Demand Curve - The Growth Newsletter #158

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The Growth Newsletter #158

Graceful exit points. Ad profitability. Satirize your enemy.

"Your margin is my opportunity"
– Jeff Bezos

Industries where companies have huge profit margins are typically complacent and ripe for disruption. Their profit margin is your opportunity to innovate and whittle it away.

Topics for the day: Graceful exit points. Ad profitability. Satirize your enemy.

Let's dive in ♨️

– Neal

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1. Provide a graceful Exit Point for your app

Insight from Growth.Design.

It's 12:35AM, you've swiped your 420th TikTok/reel, and you know you should go to bed, but you can't stop. Often, it takes some external jolt to get you to stop finally.

You then think, "Ugh, I need to delete it from my phone.”

If your app is never-ending and potentially addictive (Duolingo, Tinder, games, social media)

1. First of all, congratulations, that's hard to achieve.
2. Add in graceful exit points. This keeps users from getting so burnt out that they stop returning, and increases overall satisfaction with your product.

Surprisingly, TikTok actually already does this.

If you watch too long, they have a video that tells you to take a break. But it misses the mark for a few reasons:

1. It looks like all the other videos.
2. It's too easy to skip.
3. It doesn't use data against me.

Here's what Growth Design suggests instead:

Being told I've watched 293 videos would get me to put the phone down. And I'd be extremely appreciative that THEY took the initiative.

Duolingo could add one as well. After you hit your goal for the day, they currently dump you back into the lesson tree, where you see the weeks of effort ahead of you. You feel like you've barely progressed and are less satisfied with your efforts.

Instead, they should do this:

Give your users a graceful exit. They'll appreciate you for it.

Check out Growth Design's case studies for both TikTok and Duolingo.

2. The best way to control ad profitability

Insight from Thinkbox and Accelero.

We're a bootstrapped, lean company. We love other bootstrapped, lean companies.

This insight is a kick in the pants for startups looking to run profitable ads.

But it's also incredibly motivating.

Here are the biggest drivers of profitable ads (from analyzing up to 28,000 brands):

1. A huge brand – up to 20x multiple on ROI

Yep, that's not what any of us wanted to hear. Here's the data:

The bigger you are, the more effective your ads, thanks to existing awareness and affinity. Often, you're just reminding people to buy or that you are selling something new they should get.

Sadly, we can't control that one, but we can control this one:

2. Great creative – up to 12x multiple on ROI

Here, you can see the difference in performance across creative campaigns for two established brands:

And if you look at all the other ways that influence ad profitability, focusing on great creative is really the best way (since you can't control your brand size or budget):

The magic doesn't come from button pressing and knob twisting in an ads dashboard. It comes from great ads that are noticeable, memorable, and cause an emotional response that drives action.

3. Create a satirical version of your enemy's ad

Insight from Will Poskett.

Talking about what you're not is as important as talking about what you are, especially if you're challenging the status quo.

BRLO is a challenger startup in the alcohol-free beer category. It can't compete with massive beer brands' multibillion-dollar media spend, so it knew it had to get creative.

People are growing tired of perfect yet wholly inauthentic portrayals of men, who have dominated beer advertisements for decades.

(This sentiment away from "perfect" towards "authentic" is everywhere.)

So, they positioned themselves to be the complete opposite:

An authentic, full-bodied, and juicy beer leaning into Berlin's alternative reputation.

Much like Liquid Death did to the water industry.

Yet the cleverest part of this strategy?

They stole fame from one of the most famous, inauthentic ads of the moment by Calvin Klein and satirized it. Here's a snippet of the comparison:

They found their enemy and satirized them.

Check out Will Poskett's post for the entire video.

Fun fact: Will is an alumnus of our audience building course, Un-ignorable ;0

News and links

News you can use:

• Apple released the Vision Pro to consumer on February 2nd, the Internet won't stop talking about it. Casey Neistat has the most hilarious video.

• LinkedIn launches a new tool, Website Actions, to help simplify action tracking.

• Google Bard added image generation—and just like that LLMs are a commodity.

• Meta ads 1-day video ad view conversions.

• X/Twitter introduces vertical video ads to all advertisers.

• AI has gotten even weirder with underground site OnlyFakes churning out fake digital IDs (photos of driver's licenses) like this one for only $15.

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Something fun

AI is truly horrifying.

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We share no-BS, vetted, and actionable startup growth advice as we learn it from the top

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Thanks everyone! See you next Tuesday with another fresh batch of tactics.

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Neal O'Grady

Justin Setzer