
 Using AdWords to assess demand for your new online service, step-by-step - prakash
http://startuplessonslearned.blogspot.com/2008/11/using-adwords-to-assess-demand-for-your.html
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gruseom
I worked for a startup that employed this strategy. It didn't work - not even
close. That's not to say it can't. But I became skeptical. Among the problems
I observed were:

1\. What's a successful test? We collected lots of data, but in the end it was
still a gut decision which product(s) to go with, with all the usual emotional
factors in play.

2\. Just because people say they want a product, it does not follow that if
you build what you thought they meant, they will buy it.

3\. Tests can get a lot more expensive than you expect, and you may need to
run a lot of them. This is related to #1, since you have no objective
criterion to know when you're done testing.

4\. This is a mechanistic model for making products, which assumes that you
can turn a product "on" or "off" depending on data. But many successful
products don't come into the world that way. They are driven by vision and
total commitment on the part of the makers. (Think of that guy at Apple whose
project was canceled and who snuck into the building for a year to keep
working on it.) This is psychologically incompatible with the idea of testing
a bunch of ideas, none of which you care about that much, and picking the best
one based on some test results. That approach that tends to be favored by
managerial types who don't much care what it is they're managing - not the
classical entrepreneur who's consumed by a passion. Who do you think is more
likely to have the kind of persistence needed to carry a product forward?

I came out of this with two conclusions. One was that there already is a
mechanism for testing which ideas will have market success: the market itself.
So the strategy here is really to beat the open market, which gives some idea
of how hard it is to execute.

The second was that this way of working is not for me. I want to work on
something that I am passionately commited to because it is a creative
expression of my being - as well as something that people will pay for.
Sometimes the one has to precede the other.

~~~
DenisM

      Who do you think is more likely to have the kind of
      persistence needed to carry a product forward?
    

Someone who is confident that he is building _something people want_.

You have to make up your mind on whether you're building something people
want, or something you want. Either is fine, but you have to walk into this
with open eyes.

~~~
gruseom
_Everyone_ is confident they're building something people want. The question
is, how do you propose to tell if it's true? Ultimately, the only way to know
for sure is to bring it to market.

Measuring sign-ups on landing pages from Adwords did not (in the cases I
observed) live up to its promise as a short-cut in this process, for the
reasons cited.

Edit: I certainly believe in adapting what one's doing in response to market
evidence - e.g. listening to one's customers - rather than stubbornly assuming
that one knows what people want. That, however, is not the point of the OP.

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ckinnan
This strikes me as unethical, and probably illegal in the United States. We
have a set of consumer protections called Truth in Advertising that probably
apply here.

<http://www.ftc.gov/bcp/edu/pubs/business/adv/bus35.shtm>

~~~
bprater
I don't think he's selling anything. When the visitor arrives on the webpage,
he's greeted by a mailing list subscription form.

~~~
ckinnan
He writes: "Our goal is to find out whether customers are interested in your
product by offering to give (or even sell) it to them, and then failing to
deliver on that promise."

Again, this feels unethical. If this practice was widespread it would further
undermine trust online. It probably violates AdWords terms of service too.

~~~
alex_c
I'm assuming the goal is to see how many people would click on a "Register" or
"Buy Now" link, rather than to see how many people would fill in their full
credit card and shipping information? The former seems like it would still
give some valuable information without being too bad, while the latter does
seem questionable.

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mhartl
I'm conflicted about this. On the one hand, it seems like a good idea to test
your product ideas in this cheap way. On the other hand, you could easily miss
great products that just need a little time to catch on—some products don't
lend themselves to an immediate decision based on some web page ad copy. For
example, in _Founders at Work_ Joel Spolsky talks about launching FogBugz:

 _We had no idea [how FogBugz would do]. At the time, you could have told me
that this thing was going to sell zero copies, and I would have believed you.
You could have also told me it was going to sell $50,000 a month's worth of
copies—an equally unrealistic number—and I would have believed that too.

Now I have enough experience to know that almost everything you launch is
going to sell $2,000 to 3,000 in the first month, and that's the way the first
month of any software product always is, if you do things perfectly. But at
the time, I just had no idea what to expect._

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dawie
Tim Ferris also uses these techiques to test his ideas in his book, The 4 Hour
Work Week

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stanley
The tactic described in the article has limitations, but the underlying
purpose of properly assessing the market before building the product is
exceptionally important.

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paul9290
Yes the old de-risk test ...not for me, because people don't know what they
want!

