By Andrew Chen
The Law of Shitty Clickthroughs is the inevitable decline in performance of all marketing strategies over time. Customers respond to novelty, which fades, and first-to-market companies never last. More scale means less qualified customers. The only way to fight the Law is to constantly develop new creative and find new marketing channels.
- Summary Notes
- The decline of banner ad clickthrough rates over time
- The decline of email open rates over time
- The importance of rotating creatives
- The impact of competition on marketing efforts
- The importance of finding new, uncontested marketing channels
The decline of banner ad clickthrough rates over time
"Over time, all marketing strategies result in shitty clickthrough rates."
Eventually, all marketing strategies will become less effective as people become used to them and learn to ignore them. This is known as the "Law of Shitty Clickthroughs."
"The clickthrough rates of banner ads, email invites, and many other marketing channels on the web have decayed every year since they were invented."
The performance of banner ads and other marketing channels has gotten worse over time. This is because people have become more resistant to advertising and more adept at ignoring it. As a result, it takes more and more to get people to notice and respond to marketing efforts.
One of the reasons for this is that people are constantly being bombarded with marketing messages and they have become skilled at ignoring them. Another reason is that as soon as something becomes popular, everyone starts doing it and the novelty wears off.
The law of shitty clickthroughs is a reminder that all marketing strategies will eventually become less effective over time. The key is to always be on the lookout for new, untapped marketing channels that you can exploit before everyone else does.
"Humans seek novelty yet are pattern-recognition machines. Your initial marketing strategy will work quite well as your users try it for the first time, but afterwards, they learn to filter your marketing efforts out unless they are genuinely useful."
Humans are attracted to things that are new, but they quickly learn to ignore things that are not useful to them. This is why it is so important to have a marketing strategy that is not only new, but also genuinely useful to your target audience. Otherwise, you will quickly lose their attention.
"Any product that is first to market has a limited window where they will enjoy unnaturally high marketing performance, until the competition enters, in which case everyone’s marketing efforts will degrade."
This quote is saying that any product that is first to market will have a limited time of high performance until other companies enter the market and start competing. Once this happens, the marketing efforts for all companies will start to decline.
"The real solution: Discover the next untapped marketing channel"
The best way to combat the Law of Shitty Clickthroughs is to always be on the lookout for new, untapped marketing channels. By doing this, you can ensure that you have a few moments of strong marketing performance before the channel degrades.
The decline of email open rates over time
"The moment you start to scale it, the effectiveness of your marketing grinds to a halt."
This quote is saying that once you find a marketing strategy that works, it will eventually stop being effective as more people catch on and the novelty wears off.
There are a few reasons for this decline in effectiveness. One is that people are always seeking out novelty, so they quickly get used to seeing the same marketing techniques and start ignoring them. Another reason is that once a marketing strategy is working well, competitors will quickly jump on board and copy it, diluting its effectiveness. Additionally, as a company scales up its customer base, it will inevitably start attracting less qualified customers who are less likely to convert.
All of these factors combine to create a downward spiral for marketing effectiveness over time. The only way to combat this is to constantly be on the lookout for new, untapped marketing channels. By doing this, you can enjoy a temporary period of strong performance before the Law of Shitty Clickthroughs catches up to you.
"Welcome to the Law of Shitty Clickthroughs: over time, all marketing strategies result in shitty clickthrough rates.”
The Law of Shitty Clickthroughs is a simple but accurate way of describing the inevitable decline in performance of all marketing strategies over time. No matter how well a marketing strategy performs when it is first introduced, it will eventually become less and less effective as customers become more accustomed to it and/or as competitors enter the market.
There are several reasons for this decline, including the fact that customers are always seeking out novelty and that first-to-market advantages never last. Additionally, as a company scales its marketing efforts to reach more customers, the pool of potential customers becomes less and less qualified, which also drives down performance.
"Any clone of their business can quickly fast-follow their marketing efforts and use the same ads in the same marketing channels."
If you have a successful marketing strategy, it will quickly be copied by your competitors. This can degrade the performance of the marketing channel because the novelty will wear off and people will start ignoring the ads.
"Lesson to investors is: Beware marketing metrics done at a small scale, and beware marketing tech companies that facilitate momentary marketing opportunities without a bigger vision."
It's important to be wary of marketing companies that only focus on short-term opportunities, without a long-term plan. These companies may provide a boost in the short term, but they're not sustainable in the long run.
As an investor, you should be aware of these companies and their limitations. It's better to invest in companies with a long-term vision for their marketing strategy, as they're more likely to be successful in the long run.
The importance of rotating creatives
"Customers respond to novelty, which inevitably fades."
Customers are always looking for something new, but that eventually they will get used to whatever new thing they are presented with and it will cease to be novel. In other words, what works today might not work tomorrow, and marketers need to be constantly on the lookout for new ways to reach their audience.
"First-to-market never lasts."
Being the first company to market a product does not last forever. Once other companies catch on and start offering similar products, the playing field levels out and the original company is no longer the only option. This can lead to a decline in sales and customers.
"More scale means less qualified customers."
This quote is saying that as a company grows and tries to acquire more customers, the pool of potential customers becomes less qualified. This is because the company is now targeting a wider range of people, who may not be as interested in the product or be a good fit for the product. As a result, the company's marketing efforts may not be as effective as they were when they were targeting a smaller, more niche group of people.
The impact of competition on marketing efforts
"Your initial marketing strategy will work quite well as your users try it for the first time, but afterwards, they learn to filter your marketing efforts out unless they are genuinely useful."
Your marketing strategy might work well at first, but over time, people will learn to ignore it if it's not genuinely useful to them. This is because humans seek novelty, but also because there are more and more marketing strategies and channels being created all the time. So, if you want your marketing to be successful in the long term, you need to make sure it is truly useful to your target audience.
The importance of finding new, uncontested marketing channels
"The first banner ad ever, on HotWired in 1994, debuted with a clickthrough rate of 78% (thanks @ottotimmons)"
The quote specifically references the difference in clickthrough rates for banner ads on HotWired in 1994 versus Facebook in 2011. The HotWired banner ad had a clickthrough rate of 78%, while the Facebook banner ad had a clickthrough rate of just 0.05%.
"After months of iterating on different marketing strategies, you finally find something that works. However, the moment you start to scale it, the effectiveness of your marketing grinds to a halt."
The best way to fight the Law of Shitty Clickthroughs is to find the next untapped marketing channel. This could be something like Open Graph or mobile notifications. If you can make these channels work with a strong product behind it, then you'll enjoy a few months or years of strong marketing performance before they too, slowly succumb.
"The point is, humans seek novelty yet are pattern-recognition machines. Your initial marketing strategy will work quite well as your users try it for the first time, but afterwards, they learn to filter your marketing efforts out unless they are genuinely useful (more on that later)."
People will be interested in something new at first, but eventually they will learn to ignore it unless it is actually useful to them. This is why it is so important to have a well-thought-out marketing strategy that takes into account human nature. If you can keep your marketing efforts fresh and interesting, you'll be more likely to succeed in the long run.