Paid Growth Loops: Exponentially Increase your Revenue with Paid Marketing 💸

Alright, Nerds, today you are going to get tactical and learn how to build a marketing strategy that'll help you grow your business fast—without burning through all your cash!

You've probably heard all the buzz about "organic" marketing strategies like content creation and SEO. Don't get me wrong, those tactics are awesome, but they take time to deliver results.

Today, you're going to discover the power of Paid Growth Loops. Think of them as adding gasoline to your growth engine—they can help you achieve exponential growth, but you need to know how to handle them (and avoid setting your budget on fire!).

.Paid Growth Loops: Turning Customers into Cash (and Back into Customers!)…

A Paid Growth Loop is a cycle where a new customer generates profit for your business, which you then reinvest in paid ads, sales, or integrations to acquire even more customers. It's like a money-making machine that keeps on giving!

As you can see in the image above, the input is a new customer or user, the process is the revenue generated by that user, and the output is the reinvestment of that capital into more paid efforts.

The key to these loops is the capital you can reinvest to keep growing.

Unlike Content Loops or Viral Loops, the financial aspect here is crucial. I've spent 13 years running these loops for Fortune 500 companies, startups, unicorns, you name it—and in every single case, understanding the financial side is essential.

Why? Because Paid Loops can be like a double-edged sword. They can generate rapid growth (which can be pretty addictive, I'll admit!), but they can also cause serious damage to a company if you're not careful—even leading to bankruptcy! 😨

.Four flavors of Paid Loops…

There are three main subtypes of Paid Loops:

• Ad Loops

• Partners and Supply Loops

• Sales Loops

• Integration Loops

The key is to figure out where you'll reinvest that precious capital. Are you going to launch a killer ad campaign on Meta or Google? Or invest in a sales team to close those high-value deals? Or how about developing a game-changing integration with another app that can bring in a flood of new users?

Let's break down each type of Paid Loop.

.Ad Paid Loops: The Advertising Powerhouse…

Unless you've been living under a rock (or have a really good ad blocker), you've seen those ads everywhere online—websites, TikTok, Instagram, you name it.

They might be annoying sometimes (I'm looking at you, irrelevant retargeting ads!), but there's no denying that they're effective for many companies looking to grow quickly—especially if they have the capital to invest.

The beauty of paid advertising is that you can choose how much to invest and even predict the results you'll get (with a little help from data, of course).

Take Temu, for example—a massive e-commerce player from China that at one point represented up to 10% of Facebook’s revenue in 2023. In this case, the input is a new purchase by a user, which generates revenue, and that revenue is then reinvested in more ads on Meta.

How do you know if advertising is right for you? Ad Paid Loops work best when the user friction to get to your Promise Value Proposition is low to medium.

For example, companies with complex sales processes, long contracts, or a high barrier to entry (like those enterprise software giants) might not see the best results with Ad Loops. They'd probably be better off focusing on Sales Loops (more on those later!).

.Affiliates and Partners Paid Loops…

Partner-Powered Paid Loops—your secret weapon for tapping into the power of influencers and affiliates.

Think of it like this: You’re assembling a team of marketing superheroes, each with their own loyal following, ready to spread the word about your awesomeness!

Here's the play:

Instead of running ads directly, you're partnering with influencers or affiliates who've already built an audience you want to reach. They create cool content (think engaging ads!) promoting your product, and you reward them for every new customer they bring in. It’s a total win-win!

But here's the catch: Just like with regular Ad Loops, this strategy works best for products that are easy to understand and use (low to medium friction to users access the promise value proposition) and have broad appeal.

You'll see influencer/affiliate marketing in action everywhere these days. Big banks, insurance companies, and e-commerce giants like Amazon are all over it!

Here's a story from my entrepreneurial playbook:

Years back, I co-founded a fashion e-commerce company. We decided to try this Partner-Powered Paid Loop thing, giving our models personalized links to share on their Instagram Stories. For every sale they brought in, we gave them a commission—boom! Instant access to their engaged audience and a buzz around our brand.

Bonus: You control the CPA (Cost Per Acquisition). You decide how much you’re willing to pay your partners for each new customer.

So, if you’re looking to amplify your reach, boost your credibility, and unleash the power of influencers, this is your loop!

.Sales Paid Loops: Closing Those High-Value Deals…

This loop type isn't for everyone, but for companies with high-ticket products or a complex sales process, it can be a game-changer!

Instead of investing in flashy Instagram ads, you're investing in a sales team dedicated to prospecting and closing deals.

A great example is Salesforce. Instead of reinvesting capital into ads, they invest it in hiring more sales executives to prospect and close potential clients.

The main difference when we compare it to other types of paid loops is the types of primary value promise products it targets.

Whereas an ad loop only really works for those that have low to medium friction, a sales loop can target those with a primary value promise friction of medium to very high. And that's because the influence of a human and a sales rep distributing that primary value promise is much higher than an ad.

.Integration Paid Loops: The Art of “Being Everywhere”…

This one's a bit more under the radar, but it can be incredibly effective.

What's the secret? You're reinvesting that revenue into building integrations with other companies or platforms that can bring you more customers.

One company that's nailed this is Canva, the design platform. Their app is integrated into tons of popular tools like ChatGPT and Aweber – a smart move, right? Those integrations put Canva right in front of their ideal customer base.

Another great example is Grammarly, that grammar-checking SaaS that we all love (or at least tolerate 😉). They've got integrations with Chrome, Microsoft Office, and desktop apps, making their service incredibly accessible and convenient.

Here there is no restriction regarding the friction to access your primary value promise, it can be low to high.

One company that does great when it comes to this loop is Zapier and Segment, where integration is the core value proposition of their product. Shopify over the last years also implemented these types of loops becoming the center of gravity of their customers.

.Summary…

Alright, marketing masterminds, let's recap what we've learned about those powerful Paid Loops:

• They're all about investing capital to fuel growth. Think of them as rocket boosters for your marketing strategy. 🚀

• There are three main flavors: Ad Loops, Partner-Powered Paid Loops, Sales Loops, and Integration Loops. Each has its own unique approach and works best for different types of products and businesses.

• The "Why" is Crucial: Understanding your user's motivation is key to crafting a successful Paid Loop. Are they driven by personal gain, financial incentives, or social connection? (Or maybe a delicious combo of all three? 🍕🤑🤝 )

• Don't Just Chase CPAs: While acquiring new customers is important, remember to focus on that sweet, sweet CLV (Customer Lifetime Value). Build relationships, nurture those loyal fans, and watch your profits soar.

• Data is Your Friend: Track your metrics, analyze those numbers, and optimize your loops like a true data-driven nerd. (HubSpot's reporting tools can be your secret weapon here!)

So, Nerds, what are you waiting for? Go forth and build those Paid Loops! (Just remember to keep an eye on your budget, or you might end up launching your wallet into orbit instead of your business. 😅)

.Other newsletters that I am reading…

• B2B Growth: Every Friday, they study a successful content creator... then share what we learn with B2B content marketers.

• simple.ai: Join 100,000+ others and learn how to use Agent AI to grow your career or business.

• Growth Archive: Get real-world marketing examples every week from successful B2B projects that you can replicate for your own business

• Better Letter: The behind-the-scenes playbook for how to launch, operate and grow a profitable newsletter with paid ads 📈

• Scalable: 🚀 Practical know-how for founders to build winning startups

That is all for today friends.

Keep measuring, keep optimizing, and keep growing!

Jojo