In 2005 we discovered an innovative way to generate newsletter subscribers using press releases. We were early adopters of this strategy and it worked incredibly well. In fact, the cost to generate a lead was about $0.06 per. And we were generating subscribers by the hundreds, on a daily basis.

As our subscriber base grew astronomically fast, so did our revenue. Life was good. But we got complacent. By 2008, this strategy of generating subscribers was being used by all of our competitors. And the amount of competitors we had in 2008, compared to 2005, grew by about 600%.

As you can imagine, that lead generation strategy is no longer cost-efficient. It died out in 2010. And the average cost of generating a subscriber in that niche has now shot up to about $3 per, a whopping 5,000% increase from 2005. This has created a significant financial barrier to entry for startups in the space, and now the industry is being dominated by large players with huge marketing budgets. The little guys have all but been eliminated.

Without innovative new ways to generate leads, startups running on lean budgets are finished in the newsletter/online marketing industry.

So what’s the remedy?

First of all, anyone looking to start an ‘online business’ based on the fact that they have cool products and a snazzy looking website is about ten years late. Let’s just get that out of the way before going any further.

The Next Opportunity in Online Marketing

The new opportunity for so-called online entrepreneurs is mobile. Roughly 40% of web traffic is from a mobile device. It’ll be around 80% in 5 years. If you run an online business (which should be every entrepreneur no matter what you are selling) and have ignored mobile, those numbers should scare you into action, right away…

The Problem with Email Marketing

While email marketing is still very effective, near 70% of all emails are considered spam. This means that there is a ridiculous amount of clutter in the inbox. To deal with all the clutter, I suspect sender approval, or sender verification, will become the norm. Within a few years, for your message to make it into your subscriber’s inbox, it’ll require a triple opt-in of sorts (customer signs up for newsletter, they add you to safe list, then after sending email you will be required to verify you are a real person in order for it to land in their inbox).

In short, it will be harder for you to communicate via email with customers and subscribers.

Social Media Sucks for High Quality Leads

If you think social media will help offset the barriers of email marketing, think again. Social media is a joke for building brand loyalty and generating revenue. There is just way too much clutter on traditional social media platforms like Twitter and Facebook. And Facebook in particular is eliminating the ability for businesses to sell products using their platform without paying; but that’s a rant for another time…

As a means of generating subscribers, social media is, at best, a supplementary medium to your main drivers.

Generating Cost-Efficient Leads Online

So how do you innovate for your online business to keep generating cost-efficient leads? Aside from producing great content, which very few online marketers actually do because they don’t take the time to edit and improve their message, your business needs to start focusing on creating innovative offerings for mobile.

In 3 to 5 years, mobile apps WILL BE the primary way in which we generate online leads and communicate with existing customers. Yes, there will still be a place for emails, but remember, getting sender approval will become the norm. Meaning the adoption rate, and email subscriber growth, will be slower.

Why Focus on Mobile Lead Generation Innovations?

• On average, people look at their smartphone 150 times per day.
• There are approximately 3.5 billion active smartphones in the world today. The global population is about 7 billion… you do the math.
• Messaging via a push notification is personal, instant, and is more read than any other form of content (newspapers, email). If you can send a teaser or article headline to every one of your app subscribers, even if their phone is locked, imagine the penetration rate.
• According to Benedict Evans, mobile penetration in developed markets has exceeded 100% - meaning people have more than one active mobile device.
• People have become addicted to their smartphone. Ofir Turel, a psychologist at Cal State Fullerton, used Facebook to describe this addiction. He said that Facebook addicts driving a car are more likely to respond faster to a push notification alert on their phone than to street signs! Scary… but powerful.

Developing a mobile marketing strategy goes far beyond simply making your articles ‘mobile friendly’. It means you need to create an app (or rebrand an existing one) that new subscribers will adopt for daily use, which will eventually convert them into paying customers; it means the opt-in forms on your site need to be customized for mobile browsers (size, format, more video etc.). How many websites have you visited on your phone that have opt-in forms which aren’t properly formatted for mobile? Tons, I bet. Even some of the biggest sites on the web haven’t properly formatted their opt-in forms for mobile devices. It’s shocking.

Also, any sales copy needs to be shortened for easy readability on mobile devices. People don’t want to read a 5,000 word article on their phone about why they should purchase your product.

And in respect to apps, I don’t mean just creating a content feed of your articles and product offerings (basically just a dolled up RSS feed). Provide subscribers with a value add within your app. You know what your audience desires and what they need. What will make their daily lives easier or funner? (yes funner is a word) Build an app that provides that. From there, you can sell them more and build brand loyalty better than ever before. And for those of you worried about the cost of building a great app, as time passes it will only become cheaper. Think of what WordPress did to lower the cost of creating websites…

Innovate or die.

Stay hungry,

Aaron