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Channel Decay and How it’s Effecting Your Startup’s Growth

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Written by Tom Kornblit Life on the Bleeding Edge

When the first online banner ad went live on HotWired in 1994 it had a 78% CTR (click-through-rate). Today the average CTR on Facebook is in the ball park of 0.05%.

Andrew Chen (godfather of growth blogging) has coined this phenomenon the Law of Shitty Clickthroughs. Perhaps he could have come up with a more technical name for this phenomenon, but it undoubtedly holds true and all startup founders should be familiar with it.

Introducing Channel Decay

Highly lucrative channels are temporary by nature and eventually adopt the following properties:

Competition Saturation — Your competitors pick up on your golden acquisition channel and start to compete for market share, driving up the cost of acquisition. Think Google Adwords.

Diminishing Novelty — Overtime channels harden, they become harder to manipulate. Think SEO.

We don’t have much control over these properties. They are both sensitive to only one variable, and that’s time.

Stay Away from Eroded Channels Like the Plague

I’m not picking on SEO, after all it’s been a trustworthy source of traffic since the inception of the internet. It should actually be given respect, like the respect you would give to your grandparents. But that’s probably not where you want to be spending your time. Why? Well, because as much as we love and respect our grandparents, lets face it, they ain’t changing. At least not easily. So don’t expect to get your new hot app on the front-page so quickly.

Be creative

Search engines aren’t the only place to find your audience. Neither are PPC ads, content marketing, or email marketing. Although these are the most conventional, you certainly are not limited to them.

Be creative. Think outside the box. Find out where your customers spend their time, and figure out positive ways to engage them. Adding value is usually a sure-fire way to a customers heart.

Concluding thoughts

Technology moves quickly, new channels emerge frequently. The Traction Book boys recently reported that there are 19 well-documented channels to-date, 15 of which are online. The internet reached critical mass adoption around 1990, by my math I get about one a year.

Will you uncover the 20th channel?

Feel free to tweet me @tkornblit if you happen to stumble across one and are feeling generous ;).

Happy (channel) hunting.

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