Holger. “And we thought because of that perfect product-channel fit that we may have a long term unfair advantage versus someone else who wants to advertise on these platforms and sell shoes or something.”
But even though on paper, everything made sense, with paid content, it turned out that it wasn’t easy. In practice, it took them nine months to crack it.
“Users were in reading mode so you needed to give them something to read first, not send them to an app store right away,” explains Holger. “We needed to find the right blog design. The right conversion elements on that blog and the right articles that would softly lead them towards discovering: ‘oh there’s this app — that’s interesting!’”
But strategically, they were sure it made sense. So they stuck at it and were patient. “There’s a thin line between being bold and being stubborn and it’s hard to tell when you should stop,” says Holger. “But don’t get too frustrated if the first results are not good. The first Cost Per Acquisitions are always very high. You need to optimise the targeting, find the right creative, the right article or funnel with the right conversion elements. It just takes time. Sometimes even now, when we launch a new campaign.”
Things to apply:
- Focus on one channel at a time
- When you see diminishing returns, focus on a new channel that strategically makes sense
- If it doesn’t work, check your strategy. If you are sure it’s right, don’t give up too soon
Push or pull?
“Product-channel fit really matters,” says Holger. “Instead of just blindly starting with a channel because you’ve heard from another founder that they made this channel work, really think about what’s the best fit for your product.”
To do this, Holger recommends thinking about if your product is more push or pull. “If your product serves a very specific intent that people search for, then pull marketing — basically search — may be the right thing for you,” explains Holger.
“We did not offer something people search for. People search for books. But people did not search for book summaries,” he goes on. “We also realised if someone searched for the book and we can only give them the book summary we already have a disadvantage versus a platform that could give them the actual book. And people offering the book like Amazon could bid much higher.”
They realised that rather than targeting people searching for books, they needed instead to establish a new category of bite-sized learning. This meant going to channels that enabled them to introduce this new category and then show people why it was exciting. They needed to push, not pull.
Things to apply
- Consider if your product is push or pull
- If there is high search intent then pull or search marketing might fit
- If you’re building a new category, social may suit better
It takes a village
Holger’s next recommendation is that growth needs to be a team sport.
“Back in 2013 the product team wanted to work on product features and we had a marketing team which was basically me and an intern,” remembers Holger. “And we had zero visibility into attribution. And even though I was the founder and CEO it took me quite a while to convince my co-founders and our product team and engineers to get their hands dirty with marketing.” As soon as they built a cross-functional team around it, they were able to quickly optimise.
He also highlights that this might be because paid marketing isn’t a beauty contest. “Platforms like Facebook don’t reward pretty design. They reward clickbait. You need to do something that gets people’s attention and makes them click,” says Holger.
“I found that product people and designers usually take a lot of pride in their work. They want to create beautiful designs. They want to work on features that make the core product better and engage your users. They don’t want to test whether it’s a red button or green button on the landing page that increases conversions by 2x. So you need to find the right people with a pragmatic mindset that have fun doing these things.”
Things to apply
- Get engineers and product people involved in growth
- Make sure they have a pragmatic mindset
Once you mature, diversify
Holger has a final piece of advice. He believes that paid can be very effective at the early stages. But as you mature you need to diversify.
“Paid acquisition can get you here, but it won’t get you there,” he says. “It can really help you to scale fast and get traction. But we now focus a lot on SEO and product led growth. If paid acquisition is your only growth channel then Facebook, Google and all the others will eat all your margins. You may have a fast growing business. But you will never build a business with really good margins.”
Summary
Holger finishes by recapping his key takeaways:
- Don’t underestimate how hard viral growth is
- Growth is a cross-functional team effort
- You can test & learn a lot with little investment
- Pragmatism trumps brand (at least in early days)
He pauses and drives home his last point. “Pragmatism is much more important than having too much pride in how things should be done,” he says. “You can care about your brand when you’re bigger. But in the early days, I believe it’s really about hustling and getting users to try your product.”
Go deeper
Read Brian Balfours excellent article on Product-Channel Fit
