On Startups Doing the Advertising Thing

Internet companies shouldn’t advertise should they?

If you’ve hung around ‘startup people’ in Nigeria, you’ve probably heard some version of the following question.

Why does an internet company buy billboards? Don’t they believe in the internet?

Thank you, Techpoint :)

People used to ask this a lot when Jumia and Konga went on an aggressive marketing spree. Other internet companies like Mall for Africa and even Printivo have done some outdoor advertising.

More recently, you can catch ads for Google and Uber.

And let’s not forget about the TV and radio ads. So many TV ads.

It’s an African thing isn’t it?

I’ve heard people say that this is an African thing. The market isn’t sophisticated, users aren’t familiar with the internet so internet companies that want to grow need to invest in advertising — both traditional and online.

A founder once told me, “we have to spend money on traditional adverts because without spending this money, we won’t get an legitimacy. Nigerians won’t take us seriously if they only see us on the internet.”

But is it truly an African thing? Don’t internet companies advertise in traditional media elsewhere?

It turns out that they do.

Facebook’s “Friends” campaign had a huge outdoor element

All across the world, companies that for years have been used as examples of runaway “viral” growth and “growth hacking” techniques sometimes spend a lot of money on “traditional” advertising.

Everyone’s doing it.

What about TV? And Radio?

It turns out that television isn’t left out. You can’t find all of these ads online but everyone seems to do that today.

From Wonga…

… to Google

… and even Facebook.

I really, really like this one. A lot.

Internet companies shouldn’t advertise. At worst, they should only advertise on the internet.

I remember clearly having various discussions with people in “tech” in Nigeria — and hearing this argument about internet companies not needing to advertise, or only advertising on the internet.

It’s important to recognise where narratives come from to be able to assess them properly.

So why do people say these things? In my opinion, there are a few reasons that might be responsible.

One thing that is a factor is a fundamental misunderstanding of lean startup principles. At the foundation of the lean startup movement is a desire to find product-market fit. Product-market fit is something you search for when you’re starting the business — you’re hoping to figure out your best product for your best market. In that experimental phase, spending money on advertising is stupid. If you spend a ton of money on advertising, you’re distorting your customer acquisition experiments.

This is what Jason was talking about here — not spending money on ads allowed them to tweak their product to find the best fit for their market.

Everyone knows that in a resource-constrained environment, behaviour is modified to accommodate the lack of resources. It’s what happens next that’s funny — people explain the behaviour as if the constraints in resources isn’t a factor in that behaviour. Which brings me to my second point. In a resource-constrained environment, people aren’t used to startups spending money on advertising — and that’s always going to be seen as strange when it happens.

Capital-constrained startups that have achieved product-market fit can’t afford to do a proper marketing and advertising push to grow their businesses quickly, so they don’t and have to explain that away.

There is no reason why we shouldn’t see ads for consumer internet companies like Printivo or FrontDesk on television.

I hope we see more of those in the future.

It’s instructive to note that, while Iroko didn’t do any paid digital advertising for their apps, they did have advertising for the app on their TV channels.