Great growth requires great marketing, and great marketing requires clarity on what you are trying to achieve – the main goal at hand. I refer to this goal as a North Star, a clear, bright navigational aid that everyone on the team can see and work towards. This means that a goal and a metric to measure progress towards that goal are both essential. You, your team and your entire organisation need to be aligned on that North Star. It could be as simple as “maximise income” or as high-minded as “connect the world online” (Facebook’s goal when I began there in 2007). If done right, the North Star will be ambitious and clarifying.
The greatest threat to your North Star is your number two goal. This second goal is often a good thing to work on – it might even be better than the North Star. But flipping back and forth between the North Star and your second goal means you are splitting resources, probably competing internally and failing at both. Unfortunately, it can be hard to maintain disciplined leadership to make sure your people and teams use the North Star to question everything they do and that their actions align with that ultimate goal. Great goals have real tradeoffs, and as my former colleague Deb Liu likes to say, “It isn’t prioritisation if it doesn’t hurt.”
When a North Star is complex, detail matters. “Connect the world online” is a wonderful North Star, but break it down and questions arise. For example, are these online users registered users or are they monthly, weekly or daily active users? Does ‘the world’ mean only current online users, or does this imply expanding the internet? What even defines “active” to begin with – a logged-in visit, a post, a like? The metric to gauge success must also be crystal clear. For example, the goal for revenue might be “annual revenue” or “annual free cash flow” or “annual EBITDA (earnings before interest, taxes, depreciation and amortisation)”. Or the metric could be quarterly, not annual, or a five-year plan.
The metric for Facebook was monthly active users (MAU). A user was considered “monthly active” if they had logged into the service at least once in the last thirty days. Revenue must be in service of driving that goal. And that meant revenue couldn’t be made in a way that reduced MAU by, for example, running paid ads that annoyed users so much they stopped using the site. This settled a lot of disagreements on how to make money. That’s one of the most inspired ideas Mark Zuckerberg had in the early days of Facebook. He made it clear that MAU would serve the North Star goal of connecting the world online. This North Star has continued to inform the company and its culture; it is fundamental to our entire marketing philosophy, from how we plan campaigns to how we attract new users across platforms. But, at the time we formed it, there was no guarantee it would work and many investors and talking heads thought the top focus should be revenue. Of course, they were wrong.
Shortly before I joined Facebook, the company almost sold to Yahoo! At that point, Mark’s leadership team were very keen on the exit, but Mark determined they would not sell. His goal was to connect the world through social media – and he believed the best way to do this was as an independent company – not to quickly exit and become wealthy. This plan was not universally popular, and many executives left. I joined in the aftermath of this shakeup as a naive man in my early twenties; I thought it was obvious Facebook was awesome and would be used by the whole world, so it would be absolutely foolish to sell.
I now see that this decision involved a difficult tradeoff. There was no guarantee Facebook would make money from an as-yet-unproven business model. Typically, the goal of a startup is to grow, sell and make investors, employees and founders rich. Today, twenty years on, it feels natural that a mission-oriented business could work, and that Facebook would be huge and valuable, but at that time it was a bold bet. Coming out of that moment though, I entered a company that had a North Star goal that was forged in fire.
Not only was the North Star clear, so was the metric that measured it. As mentioned, this metric was MAU, and though that may seem standard now, it was unusual at the time. Most people then quoted registered users – the number of people signed up for a given platform – to describe their user base. Of course, someone could be registered and not have used the service for months or years, so this was mostly a vanity metric. Mark and Facebook were the first large companies that completely did away with that metric for public reporting, and it truly moved the industry forward.
The combination of the goal and metric was extremely clarifying for my and my teams’ work, and it settled many arguments without needing to escalate them to Mark for a decision. With less debate and more action, we were able to move faster and get things done quickly. For example, our North Star helped us make decisions about our monetisation product that stopped us from making revenue decisions recklessly. At the time, the company needed money – we weren’t profitable, so we needed our ad product to succeed. The ads team had lots of ideas on how to do this.
One idea was to try out “homepage takeovers”, which other social media companies were selling. In a homepage takeover, an ad that could simply not be ignored would appear on the homepage of a site, dominating it entirely. On MySpace, for example, I remember an ad in which the Hulk ‘smashed through’ the homepage, jumbling up icons and bouncing the text and other features around for a few seconds. These takeovers made the companies a lot of money, but they harmed the user experience, blocking new users on those days from ramping up their usage and connecting with friends. Since that hurt the MAU, this extreme monetisation option was proposed and killed without senior review as far as I could tell (and so were hundreds of others). This led to an ad system that has little tax on user engagement and, indeed, for many users, is a positive.
Excerpted with permission from Click Here: The Art and Science of Digital Marketing and Advertising, Alex Schultz, Wildfire.
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