Request for Clients: Geo-constrained marketplaces

Nima Gardideh
August 9, 2022

Pearmill is a growth marketing agency that uses art and technology to help companies with paid growth. We spend $100M+ on advertising each year, but we only work with 10-15 brands at a time.

This model has enabled us to work with incredibly talented and experienced marketers, designers, and engineers (and maintain a  < 3% churn!), as well as have in-depth understanding and partnerships with our clients.

We’re now in the fortunate position to start welcoming in clients which our team finds most interesting to work on, and in areas that we think we can have the biggest impact.

This blog post is part of a series we are writing to welcome conversations from companies scaling their acquisition efforts on paid search and paid social who want to partner with us to help them grow.

Our founders are Y Combinator fellows and we’re definitely inspired by YC’s Requests for Startups approach to attracting the types of businesses we want to work with! 

Geo-constrained marketplaces

We’d like to work more with companies with geo-constrained marketplaces (either managed or otherwise). We’ve had quite a bit of experience in this area already, and we’d like to continue mastering the craft of scaling these types of businesses.

If your company is providing a product or service that has multiple parties involved, and is constrained by the geography (either based on the nature of your supply, or how the demand side functions), then you fall within this area.

Our Experience

At Pearmill, we’ve had a lot of experience helping geo-constrained companies scale — including specifically managed marketplaces connecting two or three sides of a market together to enable more efficiency.

In the past few years, we’ve helped operationally heavy managed marketplaces like Made Renovation, Sonder, Ophelia, Mindbloom, and Veho scale up their efforts and start market expansion from just a few markets to tens, and eventually hundreds of cities across the U.S. and the global market.

While we’re a paid social and paid search agency, for companies with supply and demand, we’ve had to go deeper to help them grow:

  • Modeling marketplace liquidity and balancing supply/demand dynamics (sometimes this is geo-centric, and sometimes it’s less constrained)
  • Supply/demand acquisition planning to maintain efficiency
  • Clustering growth (more on this in the next section) to achieve more economical acquisition costs
  • Producing creative on paid social that feels personalized for each market but generalized for broad targeting
  • Maintaining quality across both demand and supply through modeling or questionnaire qualification

Why we believe in this business model

While there are immense challenges with systemization of growth when you launch across many markets, there’s currently an upside in the ad auctions in a channel like Facebook for two reasons:

  1. Their ad auctions have started to rely more on machine learning over the past few years. When you send more success signals to the network, your spend becomes more efficient as the ML model understands what your ideal customer looks like.
  2. The larger your audience size, the easier it gets for the auction to reward the cheapest clicks (the system favors the cheapest impressions with the highest quality). 

We reduced cost per lead by 40% for one of our clients when we built a consolidated account structure - one that was better suited for Facebook’s machine learning model and auction dynamics.

You may have heard that CAC generally grows as you scale. This is largely true in most industries – but at the moment, geo-constrained businesses are able to at least maintain (if not decrease) their CAC as they open up more markets to feed more data to Facebook’s ad network and increase the audience size.

There are many nuances on how to do this, with operational complexity getting in the way (e.g. you may need to acquire a specific number of users at the right time within each market, and grouping markets is a challenge in that case). But the fundamentals of Facebook’s ad auctions are currently in favor of your business model, and we can take advantage of them. 

Think we can help?

If you’re building a managed marketplace and about to scale up, reach out! Our growth team is happy to do a complimentary audit.

Let’s grab a few minutes together and see if there is potential to unlock growth.

Extra resources

Wanna explore other ways to grow a geo-constrained marketplace? Check out:

  • Lenny Rachitsky’s (former product lead for supply growth at Airbnb) essay on 28 ways to grow supply
  • This episode on the Hypergrowth Podcast exposing the key learnings of our recent experiment for geo-constrained marketplace client, Veho.

Some examples of our work

Sonder - a new way to stay in your favorite neighborhoods around the world.

Vivian Health - the largest transparent marketplace for healthcare hiring.

Veho - Package delivery and returns—reinvented.

Ophelia - Online treatment for opioid dependence.