The Lifecycle of Lead Generation Channels
This article is the second part of a series of two posts extracted from a workshop focused on lead generation that we held during our Point Nine SaaS Founder Meetup. If you want to be kept informed of our new posts you can subscribe to our content newsletter or follow our Medium channel.
When you leverage a lead generation / distribution channel (Facebook, Twitter, Google search results, Apple or Android appstores, SalesForce AppExchange, Product Hunt etc.) to distribute your product or your content a very important aspect to keep in mind is that these channels are not static entities but are constantly evolving.
To illustrate how this evolution looks like I’ve created a diagram using Gartner’s Hype cycle applied to the lifecycle of such channel.
I distinguish 4 stages:
- The early days
- The gold rush
- A sheriff in town
- The experts time
Each stage is defined by the state of the following three components:
- Audience: the type of audience which consumes content / product on the channel (early adopters / early majority / late majority), its size (small / medium / large) and its saturation level (low / medium / high). At low saturation people are excited and ready to consume plenty of new things whereas when a channel is saturated people start to consume less content (lower click & conversion rates).
- Competition: the type of competition which is posting on this channel (innovators, followers & copycats, big players) and the intensity of competition (whether it’s low, medium or high).
- Operator: distribution channels are generally (but not always) run by an operator who owns the channel and sets the rules (which range from loose to very strict).
Stage 1: the early days
The early days of a new distribution channel are characterized by uncertainty and opportunities. The audience is generally small but mainly composed of early adopters who are ready to consume new content / products with openness and curiosity (low saturation level). Since there’s a big uncertainty whether the channel can grow or not the competition intensity is also low and mainly composed of players which are ready to experiment new things (innovators).
At that point the channel operator is quite open and loose on the rules as its number one aim is to build the community and not to restrain it.
If the channel starts to take off, the innovators benefit from an increasing, very engaged and low saturated audience with few competition. Hence a high “Results / Effort” ratio.
Stage 2: the gold rush
However when a distribution channel takes off it generally doesn’t stay unnoticed. Several things happen at the same time: the competition increases and starts to copy what is proven to work (copycats + followers) and the audience itself starts to change with the arrival of people who are not early adopters (the “early majority” segment). The “novelty effect” also begins to fade away but the saturation level of the audience is still low / medium.
A good sign that you’ve entered a “gold rush” period is when you start to see the first articles “How we got X customers/downloads/views from channel Y by doing Z” and it works if you apply the advice. A good sign that you’re at the end of the gold rush is when you see tons of these articles but the advice doesn’t work anymore.
At that point (end of gold rush) the ratio “ Results / Effort” can drop to the bottom of the valley of disillusionment mainly because of the explosion of competition and the lack of control from the operator which increases noise and abuses. The channel operator needs to put in place mechanisms to ensure that copycats and low quality products / content get filtered out.
Stage 3: A sheriff in town
When its audience keeps growing the operator needs to ensure that crap / irrelevant content and products are removed. This is why at that stage features likes prefiltering, moderation (human or automated), feed customization, user rating, upvoting circles detection etc… appear on the channel.
As a consequence it gets harder to distribute your content / product to the audience but if you manage to do so, the results also start to get better again (less noise).
At that point if the distribution channel reaches critical mass, bigger players will also flock in.
Stage 4: the experts time
On a mature distribution channel the environment is totally different from stage 1: the audience is not a small and highly engaged niche anymore but a large one which has lost the excitement of the first days and can be saturated.
The competitive landscape can also be much different. Since it takes more resources than before to distribute content/product well, bigger competitors very often have an advantage and can lock it.
This is also why experts can make a living on these channels (e.g: SEO / SEM has become so complex that it’s a full dedicated job).
This situation is reinforced by the fact that at that stage the channel operator often feels the pressure to monetize its audience and focuses on paid distribution features (ads, paid visibility etc.).
Let’s illustrate this framework with some concrete examples.
Google Search Results
Of the major (if not the biggest) distribution channel for products and content online is still Google search results.
Nowadays reaching the top position on organic search (SEO) for popular keywords is a very difficult task and competing through paid search (SEM) has also become extremely costly.
But it was not always the case. At the beginning when Google didn’t have the audience it has today getting good results was far easier (stage 1). Which eventually lead to a lot of abuses (e.g basic black hat SEO) once the audience grew (stage 2) Google tackled the problem by constantly refining its algorithm, killing wave by wave players which were abusing the system (stage 3).
Now getting good SEO and SEM results has become a very specialized job that requires hard to acquire skills (stage 4).
On mobile the landscape is slightly different as the major distribution channels are owned by Apple (iOS) and Google (Android).
But the lifecycle is similar. For instance on the iOS Appstore after a first few years characterized by an audience of highly engaged early adopters and the relative “ease” with which it was possible to break in the various top 10s, succeeded a period when plenty of mobile apps “abused” the system by incentivizing downloads on external channels or by generating fake downloads.
Again Apple stepped up and started to tightly control the way you can promote an app and the way an app appears in the top 10s. Now the iOS top 10s are dominated by huge players like Facebook (with Facebook app, Messenger and WhatsApp, Instagram) or Google (maps and Youtube) and it’s extremely complicated for newcomers to break in.
In term of audience you can also clearly see an increasing saturation that happened over the course of the years. People downloads less apps on average.
I won’t go into details but just remember the golden age of social games and apps that were abusing Facebook notification system (Farmville, HotorNot, Poker…) and how it has become more and more complicated for content to spread there.
We’re to a point where companies need to pay if they want to distribute status updates to the fans they’ve generated themselves on their Facebook page.
This framework doesn’t only apply to major distribution channels, this lifecycle can also be found on smaller ones.
For instance Product Hunt and Hacker News are two good examples of “niche” distribution channels that have been through the same cycle and are now much harder to “abuse”.
1 When you start on a channel be aware of its current stage and adopt the right playbook
Stage 1 is perfect for bold and creative experiments. You generally don’t need experts but more “growth hacking” style of profiles who will explore what can be done and assess the potential of an emerging channel. It’s always good for growth teams to keep an eye on emerging channel to leverage them early.
Stage 2: if you encounter a channel which is taking off don’t hesitate to copy the playbooks of others. Don’t be ashamed because if you don’t do it others will :-)
On a channel at stage 3 if you feel that it has a good long term potential for your product / content then it’s definitely worth spending time building specific expertise and keep it in-house.
When you enter a stage 4 channel it’s still possible to get some results by experimenting but to get sustainable results you need to invest resources for the long term (time, team and expertise). This is typically the case for some of the channels mentioned above (SEO, SEM, Facebook marketing…).
2 Once you perform on a channel be aware that the situation can evolve fast
One of the main points of this framework is that lead generation / distribution channels are evolving entities. So once you perform well on one always keep in mind that whether it’s the audience, the competition or the operator the environment can evolve fast so you need to anticipate it.
- Audience: beware of audience saturation. If the audience doesn’t renew or if you don’t renew your message you can saturate people.
- Competitors: at stage 1 & 2 the barrier to entry are generally low so it’s easy for competitors to come after you. At stage 3 & 4 it’s way harder to get results but it’s also harder for competitors to simply copy you.
- Operators: if you depend too much on a channel you always face the danger that its operator changes the rules and kills.